Allowances are placeholders the GC includes in a bid to cover items not yet finalized. For example, if the selection of lighting fixtures is still in question, a GC might instead propose a generic fixture cost as an allowance. Then during construction, when the actual fixture is decided, the GC will adjust for the difference with a change order. The problem with allowances, though, is the wiggle room they leave for excessive change orders.  If the contractor inserted too many allowances or underestimated their prices, the resulting change orders could be onerous.

City buildings typically abut other city buildings. When work to a building alters a party wall, the owner will first need an access agreement with the affected neighbor. This agreement will stipulate the extent of the encroachment, any proposed underpinning, the protection required, and the duration of the work.  We always recommend executing access agreements before the start of any construction.

Though a contract is the final word on a project, changes are inevitable.  Changes can come from any source.  From the client: “Let’s add a hot tub on the roof!”  The city: a DOB inspector demands a sidewalk fence.  Site conditions: a boulder buried under the cellar blocks the proposed excavation.  The contractor: "Why patch all this molding when we can just replace it?"  Or from the architect: “How about a hot tub on the roof?”  But a contractor cannot change the price or timeline of a stipulated-sum project without a client's written approval. A change order is the form for that approval, and the client may accept or reject it.  Change orders aren’t penalties, but they are more expensive than initial costs. This is because bidding contractors are desperate to cut costs to win a job, but that desperation vanishes once a contract is signed.

We typically recommend clients budget a 15% contingency to cover the inevitable surprises that come up during construction when renovating an old building.

Instead of a set price, a cost-plus contract compensates the contractor for all project expenses plus a fee for the contractor’s overhead and profit. Also known as time+materials, this agreement allows a project to start quickly, even before the design is complete.  But this means the client must hire the contractor without knowing the total cost of the project.  This method demands a lot of trust between the client and contractor.

Credits are the sunny side of change orders. Instead of a price increase, they are a decrease, lowering the total cost of the construction contract.

Design-build is a project delivery method where the owner hires a single firm to handle both the design and construction of the building.  For more on the pros and cons of this method, read this post.

A GC’s bid price includes everything in the architect’s bid plans and specifications, unless an item is specifically excluded by the GC. During construction, these exclusions can be added back into the scope by means of a change order.

General conditions are operations, procedures, and services provided by the general contractor that are indirectly related to construction but are still necessary for executing the project. These include project management, temporary site facilities, safety compliance, and waste removal.

Liens are legal claims against a property by a contractor, a subcontractor, or a vendor who hasn't received payment for their work. A lien will prevent an owner from selling or refinancing a property.

Shop drawings are drawings provided by the GC that detail the fabrication of components for review and approval by the architect.  These bridge the gap between design and construction, ensure conformance with design intent, and help to avoid errors and rework.

A site safety plan is a document prepared by a general contractor that outlines the scope of work, identifies potential risks, and details the company's safety practices. The main purpose of this plan is to establish protocols that mitigate hazards to prevent accidents and injuries on the site.

With a stipulated-sum contract, the GC agrees to complete the project for a predefined set price. Also called a lump sum or fixed-fee contract, it binds the contractor to a predetermined cost. If the actual labor and material costs are lower than expected, the GC profits.  But if the actual costs are higher, the GC pays the difference.

Like a shop drawings, submittals are a critical checkpoint to prevent errors, delays, and miscommunication in construction.  A submittal is a document provided by a general contractor that delineates a material or component for approval by the architect before purchase and installation to ensure conformance with design specifications.  Submittals can take the form of equipment data, finish samples, cut sheets, or product manuals.