Septic systems: Protect yourself during the bidding phase

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To be a successful contractor, you must protect yourself during the bidding phase. This can be done in many ways. One of the most important methods requires you to put everything in writing. Verbal statements rarely hold water in court. You need written documentation in order to have solid footing in a legal battle.

You’ve seen some of the many risks associated with wells and septic systems. When you assume responsibility for installing these systems, you are putting yourself at risk. This responsibility, however, is part of your job. But, the risk factor can be kept in check with a little thought and preparation on your part.

What type of proposal do you use? Is it one of those generic, fill-in-the-blank forms that you order from a catalog? This type of proposal and contract is used by a lot of contractors. Just because the forms are used in large numbers doesn’t mean that they are good. You should have your attorney draft forms for you to use.

Even the best forms in the world are not much good unless you use them. How many times have you given customers a quote over the phone? Do you have any record of your conversation? I doubt it, and even if you did, it probably wouldn’t be enough to save you in a court battle. Your bids should be given in writing. If you have to give a price over the phone, follow it up with a written proposal.

Confusion is one of the biggest reasons why contractors get into arguments with customers. If your intentions are spelled out in black and white, there is much less room for confusion to occur. Until you and your customer understand each other’s plans completely, there is unneeded risk of a conflict.

As a builder, you have to take responsibility for a lot of various building trades. You are probably more familiar with some of the trades than you are with others. This is only natural. Regardless of how much you know, or think you know, about a trade other than your own, you can’t afford to make representations without documentation. And, you might not be able to create solid documentation without some help from experts in the fields of work that you are dealing with at the time.

Look at the last contract you signed with your well driller. Pay particular attention to the disclaimers. Now, do the same thing with the last contract you signed with your septic installer. Compare those contracts with the proposals you presented to your customers for those jobs. Does your bid package detail the same disclaimers found in the proposals from your subcontractors? If it doesn’t, you are assuming too much risk.

Many contractors take a casual approach when bidding jobs. I’ve seen bids for major work come into my office with only a couple of paragraphs describing the work and terms being offered. This not only makes for a poor proposal in terms of sales appeal, it leaves a lot of room for confusion and confrontation.

Your formal quote to a customer is a serious communication. If you leave details out of your quote that are later put into a contract, you might run into resistance when you ask your customer to sign your contract. I believe the quote should provide complete details of every offer you are making. If there are exclusions, they should be spelled out in the quote. Any substitution of materials should also be put in clear language. Your quote is your sales presentation, so it should be accurate and enticing.

As a general contractor or builder, I’m sure that you’ve received numerous quotes and estimates from subcontractors. You must have seen some pretty skimpy ones from time to time. My experience has shown that a majority of bids are poorly prepared. Customers take ac curacy, neatness, and thoroughness into consideration when trying to decide who gets their contract. But, getting the job is not your only concern.

Once you have won a bid, you want to make money and keep your customer happy. Detailed quotes and contracts are a good step in reaching your goal. If pertinent details are omitted from either a quote or a contract, you might very well have a disgruntled customer On OUF hands. It’s possible that you might even be dragged into court. Here’s an example: One of my carpentry subcontractors was telling me about a house he recently built for a customer. As part of the contractor’s contract, he was supposed to have his site subcontractor provide a certain amount of loam for a job. During the construction process, the site contractor and the owner of the property had a discussion. They agreed jointly to use sand in place of loam for much of the fill work, because sand would be cheaper. A written change order was not used to document this new agreement. The site contractor performed the services as agreed to by the homeowner.

After the house was built, the homeowner refused to pay the subcontractor for some of the work that had been done. One of the phases being contested was the site work. The owner wouldn’t pay up, so the site contractor took him to court. As the general contractor, my friend was also required to make an appearance in court.

The court hearing didn’t last very long. After some verbal ex changes and accusations, the judge referred to the only written agreement between the parties. The contract called for a certain amount of loam. When the judge asked if the described amount of loam had been installed, the site contractor had to admit that it had not. He tried to qualify his answer by telling the court about the verbal agreement to substitute sand for a portion of the loam, but the judge wouldn’t hear it. Based on the written agreement, the court ruled in favor of the homeowner.

