Reading an exclusions block

What it is

Every subcontract bid in commercial construction has the same shape. A number at the top, and at the bottom a block headed EXCLUSIONS — sometimes "Clarifications" or "Qualifications", which mean the same thing.

It is the subcontractor saying, in writing, what their number does not cover. It is not sharp practice; it is the only honest way to bid. A roofer cannot price the wall flashing without knowing what the wall is, so they exclude it and expect somebody else to carry it.

The block is usually eight to twenty lines, it is usually in smaller type than the number, and it is where an owner’s exposure lives. Most owners have never seen one, because it goes to the general contractor rather than to them.

The three kinds of exclusion

Boundary exclusions. "Excludes roof flashing." "Excludes blocking in walls." "Excludes final connections." These point at an adjacent trade, and they are where gaps come from. Read on their own they are unremarkable. Read against the adjacent bid they are either fine or they are a hole.

Condition exclusions. "Excludes concealed conditions." "Excludes any structure not shown on the drawings." "Excludes rock." These are the subcontractor refusing to price an unknown, which is reasonable. They are a signal that somebody should go and look before the contract is signed.

Commercial exclusions. "Excludes overtime." "Excludes bonds." "Excludes temporary heat." "Price valid 30 days." These are about terms rather than scope. They matter less for gaps and more for the schedule and the contract.

The first kind is the dangerous one, and it is the kind that looks most like housekeeping.

The twelve that appear on almost every job

Each of these shows up repeatedly, across trades, on most commercial projects. None of them is a red flag on its own. Each becomes a problem only when the trade on the other side excluded it too.

Cutting and patching. Fire-stopping of penetrations. Blocking in walls. Final connections to owner-furnished equipment. Temporary heat and protection. Concrete moisture testing. Flashing at a dissimilar material. Roof curbs and openings. Access control wiring and hardware. Painting of the trade’s own work. Removal of the trade’s own debris beyond the dumpster. Rebalancing of existing systems.

Take that list to whoever is levelling your bids and ask, for each one, which trade is carrying it. Twelve names. Any blank is a gap that is already in your project.

How to read two bids against each other

This is the whole technique and it takes about five minutes per boundary.

Take two adjacent trades — two trades whose work physically touches. Roofing and siding. Drywall and millwork. Electrical and mechanical. Concrete and steel.

Read the first bid’s exclusions and write down every line that points at the other trade. Then read the second bid’s exclusions and do the same.

Any scope that appears on both lists is unbought. Not disputed, not ambiguous — unbought. Two firms have each said, in writing, that it is not in their number, and both are telling the truth.

That is it. There is no sophistication to it beyond having the two documents on the same desk and the discipline to actually do it for every adjacent pair. The eight boundaries where this most reliably produces a hole are on the gap register.

What a good contractor does with what they find

Three things, in order of preference.

Assign it. Go back to one of the two subcontractors, agree the scope and the price, and put it in that subcontract. Cheapest, cleanest, and it happens before award while there is still competitive pressure.

Carry it as a stated allowance. Where the scope genuinely cannot be defined yet — because nobody has opened the wall — it goes into the budget as an allowance with its assumption written down, visible to the owner.

Tell the owner it is open. Where it is neither assignable nor estimable, say so. An owner who knows a boundary is unresolved can decide to spend money investigating it. An owner who does not know will find out at month seven.

The fourth option, which is the industry default, is to assume it will sort itself out. It does, at a price nobody competed for.

What this means when you compare contractors

Two proposals for the same building, eight per cent apart, are almost never eight per cent apart on quality. They are apart on what was bought.

The lower one may have had thinner coverage, carried fewer allowances, stated no contingency, or simply not levelled the scopes — in which case the gaps are still in the project, unpriced, waiting. That is not a cheaper building. It is the same building with the risk moved onto the owner, and it will arrive as change orders with a sole-source price on each one.

So the useful comparison is not the bottom line. It is: the coverage count per trade, the allowance list with what each is based on, the stated contingency, and whether a scope matrix exists. Four documents, and any contractor who has done the work will have all four.