Sixty Days

Clause 14 of the construction contract was three lines long. Most people skip it.

It set out two things. First: five percent is withheld from every payment to the contractor, released only at the end. Second: if there's no progress on the works for sixty days, the developer may remove the contractor from the site and bring in another one.

Michal signed that contract without being particularly excited about the clause. The contractor came recommended, the price was reasonable, and she had built a good relationship with him. "I don't intend to use it," she told me then. "But it's good that it's there."

A year and a half later, in the middle of building a residential project on the outskirts of Bucharest, she called and told me something wasn't right at the site.

It didn't happen in one day. First fewer workers showed up. Then trucks with materials came only once a week. The site manager started explaining that materials were short, that there was a problem with a supplier, that next week it would sort itself out. Next week it didn't sort itself out.

Michal saw it happening and didn't want to believe it. She knows these moments in projects. Sometimes a contractor gets stuck with cash flow for a few weeks and comes out of it. Sometimes a supplier really is late. A developer who jumps on every slowdown very quickly finds himself without contractors willing to work with him. So she waited, and asked, and got explanations. But she also started doing something that in hindsight was just as important: photographing the site every few days, and writing down how many workers were there and what had been done.

And then the work stopped.

Here Michal did the first thing that was right: she didn't wait. She didn't call the contractor to ask how he was doing. On the day the work stopped, a written notice went out to him, documenting the situation at the site and referring to the clause in the contract.

And from that day the count began.

The mistake I see most often with developers who have a clause like this is to treat the sixty days as waiting time. They wait to see whether the contractor comes back, and only on day sixty do they start thinking about what to do. Then on day sixty-one they discover there's no replacement contractor, that no one is willing to come onto the site at a week's notice, and that the clause that gave them the right to remove the contractor gave them nothing to put in his place.

Michal used the sixty days as preparation time. While the notice did its work, she was already talking to other contractors. And before day sixty, a second notice went out: a notice of intent to remove the contractor from the site. When a notice like that comes with the name of a replacement already in talks, it doesn't sound like a threat. It sounds like what it is: a decision.

The contractor didn't come back. Michal replaced him.

I'd like to say that was the happy ending, and to a large extent it was. But the replacement cost money, and not only money.

The project was delayed by two months. Handovers to buyers were late, with everything that entails with them. Michal sat down and wrote to each buyer separately, explaining what had happened and what the new schedule was. Some understood. Some less so. None of them bought an apartment to hear about a main contractor they had never met. And the new contractor set a condition Michal hadn't anticipated: he wasn't willing to take responsibility for the previous contractor's work. What was built before him remained someone else's responsibility. And since that someone else was no longer in the picture, in practice it stayed with Michal.

Think about what that means. A new contractor coming into the middle of a building has to build on foundations and a frame he didn't pour. If a crack or damp appears in two years, he'll say it's from the stage before him, and he has no reason to think otherwise. He priced that in, and asked for more than Michal had paid the previous one. So Michal paid more for everything that was left, and on top of that was left carrying the risk on everything already built.

The five percent that was withheld didn't cover all of that. But it was money that stayed in her hands and not in the hands of a contractor who had walked off the site. And that's a difference you feel on the day you have to pay someone new.

"I told you I didn't intend to use that clause," she said to me on our last call. "Good thing I didn't listen to myself."

What stays with me from this story isn't the clause itself. The clause is three lines. What made the difference is that Michal started counting from the first day, not from the last.