If everything I was told was true, and I believe it was, the site contractor got a raw deal. I can’t fault the judge for going by the only real evidence available, but the homeowner took advantage of the site contractor. If you want to avoid this type of problem, make sure that all of your agreements are in writing. This pertains to all aspects of your deal, including any exclusions.

Disclosure

Every well proposal I’ve seen has included some form of disclosure. One statement commonly found in well proposals usually reads some thing like this: “the driller will not guarantee the quantity or quality of the water produced by a well.” This is only one simple sentence in the quote or contract, but it can have a huge impact. Let’s talk about this for a few minutes.

Assume that you are building a new house for a young couple. The house is in a rural location and requires both a well and septic system. As the builder, you are responsible for all aspects of the job, including the well. Further assume that your agreement with the well driller does contain some version of the standard disclosure about quantity and quality. Now let’s say that the well driller hits water and everything is fine until about six months later when the dry season rolls around.

One day the homeowner calls and complains that the house you built has no water. After troubleshooting the situation, you discover that the well has run dry. As the builder, you have to warranty the house for one year. After only six months, the well has dried up. What’s going to happen?

The homeowner is probably going to expect you to dig or drill a deeper well. If you ask your well driller to do the job as warranty work, you are probably going to be told to forget it. The driller can simply pro duce the contract you signed, the one with the innocent little sentence in it, and prove that the quantity of water was not guaranteed.

Where does this leave you? Between a rock and a hard place. You’ve got to give the customer a better well, and your well driller doesn’t have to do any of the work as warranty work. Under the circumstances, you are going to have to pay for the new well out of your own pocket.

You could probably avoid this situation by putting the well con tractor’s disclosure into your contract with the homeowner. If the homeowner was getting the same deal as you were, and the facts were set down in writing and signed, you’d be in a much better position to avoid paying for a new well.

The use of disclosures and liability waivers can go a long way to wards protecting you and your business. If you have specific terms written clearly into any agreement you make with a customer, you are much less likely to get into arguments with your customers. This is not only good protection, but good public relations as well.

Danger spots

What are some of the danger spots that should make you extra cautious when bidding jobs with wells and septic systems? Many circum stances can put you at risk. Some of them, but not all, can be avoided. With the use of disclosures, exclusions, and liability waivers, you can put up a pretty good shield around you and your business. To expand on this, let’s look at some of the specific areas of concern. Let’s start with septic systems.

Septic systems

Septic systems are fairly simple to install. Yet, complications can get in the way. There can be a great deal of risk when bidding jobs requiring private sewage systems. To help protect yourself and your company, you need to address some of these key issues in your proposals and contracts.

Septic permits:

Septic permits are usually required before starting the installation of a septic system. Normally, this is not a problem, but it could become one. When bidding a job, you should make your price and work subject to the issuance of a septic permit. Then, if for any reason, a permit can't be obtained, you have an out.

Having a request for a septic permit denied is not common, but it can occur. It could be due to poor soil conditions, but there is another reason why the request might be turned down. In some areas, as public sewer lines are extended, they sometimes end up located near homes with septic systems. Assuming a building lot is large enough to accommodate a septic system, a property owner might prefer having a private system. This eliminates the tap fee charged by the sewer authorities to connect to the public sewer. It also does away with monthly usage fees for the public sewer. However, the jurisdiction is suing permits might not allow the installation of a private system when a public sewer is available. This is a common practice. You could walk into a nightmare if your quotes and contracts don’t cover this possibility.

A specific design:

When you write up a quote or contract to install a septic system, you should name a specific type of design. If your quote is based on a pipe-and-gravel system, say so in your quote. Reference the septic de sign drawing that you used to calculate your pricing. If for some reason the specified design isn’t approved, you’re at much less risk. An open clause that simply states that you are going to install a septic system for a certain price is much more dangerous. The more specific you are in your language, the less likely you are to have a problem.

Clearing:

An area must often be cleared in order to install a septic field. Who’s responsible for this work? If your proposal says you are to install a septic system and does not exclude clearing, it could (and probably should) be interpreted that you are going to take care of all aspects of the job, including clearing.

If you are going to clear land for a septic system, detail in your proposal the work that's to he done. How large an area is to he cleared? The answer to this question should be a part of your proposal. Are you going to remove stumps, rocks, and other left-over debris? If not, exclude this work. Otherwise, stipulate what you plan to do with the debris. Make all of your work description very clear.

