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Bidding On Medical Building and Hospital Jobs

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Contracts for equipment installation and services for medical buildings and hospitals are potentially very lucrative, and represent a year-round source of income. It’s no wonder that such contracts are often very attractive to HVAC contractors, who are subject to seasonal ups and downs. However, bidding on these contracts is not as straightforward as many contractors would believe, according to Jason Harley, a construction attorney and associate with McDonald Hopkins, a business advocacy law firm located in Columbus, Ohio. Harley also worked with healthcare facilities as a mechanical engineer.

“A lot of contractors think ‘We’ve been doing HVAC forever, why don’t we do this hospital?’” Harley said.

Frequently it’s only after they’ve begun work on the job that HVAC contractors realize some of the unique challenges associated with hospitals and medical buildings. Accounting for these unique challenges in advance is essential to successfully winning bids and executing HVAC contracts for hospitals and other medical facilities, according to Harley.

Complex Systems, Small Spaces, and Tight Clearances
Coordination in tight spaces is essential to nearly every HVAC job. However, HVAC contractors working in medical facilities are often faced with even tighter spaces than they deal with in other commercial jobs. Contractors should be aware of this fact when submitting their bids. Where many commercial buildings have straightforward HVAC, plumbing and electrical systems, hospitals have HVAC, plumbing, electrical, oxygen piping, medical gas and vacuum piping, according to Harley.
“One thing we see a lot of in the medical field and in the buildings they’re constructing is that they have so many systems interacting. Everything is packed in really tight,” Harley said.

Logistical Challenges
Hospitals and medical facilities are frequently located in densely developed urban areas. Such areas present logistical challenges that are easily overlooked, but can potentially be very costly and should be accounted for in the bid. For instance, there may not be an open yard to store supplies. As a result, on-time delivery of equipment and supplies is critical, according to Harley.

“You don’t want 50 guys standing around waiting for pipe or a conduit,” Harley said.

Contractors should also consider and account for how their workers will get to the job site, if on-site parking is not available. Contractors must also account for mundane matters such as where their crew will take breaks. Job sites that require crew members to travel between multiple floors can also trigger costs that must be accounted for in the bid, according to Harley.

“If they’re waiting for elevators half an hour each day going from floor to floor, that adds up,” Harley said.

Willingness to Take Charge
Because of the complexity associated with hospital and medical facility construction contracts, it’s critical for contractors and owners to be on the same page about what is or is not included in a contract before work begins. Otherwise, contractors may learn that owners expect them to complete work that they didn’t include in their bids, resulting in misunderstandings or worse, according to Harley.

On the other hand, contractors who are not only aware of the unique challenges associated with hospital and medical facilities but who take a leading role often stand out from the competition. All other things, being equal, contractors relay to owners that they are willing to coordinate the various moving parts of a medical facility or hospital construction project rather than simply collaborating as part of an overall effort frequently win the job, according to Harley.

“(Say to owners) This is an issue; we know it’s an issue. We’ll take the reins,” Harley said.

Notice Provisions
Contractors should also act to protect themselves against overly strict notice provisions during the bid process. Notice provisions require contractors to provide written notice to owners within a specified time limit for claims relating to a contract. Otherwise, contractors risk having their right to collect damages terminated for claims up to the time agreements containing notice provisions were signed. Notice provisions are nearly always enforceable and are strictly enforced, even when a contractor’s claim would otherwise be valid. Harley explained.

“You can argue until you’re blue in the face that everybody knows about an issue but if you haven’t given notice, it will do you no good,” Harley said.

Notice provisions associated with final payments are frequently especially harsh. Contractors who neglect to practice due diligence and who sign agreements containing overly broad notice provisions in exchange for their final payment on a job potentially risk waiving all claims related to the entire contract, according to Harley.

“It’s concerning how many people don’t understand what they’re signing when they seemingly innocuous documents,” Harley said.

The majority of overly broad notice provisions are not concocted by owners acting in bad faith, but are instead the result of poor contract drafting. Nonetheless, in a dispute, owners who have signed contracts containing strict notice provisions are likely to enforce those provisions, according to Harley.

“It may have been an accident at the time, but you may be out of luck,” Harley said.

Clarifying Exclusions
Clarifying exclusions during the bidding process protects contractors from many of the hazards associated with notice provisions. However, doing so presents potential hazards for contractors. Bids that include a long list of exclusions can put owners off, Harley said.

“They (owners) may say ‘I don’t want this guy; I want somebody who’s ready to start,’” Harley said.

Contractors understand this hazard, and therefore frequently shy away from dealing with exclusions and claims waivers during the bid process, according to Harley.

(Contractors say) “I don’t want to be branded as a claims contractor,” Harley said.

Nonetheless, initiating a candid discussion with owners during the bid process can save contractors significant headaches down the line, according to Harley.

“(Otherwise) You’re (the owner) going to be disappointed by my high bid, or I’m going to be disappointed by what you make me buy (on a low bid),” Harley said.

One way to do so is to take a “just in case” approach, while assuring owners that they don’t anticipate any problems, according to Harley.

(Contractors should say) “I don’t know if this will ever come up, but it’s in the contract, so let’s talk about it,” Harley said.

Afterwards, the contract should be revised to reflect the terms agreed upon during the discussion. In fact, many contracts include blanks for exceptions and language within the contract that states that waivers apply except for those listed exceptions, Harley said.

“Taking an hour up front to review a contract can save a ton of money down the line,” Harley said.

Disclaimer: This article includes tips oh making HVAC contractor bids on medical facilities and hospitals. It is not intended to provide legal  advice. Please consult with an attorney in your jurisdiction with specific legal questions associated with  making  such bids.

Audrey Henderson

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