FAQ
Q. We’ve already hired an architect and our plans are almost finished. Is it too late to benefit from COVENANT’s expertise?
A. We are convinced that the greatest probability for a successful building program is realized if you start applying excellent project management principles in the conceptual planning stage. The further you go into the process, the less impact you can have on project success. Your last opportunity for significant positive impact occurs just prior to final plan review and construction contract execution.
Q. Is trust important in a contracting relationship?
A. Without trust, a condition of constant positioning to defend against a claim is fostered by all parties, increasing cost and distracting attention from effective project design and construction. Cost and quality usually suffer. An exception is contract execution; don’t place trust ahead of diligence in assuring the contract accurately and effectively establishes a fair and equitable contract relationship. It is far easier to exercise trust with this kind of contract in place than with a one-sided contract.
Q. We’ve gotten calls from several subs and suppliers saying they have not been paid. The General’s been paid but he’s not returning my calls. Should I pay the subs?
A. Not yet, unless ordered by a court. Get written notification of non-payment. If you have performance and payment bonds on your project, give the bonding company written notice of the alleged non-payment. This circumstance is avoidable even if you don’t buy bonding. It is recommended you obtain from the General and all significant subs and suppliers, conditional lien releases upon each progress payment and hold a portion of each progress payment as retainage (if provided in your contract). Obtain final lien releases coincident with final payment.
Q. We’ve got Performance and Payment bonds on our project. What else is there to worry about?
A. Bonding is like life insurance; your dead if you use it. If the General Contractor defaults, the bonding company assumes the outstanding General Contractor financial obligations related to the project and is usually obligated to finish the project within the same time, specified quality and cost as the original contractor; fulfilling these obligations is often a challenge and is rarely met to the satisfaction of the Church. There is often a substantial delay when the bonding company takes over. Expect cost, time and quality impacts. Unfortunately, even if you adhere to all the best practices for contractor pre-qualification and analysis, there is no guarantee that bankruptcy/default will never occur on a project. More likely than not, a bad project in New York or California is the cause of the contractor default.
Q. Our General Contractor says he has workman’s compensation insurance so his subs don’t need it. Can this be right?
A. Texas is the only state that does not require workman’s comp insurance. If an uninsured sub’s employee has a serious on the job injury not covered by workman’s comp, he may seek restitution from the church. If any subs don’t have workman’s comp insurance, make sure your General is required to carry a workman’s comp rider on their general liability policy.
Q. Our general has asked for a 30% down payment to start the work? Should we pay it?
A. Not unless you’ve signed a contract that requires it. If so, try to renegotiate the provision, but don’t expect it to be free (you might offer a twice monthly progress payment schedule or shorter payment terms as trade offs). A very firm rule of thumb is: DON’T pay the contractor in full for work that has not been performed satisfactorily or materials that have not been delivered and/or securely stored. If you’ve signed a contract that requires it, try to renegotiate the provision, but don’t expect it to be free (you might offer a twice monthly progress payment schedule or shorter payment terms as trade offs).
Q. Our church is eager to get started on our project but there are a few details on the cost and specifications that have not been ironed out. Is there anything wrong with going ahead with the work and addressing the specifics later?
A. Don’t proceed with construction work until all the negotiated prices and contract terms and conditions are agreed upon and reflected in writing in an executed construction contract.
Q. We have been working on a major change order and we have not been able to come to terms with the General on cost. He recommends proceeding on a time and materials basis. Should we?
A. Don’t authorize work on a time and materials basis (cost plus) unless there is a guaranteed maximum cost established for the C/O work; plan to pay the maximum.
Q. Our contractor presented us with a contract to sign on his own contract form. Should we sign it?
A. No. Use a form prepared by someone expert in the subtleties and nuances of contract terms, conditions and language who is dedicated exclusively to protect your contractual interests.
Q. Is there scripture relevant to running a construction project?
A. Nehemiah demonstrates some important project management principles:
Nehemiah sought the Lord in prayer. (1:4-11)
He prayed for favor from the king. (2:4)
He followed a vision inspired by God. (2:5)
He conducted a facility condition survey (2:12-15)
He presented the vision to the people. (2:17-18)
He faced fierce opposition. (2:19, Chs. 4,6)
He reached out to those with a stake in the project enabling workers to take ownership. (Ch. 3)
He gave credit to the participants (Ch. 3)
He finished in 52 days! (4:15)
He celebrated and dedicated project completion (12:27ff)
Jesus gave critical advice central to Project Management in Matt 5:25 and Luke 14:28
Most other scripture we apply to our efforts is more related to business and personal conduct and is found in Proverbs. See 3:30; 6:16,19; 10:2; 11:1; 12:22; 13:10,11,18; 14:17; 15:1,18; 16:18,19,21; 18:13,19; 19:5,19; 21:6; 22:1,3; 26:4,21; 28:8; 29:11,20.