Access:

Access to a septic site can be a problem. You might have to cut down trees to get trucks and equipment to the site. If your customer is not aware that trees outside of the septic area are going to be removed, you might have an angry customer on your hands. Indeed, you could be in big trouble if the customer comes out to inspect your progress and then is shocked to discover you removed some favorite trees without giving any notice. If an access path must be made, be specific about where it's going and what is to be done.

I’ve had occasions when the only practical way to get equipment to a septic site was to cross over the land of adjoining owners. Don’t put equipment on adjoining property until you have written permission. If your customer tells you that the neighbors won’t mind if you use their driveway or land for access, don’t believe it until you have it in writing.

Rock:

Rock can make the normal installation of a septic system impossible. You should address this issue, as well as other underground obstacles, in your proposal and contract. I’ll leave it up to you and your lawyer to work out the exact wording, but make sure that you have some type of protection in the event that unseen obstacles prevent you from doing the work you are proposing at the price you are quoting.

Materials:

The availability and price of materials is another issue that you might want to cover in your protective paperwork. I don’t believe this is a big issue with septic systems, but it wouldn’t hurt to have some type of clause in your agreements to deal with rising prices and materials that are not readily available.

The sewer:

Who is going to run the sewer from the house to the septic tank? Septic installers often run the sewer to within 5 feet of the house foundation. From there, a plumber takes over. This, however, is not always the case. Sometimes plumbers do the sewers. If you are bidding all phases of a job, this is not such a big deal. However, if you are bid ding the septic work and not the plumbing work, a question as to who is responsible for the sewer could become an issue. Digging the trench for a sewer can take some time. Also, the labor and materials needed to install the pipe must be considered. Keep the sewer installation in mind when you are bidding your next job.

Landscaping:

Are you going to landscape the septic area? Who does the finish grade work? Who is going to seed and straw the area? These questions should be answered in your proposal and contract. Even the type of dirt used to cover the excavated site should be detailed.

Perimeter trees:

Perimeter trees can interfere with a septic system. If trees are left standing too close to a drain field, their roots might invade the field. If you feel that perimeter trees should be taken down, stress your point in your proposal. Owners who prohibit you from following your instincts on this issue should be asked to sign a liability waiver that releases you from any damage done by the perimeter trees.

Wells

Wells, like septic systems, can present bidding contractors with some problems. Certain clauses often found in well-drilling contracts can set a builder up for trouble. If you don’t provide some protection for yourself in the contracts, you could lose thousands of dollars. A lot of houses depend on wells for potable water, so you better be prepared to bid on those jobs. Let me give you a few pointers on what to look out for.

By the job:

Are you paying your well driller by the job or by the foot? Both payment methods are usually available. Depending upon circumstances, and the payment method you choose, there can be dramatic differences in the overall cost of producing a well. Since this is an important subject, let me give you a little background on how I worked with wells in the past.

The well drillers I work with always give me two payment options. I can pay so much for each foot of well depth, or I can pay a flat rate that doesn’t change no matter how deep the well. The flat rate price also guarantees me water, so if a driller hits a dry hole, I’m not paying to have the second well sunk. Under these conditions, what way would you go?

The flat-rate price for a well is usually pretty steep. Well drillers generally look at historical data f the existing wells in the area. They calculate a worst-case scenario and base their prices on that in formation. The per-foot price often works out to be cheaper, some times as much as $1000, but there is additional risk involved for the person paying the bill.

In the past, I’ve always gambled on my wells. Even though the guaranteed deals are safe, I wanted to try and save the extra money if I could. Like the well drillers, I researched the area well depths. Sometimes I would talk to owners of adjoining properties to find out the depth of their wells. This gave me a good idea, but no guarantee, of how deep my wells would have to be. Using this strategy, I’ve saved lots of money over the years. I could have gotten caught on some, and had to pay for extra-deep wells or even a dry hole, but I never have.

When I built my most recent personal home, I opted for a guar anteed price. It was the first time in all of my years as builder that I ever went with a flat-rate fee. And, am I ever glad that I did.

