The 12-month correction period

Another way engineers can keep the client happy.

By Michael Heinsdorf, PE, LEED AP, CDT, ARCOM March 6, 2015

Every engineer should know when to specify a warranty or a guarantee and the difference between the two. However, there are times when neither applies or when they need to be coordinated with the 12-month correction period.

This 12-month correction period is built into AIA 201 "General Conditions of the Contract," AGC 200 "Standard Form of Agreement & General Conditions Between Owner and Contractor (Where the Contract Price is a Lump Sum)," and EJCDC E700 "Standard General Conditions of the Construction Project." This correction period requires that the Contractor correct any defective work found within 12 months after Substantial Completion. This is often incorrectly referred to as a 12-month warranty or 12-month guarantee.  It is neither.

In a previous blog post, I discussed the difference between a warranty and guarantee. To recap, engineers should keep in mind the legal definition of these two words. Black’s Law Dictionary defines a warranty as "an assurance, promise, or guaranty by one party that a particular statement of fact is true and may be relied upon by the other party." A guarantee in noun form is defined as "an undertaking or promise that is collateral to the primary or principal obligation and that binds the guarantor to performance in the event of nonperformance by the principal obligator."

The intent of the 12-month correction period is to require the Contractor to return and repair any work that the owner deems defective. While warrantees and guarantees may be in force during this time, the 12-month correction period either overrides them or provides a means for the owner to correct any deficiencies found after Substantial Completion. 

The 12-month correction period can be implemented into a construction contract in at least two different ways:

1. As a supplement to any warranty and guarantee.
2. As an override for any product-specific warranty and guarantee.

The first option is the most ideal from the perspective of the owner, and is what most engineers would like to provide their clients. In this scenario, the correction period is separate from the warranty period, and the contractor is responsible for fixing any work that the owner deems defective. This frees the owner from making a repair, then contacting or suing the contractor to recover the cost of the repair.

The second option overrides any warranty or guarantee, and can be a means to reduce item or assembly pricing, as the contractor builds costs associated with a warranty and guarantee into a bid or price. This option is most appropriate for an owner with the ability to maintain equipment in-house (e.g., a maintenance department). After the 12-month correction period, the owner has no warranty or guarantee rights with the contractor or manufacturer. This option is often mistakenly or inadvertently required in a project specification, which can result in reduced warranty coverage or increased cost for the contractor to provide the warranty.

Michael Heinsdorf, PE, LEED AP, CDT is an engineering specification writer at ARCOM MasterSpec. He has more than 10 years of experience in consulting engineering, and is the lead author of MasterSpec Electrical, Communications, and Electronic Safety and Security guide specifications. He holds a BSEE from Drexel University and is currently pursuing a master’s in engineering at Drexel University.