www . refrigerationandaircon . co . za RACA Journal I October 2023 7
Associations
MONEY AND ETHICS : EXPLORING THE ETHICAL STANDPOINT OF THE HVAC INDUSTRY ( PART 2 )
Written by Eamonn Ryan
On 5 June , Timothy G . Wentz , PE , HBDP | Fellow / Presidential Member ASHRAE , gave the second of a series of three presentations over three weeks to the South African Chapter of ASHRAE .
… continued from part 1 .
The second was on the topic of Money and ethics : exploring the ethical standpoint of the HVAC industry hosted by the ASHRAE Society Chapter Technology Transfer Committee ( CTTC ). The following is a relatively complete review of that presentation edited by Eamonn Ryan , with lecture three being covered in subsequent issues of RACA Journal . Due to the importance of this lecture and its length , it is split into parts 1 and 2 , with part 1 having been published in RACA August issue .
To navigate scope games effectively , creative contract negotiation plays a vital role . Do not sign away your rights or overlook the issues at hand . When faced with an owner who refuses to pay for unforeseen conditions , engaging in a constructive dialogue becomes crucial . Explain the potential consequences , such as contractors and engineers factoring in additional costs to account for these uncertainties . Most owners would prefer to pay for actual unforeseen conditions rather than paying for potential ones that may never materialise . By clarifying and refining the scope in meticulous detail , engineers , contractors , and manufacturers ' representatives can minimise disputes and ensure a clear understanding on both sides .
However , if all else fails , and the situation calls for it , one must consider adjusting the price or margin accordingly . It is important to approach this decision with careful analysis and consideration , as relying on a barrage of change orders can strain relationships and have negative consequences throughout the industry .
Navigating scope games requires diligence , transparency , and a commitment to ethical conduct . By actively engaging in clear communication , thorough contract review , and fair negotiations , we can mitigate scope-related challenges and foster a healthier industry environment for all parties involved .
In the world of construction contracts , there are often decisions to be made that can have significant consequences for all parties involved . It ' s like having a devil on one shoulder and an angel on the other , each whispering their own advice . One strategy that is often overlooked , but can be crucial , is the concept of ‘ run like hell ’. Sometimes , the risks associated with a particular job are so high
that it ' s better to run away and not bid on or enter into a contract with that owner .
Cutting corners is another approach that some may consider , but it rarely benefits anyone , including ourselves . A study conducted by Lawrence Berkeley National Laboratory revealed that out of 60 buildings examined , 15 % had missing equipment
ASHRAE that was never included in the plans and specifications . Some individuals may view this as a margin , but it ultimately tarnishes the reputation of everyone involved , causing harm to owners , engineers , contractors , and the industry as a whole . It ' s clear that such strategies lack a strong ethical foundation .
Payment games are a prevalent issue in the construction industry . The standard practice is to work for 30 days and submit an invoice , with a 30-day window for payment . This means that before engaging in a project , it ' s crucial to ensure there is 60 days ' worth of cash flow available . However , two critical questions remain :
• Will I get paid in full when I submit the invoice ?
• When will I receive payment ?
These questions weigh heavily , particularly for small family-owned businesses , where cash flow is essential for meeting regular obligations . Payment in full can sometimes be compromised by factors such as retainage or holdback , additional bonds for defective work , or general contractors withholding money due to incomplete or faulty work . These deductions can significantly impact the amount received , reducing it from the expected 95 % to as low as 70 % or 75 %. Furthermore , the timing of payment is an ongoing problem worldwide . Some contractors may experience delays of 60 or even 90 days before receiving payment . Addressing these payment-related issues requires careful examination of the contract , particularly the clauses related to payments .
Timothy G . Wentz , PE , HBDP | Fellow / Presidential Member ASHRAE
www . refrigerationandaircon . co . za RACA Journal I October 2023 7