Most wells in my area are between 250 and 300 feet deep. If I were estimating my costs on a per-foot basis, I would have used the 300-foot figure. I have river frontage on my land, and I thought the water vein might be even closer. My neighbors live about one-half a mile away, so their wells are not a great barometer to use, but they are better than nothing. I figured my well would not be deeper than 300 feet and might be as shallow as 200 feet. Yet, something gnawed at me about this well. For whatever reason, I decided to go with a fixed price. My well wound up being 404 feet deep. Even the driller was shocked. In this case, the driller lost and I won. If I’d gone on a per-foot price, the cost would have been well above my budgeted amount.

Which pricing method should you use? If you want to be safe, go with the guaranteed price. It’s up to you to decide which way to go, but you should put something in your proposal to identify the conditions you are giving your customer. You might say that the cost of the well is going to be a specific amount and that the amount is guaranteed. The price might scare your customers, but at least they can rest easy knowing there won’t be any surprises.

As another option, you could give the customer a price based on so much per foot for an estimated well depth, say 250 feet. If the actual depth turns out to be less, you credit the difference to the customer. Should the depth be more, the customer pays the extra cost. This approach might frighten your customers more than the higher fixed price.

As a matter of practice, I give my customers the same option that the well drillers give me. I let them choose between the per-foot and the fixed-price method. Once they have made a decision, I memorialize it in our agreement. This method has always worked well for me.

I’ve been lucky with my wells. Few have run deeper than expected, and I’ve never run up against a dry hole. Other contractors I know have not been so fortunate. It’s no bargain when you pay for two or three wells in order to get one, so be careful on this issue.

Drilled or dug:

Is the well you are providing to be drilled or dug? You could simply put in your agreement that you are providing a well. Most customers wouldn’t question this approach. However, after the well is installed, you could get some grief if you installed a dug well and the customer thought a drilled well was being installed. You should clearly identify the type of well your price includes.

Dug wells are cheaper than drilled wells, but they sometimes run dry. Drilled wells rarely run out of water because of their extreme depth. If your customer is looking to cut corners and the local ground conditions allow it, a dug well and a jet pump are the least expensive way to go while still maintaining a viable hope for a steady water supply.

Driven wells, in my opinion, should not be considered a worth while option for full-time homes. These little wells can produce good water, but the quantity is limited. While a driven well makes sense for a week-end cottage or fishing camp, I don’t feel it's suitable for the demands of full-time use.

Drilled wells are the most expensive to install, but they are also the most dependable. A submersible pump and a drilled well are the way to go in my opinion. In the several houses I’ve owned, I’ve had experience with dug wells and drilled wells. In my opinion, the drilled well can’t be beat.

Well preference should be left to the customer’s discretion. How ever, in your paperwork, you need to make it clear what type of well is wanted, what your prices are based on, and how problems that might arise are going to be handled.

Quantity:

Will your customer be guaranteed a certain quantity of water from a well? Your well driller probably won’t make this commitment, so you shouldn’t either. Every driller’s proposal I’ve seen excludes any assurance of water quantity. This is a touchy subject, but it's one you should deal with before a problem pops up. If your customer com plains about a lack of water quantity, you are unlikely to have anywhere to turn. Think about this.

How can you get your customer to accept the fact that you can’t guarantee a quantity of water. There is a method that I’ve used for years that has never let me down. Get several quotes from well drillers. If you’re not afraid to show your customers the prices that you are paying, show them the actual quotes. In my experience, every quote has stipulated that the well company would not be responsible for quantity. Once you prove to the customer that it's an industry standard to exclude quantity, you should have made your point. If not, get more estimates. Once you have collected a handful of quotes, all of them excluding water quantity, your customer should give in.

Flow rate:

I’ve had customers demand that I guarantee them a minimum flow rate of recovery for their wells. I’ve never dealt with a driller who was willing to do this. Therefore, I’ve never done it. This problem is similar to the issue of quantity. If you can’t find a driller who is going to give you a guarantee, you shouldn’t offer such a commitment to a customer. Even if I found a driller who would make such a claim, I don’t think I would be comfortable doing so.

Quality:

Water quality is another issue that most well drillers can’t guarantee. The attitude of most well drillers is such that they feel their job is done once water is hit. Most drillers go deep enough to provide a reasonable rate of recovery, but they won’t refund your money if the water smells like rotten eggs. Water with a high sulfur content stinks something terrible, and some wells are full of this disgusting water.

