ASBESTOS CONTAMINATION PLACES PROJECT BUDGET AT RISK
Asbestos contamination was discovered in the crawl space of a renovation project during construction. The contamination was borne from piping that was thought to have been free of hazardous materials. In fact, most of the piping in the crawl space was insulated with asbestos containing materials. In addition to this changed condition on the piping, the hazardous asbestos insulation had been disintegrating and contaminating crawlspace soil. The total area of potential contamination was approx. 33,000 sf of crawlspace. The General Contractor presented a proposal of $418,000, which was much higher than originally expected. Unless this material was removed, the renovation project’s completion was in jeopardy…but so was its budget. The client was willing to pay a “fair and reasonable” price for this work, but first wanted reassurances from an independent cost-estimator as to what that amount should be.
Upon studying the General Contractor’s proposal, it became clear that there was an underlying concern of how productivity working in a tight crawlspace (3’ to 4’ heights) would be impacted. They proposed extraordinarily large crew sizes and quantities of equipment, both of which for durations of time seemed unreasonable. But were these assumptions unreasonable…how much did the General Contractor know/understand per the Contract Documents and this changed condition? How was this knowledge impacting their proposed costs?
In construction change order cost-estimating we start with learning what changed in the Contract; comparing the Contract with Change Documents is a critical first step. This Project’s Contract Documents were voluminous, consisting of the typical drawings and specification sets, but also included multiple reference (as-built) drawings; this was a major renovation project after all. The Change Documents were based on a post-bid Asbestos Procedure 5 work plan, which the General Contractor’s team used to frame their proposal’s cost. Prufen proceeded with comparing the Contract and Change documents, ultimately discussing its findings with the Owner’s onsite CM team.
Prufen observed that the General Contractor’s proposal had not only included the removal of the asbestos contaminated piping insulation and soil, but the piping itself. The Contract Documents had called for the removal of this piping all along, and it would be necessary to extract this labor & disposal cost from their change order proposal. The General Contractor had also baked-in a lot of contingencies within their proposal’s quantities (labor hours, disposal bins) and unit rates. Prufen’s independent cost estimate, accounting for said crawlspace restrictions, removal only of asbestos (and not piping itself), and quantified size/lengths of piping was significantly less. It would be important to shed light on actual labor production, as well as disposal quantities and cost to ensure the General Contractor was “fairly and reasonably” compensated for their work. Prufen proceeded to leverage its quantity takeoff, daily inspection reports by Owner, disposal invoices by General Contractor, applicable weekly meeting minutes, and the Contract’s General Conditions for change work to formulate a fair and reasonable price.
Prufen worked directly with both the Owner’s and General Contractor’s team to successfully settle this change order at $320,000. This was a 23.50% decrease from its original $418,000 price and, more importantly, considered “fair and reasonable” by all parties…a Win-Win.