Why Ambiguity Costs Money

One of the most expensive things you can leave in a construction project is uncertainty.

An incomplete drawing, unclear scope item, missing finish, undefined responsibility, or unresolved detail may seem minor when you are preparing the project.

Once construction begins, it can become much more complicated.

That is because the Owner’s contract with the General Contractor is only the top layer of a much larger collection of agreements.

The General Contractor is also contracting with subcontractors, suppliers, vendors, and other members of the project team.

When an ambiguity is discovered, the General Contractor may first have to determine:

• What the drawings and specifications actually require.
• Which subcontractor owns the work.
• Whether that subcontractor included it in their price.
• Whether additional labor or material is required.
• Whether another trade is affected.
• Whether the work changes the schedule.
• Whether a supplier must revise an order.
• Whether completed work must be modified.
• And who should ultimately pay for it.

The General Contractor then has to negotiate those issues with the affected parties before bringing a proposed solution back to the Owner.

That negotiation has a cost.

Uncertainty Creates Risk

Contractors price risk.

If the scope is clear, the contractor can determine what must be done, obtain prices, coordinate the work, and include those costs in the contract.

If the scope is unclear, someone has to assume the possibility that the work may cost more than expected.

That risk eventually finds its way into the project price.

Sometimes it appears as a higher bid.

Sometimes it appears as a contingency.

Sometimes it appears later as a Change Order.

And sometimes it appears as what might reasonably be called a headache fee.

A contractor who expects an issue to require repeated meetings, negotiations, coordination, documentation, schedule adjustments, or difficult conversations may price not only the work itself, but the effort and risk associated with resolving it.

That does not necessarily mean the contractor is acting unfairly.

They are pricing the project they believe they are being asked to manage.

Relationships Affect the Cost of Resolution

Construction is also a human system.

When problems arise, contractors frequently have some discretion in how aggressively they price them.

A General Contractor may be able to negotiate with a subcontractor, absorb a small coordination issue, find an alternative solution, reduce a markup, or work with the Owner to keep a problem from becoming larger.

Whether people are inclined to do those things can depend partly on how the project has been managed.

An Owner who is organized, reasonable, decisive, and respectful generally gives the project team more room to solve problems constructively.

An Owner who regularly creates confusion, delays decisions, changes direction, disputes reasonable costs, or treats every issue as a confrontation may eventually find that contractors protect themselves more aggressively.

That protection usually costs money.

This Is Why CIY Emphasizes Team Management

CIY does not teach Owners to control contractors through constant confrontation.

It teaches Owners to create a project that is clear enough to manage and a working environment in which problems can be resolved without unnecessarily turning every issue into a dispute.

That means:

• Defining the work before asking contractors to price it.
• Making bids reasonably comparable.
• Clarifying assumptions before signing the contract.
• Documenting decisions.
• Responding to questions promptly.
• Managing changes deliberately.
• Holding people accountable without creating unnecessary conflict.
• And recognizing that the best project outcome usually occurs when the Owner, contractor, subcontractors, and project itself can all succeed.

These are not principles that apply only to homeowners.

They are the same principles used by effective Owner’s Representatives, General Contractors, Construction Managers, and Project Managers.

The role may change.

The principle does not.

Projects work better when the person managing them understands that their own success depends, in part, on creating the conditions for everyone else to succeed too.

That is one of the reasons clarity matters so much.

Clear drawings and a clear Scope of Work do more than reduce mistakes.

They reduce negotiations.

They reduce risk.

They reduce friction.

And they reduce the number of opportunities for uncertainty to become additional cost.