Insolvency is the most common cause of claims under Subcontractor Default Insurance (SDI), but the collective cost of claims for rework arising from substandard installations is greater. Depending on the policy, such claims can be made up to ten years after substantial completion, when a latent defect or warranty issue arises and the subcontractor won’t or cannot make good. That makes SDI underwriters acutely sensitive to General Contractors’ Quality Management (QM) programs.
QM should originate at the highest possible level of a project, ideally with the owners or executive. It requires evaluation of each subcontractor’s completed work through inspections and testing against standards, and imposes necessary corrective actions.
The substance of a contractor’s QM program should be set out in a comprehensive Quality Management Plan which includes:
- statements of mission, accountability, and philosophy
- an outline of field processes utilizing mockups, sample construction assemblies, and material verification procedures
- descriptions of testing and inspection regimes, including for third parties, and
- details of close-out and turnover procedures.
The following elements should be incorporated into the Quality Management Plan:
Accountability: The plan must identify a sponsor of executive management or ownership level who is ultimately responsible for QM. It should detail requirements and methods, and include forms to be used, a plan and process for third-party inspections, and provisions for project-specific modifications. QM roles and responsibilities should be established during job planning.
Philosophy: A contractor’s QM philosophy describes their attitude toward striving for quality construction, and outlines behaviors which exemplify a “quality attitude”. The best philosophies encompass budgeting for quality, a dedicated quality director, training, a lessons-learned process, and the priority of quality over production.
Monitoring: Through a process involving peer reviews, third-party consultations, and key subcontractors during job planning, all documents should be reviewed thoroughly for constructability, and to plan testing and inspection. Alongside scheduled subcontractor meetings, field processes should include monitoring of daily production to identify and record any non-conformance and its subsequent correction.
Remediation: It is imperative that non-conforming work or materials be promptly rejected, and that finished work is protected from damage.
Mockups: Mockups can be used as a quality reference, and may include full-unit fit-and-finish models for residential construction, exterior wall mockups, and rated assemblies. Their construction should engage of the craftspeople who will complete the work, and all project stakeholders should approve them.
Offsite: Site visits to offsite fabricators are beneficial, as are “first-work” inspections at the outset of all work. Certifications or commissioning may be required for certain scopes of work, and manufacturer representation during installations is always encouraged.
Water: Comprehensive, documented water intrusion protocols and mitigation procedures will cover watertight vapor barriers, subsurface drainage systems, damp-proofing, window, roof, and gutter flashings, and site drainage issues.
Additional best practices include:
- mitigation protocols for vapor, vibration, and sound attenuation
- wall & floor sound deadening systems
- isolation of plumbing and mechanical systems, and
- mold prevention and mitigation.
Digital documentation of all testing and inspections, including photos and as-built drawing updates, should be backed up and stored in a master file. A thorough QM plan will also include warranty-period provisions describing the contractor’s approach to complaints, and timeframes for their resolution. It will express willingness to correct all defects satisfactorily. The best QM programs will facilitate and manage the collection of data, identify discrepancies and nonconforming work, and enhance the contractor’s project delivery.
The overall purpose of QM planning is to get it right the first time. The benefits are multiple, including lower total costs, higher customer satisfaction, and the best-possible deal on Subcontractor Default Insurance.