Who pays for permits and inspections?

Comments

6 comments

  • Avatar
    David Kaplan

    I think the important thing is to note the wording of the question, which starts, "Per AIA A201......."  If you have found that A201 states that the Contractor is responsible for the payments, then that is the answer.  Ignore the fact that yes, in the end, the GC will eventually get reimbursed when all is said and done.  Just answer the question as they ask it - what does the Contract say?  Do that on all questions and you will be gold!  

    0
    Comment actions Permalink
  • Avatar
    Pierre Antounian

    I agree with David!

    0
    Comment actions Permalink
  • Avatar
    Gang Chen (Edited )

    Per A201, the contractor shall secure and pay for building permit and other permits,  fees, licenses, and inspections by government agencies. See A201, General Conditions of the Contract for Construction, sections 2.3.1 and 3.7.1.

    The owner will not reimburse for the permits,  fees, licenses, and inspections unless A201 and the contract documents have been modified for a specific project  to specifically state the owner is paying for them.

    You cannot say ultimately they will come out of the owner’s pocket, then they are eventually the owner’s responsibilities. Otherwise, everything is the owner’s responsibilities since the entire project is paid for by the owner, including the contractor’s entire bid.

    Gang Chen, Author, Architect, LEED AP BD+C (GreenExamEducation.com)

    0
    Comment actions Permalink
  • Avatar
    Megan Hoover

    Thank you for your comment Gang, but I don't agree.  If you think surface level, which you need to for these tests, per the statement in A201 the contractor does pay these fees.  But in reality, if A201 states this, then the contractor will include these costs in their bid and ultimately the owner will reimburse them. The owner is ultimately responsible for these costs because they are purchasing these services from the contractor.  

    I've never heard of a contract stating that a contractor won't be reimbursed for a certain service.  Otherwise there is no incentive for the contractor to do the work.  

    But in the case of these tests, if the question states what a specific contract requires then that is the answer despite the reality of the situation.  Similar to what David said.

    Megan

    0
    Comment actions Permalink
  • Avatar
    Gang Chen (Edited )

    You are right, the ARE exams are different from real practice. In real practice, we often modify A201 and exclude the building permit and other permits,  fees, licenses, and inspections by government agencies from the base bid and make them part of the reimbursables.

    Going back to the question. We are talking about two separate things here:

    Base bid and reimbursables.

    Per A201, the building permit and other permits,  fees, licenses, and inspections by government agencies are included as part of the base bid, and therefore are the contractor’s responsibilities. Owner will NOT reimburse the contractor for these costs. For example, if the base bid is 5 million dollars, and the owner will not pay the contractor a penny more to reimburse the contractor for these costs.

    On the other hand, there are other reimbursables that are NOT part of the base bid, like printing costs, etc. They can be paid for by the contractor and then get reimbursed by the owner.  Using the same example above, if the printing cost is 100k, then the owner will pay the contractor the base bid, PLUS the 100k reimbursables.

    Gang Chen, Author, Architect, LEED AP BD+C (GreenExamEducation.com)

    0
    Comment actions Permalink
  • Avatar
    Gang Chen (Edited )

    This is actually a very good question, and is very relevant to architectural practice.

    In every pre-bid meeting, the bidders always ask if the building permit and other permits,  fees, licenses, and inspections by government agencies are included as part of the base bid, and 90% of the times, we modify A201 and exclude them from the base bid because these costs stay the same no matter who wins the bid.

    Gang Chen, Author, Architect, LEED AP BD+C (GreenExamEducation.com)

    0
    Comment actions Permalink

Please sign in to leave a comment.

Powered by Zendesk