Sulfur is not the only disagreeable element found in water. Iron can be a big problem. It stains plumbing fixtures and leaves a black build-up in toilet tanks, water heaters, storage tanks, and so forth. Hard water is common in some areas. Soap does not perform well when mixed with hard water, making it difficult to wash dishes, clothes, and hair. Acid can be so dominant in drinking water that it eats holes in copper pipes and causes upset stomachs in some people. Other minerals, too, can cause homeowners to be disappointed with new wells.

The types of water conditions we are discussing don’t usually make water unsafe to drink. But, your customers won’t be happy smelling the odor of rotten eggs every time they drink a glass of water. For this reason, you need to cover the bases on water quality in your quotes and contracts. Again, I would use the quotes of well drillers as evidence that a guarantee of quality just isn’t standard procedure within the industry.

Location:

Location might be an issue that comes to haunt you when installing a well. If the only place to put a well is smack dab in someone’s front lawn, you might have a problem. Dug wells have a large diameter and usually consist of a concrete casing and top. It’s a lawn ornament that won’t get a home on the cover of a fashionable magazine. Drilled wells are not as conspicuous, but they are still not a thing of beauty. The six-inch steel casing of a drilled well is easier to camouflage than the three-foot diameter of a dug well, but you’d better clear the location with your customer before you make a firm commitment.

I suggest that you determine the proposed well location during your site visit. Have the customer agree to the location, then identify some landmarks and take measurements to detail the location on pa per. Also, include some option for yourself in case the proposed location proves unsuitable.

Access:

Well-drilling rigs are big. It takes a lot of room to move them around. Tree limbs or entire trees might have to be removed to allow access for these big rigs. Make sure you talk this over with your customers in advance. Have the customers agree to whatever is needed to get a well truck in and out.

Permission:

Getting permission from a governing body to install a well is normally not a big deal. However, you could run into a problem similar to the one we talked about with septic systems. If a public water supply is available, you might be required to hook up to it. You seldom run into this type of a problem, but don’t assume that it couldn’t come up.

The trench:

Who is going to be responsible for the trench that runs from the well to the house? Well drillers sometimes take care of the trench if they are installing the pump system, but they don’t normally provide a trench in the drilling price. If you have full responsibility for all aspects and costs of building a home, you must have the trench dug. That means there is no need to bother the customer with questions about who is expected to do the work. However, if you are acting as the general contractor on only parts of the construction process, the trench may be an expensive issue to have to settle at some point.

The pump system:

The pump system falls into a category similar to the trench. If you’re taking care of the whole job, the customer doesn’t have to know if the pump system is to be installed by a plumber or a well driller. But, if your job is segmented, you might have to determine who is assuming responsibility for the pump system. This work involves a good deal of material and labor, so it's not a cheap place to make a mistake.

A spec sheet:

A detailed spec sheet should accompany all of your proposals and contracts. This is just good business for any contractor. Many of the risk elements that we have discussed can be covered in the spec sheet. For example, in the specifications for a well system, you should list all of the types of materials that are to be used. The list would start with the type of well being priced. The type of casing and grouting should also be included. You would then note the brand and size of the pump to be supplied. Reference should be made to the brand, type, and capacity of the pressure tank. The more details you put on your specifications sheet, the better.

As a part of my company policy, I require customers to sign more than just my contracts. I ask them to sign the specifications sheets and any blueprints or drawings that are used. This eliminates any possibility of the customer coming back and claiming that they never saw the documents. There have been occasions when this practice saved me a lot of trouble. If a customer starts complaining about something that's covered in the documents, a quick reminder of their signatures settles them down fast.

What you don’t know

What you don’t know can definitely hurt you when bidding jobs. If you are not familiar with septic systems and wells, spend some time studying them. You have to be able to talk intelligently about these subjects even though you are not expected to be an expert on the topic. If a customer asks you the difference between a one-pipe jet pump and a two-pipe jet pump, you had better have a good answer. What would you say if a customer wanted your advice on whether to use a jet pump or a submersible pump? Would you recommend using a garbage disposer with a septic tank? You should be prepared to answer such questions with solid answers.

A lot of builders don’t know much about wells or septic systems. This is understandable, hut not acceptable. You owe it to your customers and yourself to become educated on the services you offer. Failure to do this can hurt your reputation and your bank account. Since you are reading this guide, you are obviously interested in learning more about rural water and waste systems. I applaud you for this.

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Updated: Sunday, April 4, 2010 11:40