A Case for Soil Modification on Earth Day

Making a Case for Modification Contingency on Earth Day

Undercuts are Bad for Everything Except Hair

Google the word “undercut”.  You’ll find stories on companies undercutting one another to grab more market share, or corrupt politicians undercutting one another to grab more influence.  Either way you slice it, you can’t undercut something in a nice way.  Believe me, I’ve monitored the word “undercut” on my Google Alerts for the better part of a year, and I haven’t found the word to describe anything but people and companies acting shady.

Why do we Undercut?

As contractors, the idea that we do not entirely know the sub-surface of our projects is scary. Even if you have soil borings, those borings are only representative of their exact location.  In a competitive bid climate we need to keep prices low, so we bid the best case scenario and throw in a little insurance policy called an undercut contingency.  Undercuts are expensive, and place a heavy burden on the environment.

These contingencies typically include enough dollars to cover removing and replacing a small amount of the entire buildable area, or worse, they provide a unit price that is open ended.  When bad soils are encountered, the contingencies are quickly exhausted or begin to escalate out of control and lead us to a difficult conversation with an unhappy owner.

Is There Another Way?

On Earth Day, let’s consider there could be better ways.  Better ways for our customers and for our planet.

Try a site guarantee and provide a lump sum price for site development that includes a calculated risk to modify poor soils when encountered.  The owner gets a guaranteed price, and you, the experienced contractor, takes the risk.  When things work out you get a little reward for your risk, and your customer sleeps easy knowing their project budget is safe.

If you don’t want to take all the risk, consider a modification contingency.  Rather than funding undercuts for a small portion of the project, consider earmarking the same dollars for modifying one lift of the entire buildable area.  Typically, the cost would be comparable to undercutting 25% of the same area, and if needed, leave the owner with a stronger more consistent subgrade.  In this scenario, there is little risk of the owner exhausting the modification contingency and running over budget.

Another solution, a win-win, for both the owner and the contractor is for the contractor to buy the site with a modification contingency credit.  With this method the contractor buy’s the site but offers a credit for modification not performed.  Less risk for the contractor, but less reward as well.

On Earth Day, make it a point to stop undercutting your customers and our planet.  Do the right thing for your projects and start including modification contingencies in your contracts.

Earth Day

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Written By:

MikeBlog