There is no sure-fire way to eliminate risks associated with VE substitutions, but much can be done to manage the VE process to your advantage. Consider the following suggestions.
1. Talk it up
The more everyone understands the advantages and disadvantages of VE substitutions, the more likely there will be a better outcome. A frank discussion with the owner regarding the value that is received for the investment is always in order. Moreover, the topic should always be included in the pre-construction conference agenda. It may not alter events during construction, but keeping it as a primary agenda item emphasizes its importance. In addition, if you are maintaining strict enforcement of the requirements in the specifications, it is good to establish your position early.
2. Use a Substitution Request Form
One way to help control the substitution process is available from the Construction Specifications Institute (CSI). When VE initially gained popularity in the 1980’s, lump sum contracts prevailed and it was used prior to contract award. The CSI published the Substitution Request Form 1.5C for use during the bid period. But with the proliferation of VE initiated by contractors after contract award, the CSI responded by publishing Substitution Request Form 13.1A for use after the bidding/negotiation stage.
Form 13.1A goes into detail regarding the documentation required of the contractor when requesting a substitution. If all information required is submitted, the architect is better assisted in its evaluation of the proposed substitution. The form also contains an encompassing certification by the submitting party which includes payment for A/E redesign and detailing if required for its use.
The form consists of two pages, and more information is required since its first publication. If information required of the contractor by the form is fully enforced, it can provide some protection against the use of products of lower quality and unproven performance.
While the CSI Substitution Request Form gathers useful information for substitution review, the risks that can arise from the use of unfamiliar or unproven products reviewed and approved in very short timeframe remain, especially if a change order is executed to add the substitution to the work scope. While lower cost substitutions are worthy of a deductive change order, if the original products are replaced by a change order, the design professional can assume increased risks. It is therefore worth consideration to not change the contract documents. This is addressed in more detail below.
The Architect’s Handbook of Professional Practice, 14th Edition, “Chapter 14.2, Maintaining Design Quality,” contains a sample Substitution Request Form. This form contains a “Manufacturer’s Certification of Equal Quality,” and although it is limited compared to the CSI form, it can be useful as a template for developing your own version of the form.
The Handbook chapter also suggests helpful steps to follow in the sections, “Controlling Substitutions,” and, “When the Owner Overrides Recommendations,” which suggests an indemnity from the owner should the architect not agree with the owner’s acceptance.
3. Consider not revising the contract documents
State licensing statutes require you to be responsible for construction documents issued under your seal and signature. If you change your documents to include the VE/Substitutions, you will be responsible as if you originally specified and detailed them. If it is an unfamiliar product that has a weak performance history, the risk you assume is far beyond that which you would otherwise have. Therefore, you should consider not changing your documents to incorporate the VE/Substitutions.
This can be done by approaching substitutions for what they are, a product substituted for that originally specified. The contractor is given conditional approval to use the product as long as it performs equal to or better than that originally specified. This way the substituted work remains as a contractor performance requirement, and since it is not incorporated into the drawings, it becomes “accepted nonconforming work.” Both the architect and the owner are allowed to accept nonconforming work if it meets the intent of the contract documents. These conditions must be established in Division 1 and the Supplementary General Conditions, and discussion with the owner up front is required to help understand the risk involved and the best way to manage it.