Construction project guarantees and warranties

A recent article reminded me how important warranties and guarantees can be. In this case the client had started using a new state of the art hospital that had cost over a billion dollars to construct. There were various delays in the construction process. Furthermore, the client was not ready to occupy the hospital immediately it was completed. When they finally moved in, they discovered that some  equipment (some costing over a million dollars), that had never been used, had guarantees and warranties that had already expired. This meant that the client was now responsible for repairs and maintenance of the equipment even though they had barely used it.
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Often contractors end up in a similar situation. They place orders for equipment which is to be included in the facility they are constructing. Their client normally expects (or has stipulated) that the item has a one year (or longer) guarantee period, which usually includes repairs and maintenance to the item. In most cases however, the supplier's guarantee starts from when the item is delivered to the contractor. In most cases the contractor still has to install the equipment, complete the project and hand the project to the client before their guarantee period begins with the client. This process is usually several months, even years, after the item has been delivered. This often means the manufacturer's warranty has expired, but in terms of the contract the contractor is still responsible to maintain and repair the equipment until their warranty period expires with the client. This can result in additional unexpected costs for the contractor.
Furthermore, even when the item is still under guarantee there are often problems which could make the guarantee void. These include; the item hasn't been stored, transported, installed or operated in accordance with the manufacturer's instructions, or someone other than an approved contractor has carried out repairs.
It is therefore important to check guarantees and warranties to ensure that:
1. they are valid
2. they apply to the item and provide the required cover
3. the guarantee period is sufficient
4. the installation, servicing and repairs conditions specified in the guarantee aren't violated