InterNACHI releases new Standards of Practice for Inspecting Commercial Property.

[Joe Farsetta]

Ken,

3.2 What are “representative observations”?

Representative observations, refer to a sampling of same items. For instance, if there are 1000 windows in a building, no one reasonable expects the inspector or consultant to actually inspect and operate all 1000 windows. To do so would require the correct application of $$ to the process on tha part of the client. Representative observations is astandard concept found in E2018-01.


4.4 Uncertainty
Inspector and Client should attempt to define the acceptable level of uncertainty when defining the terms of the contract.

In E2018-01, there is a section dealing with uncerainty. realistically, and translated from their verbiage, the clause means that the inspector cannot guarantee that all defects and deficciencies will be discovered. Nothing new here. BUT, a commercial inspection may also deal with deffieiencies related to deferred maintence, fatigue, wear, and neglect. remember, a commercial inspection may not only be likited to the building, but may also involve equipment used in business.

A report is only the written communication of the observations made and research conducted by the inspector. The report contains those items which in the inspector's opinion are likely to be of interest to his/her client. This should be defined in the contract.

No, this should be defined in a Scope of Work, as mutually discussed and agreed to by the client and the Consultant /Inspector.. It isnt enough, IMO, to report on items of interest (as determined by the Inspector). Some items are REQUIRED to be included in the report, as defined in our standard and in the E2018 model. Nothing new here. Ither items are those as mutually defined by the parties.


4.5 Subjectivity
Will using moisture meters or other instruments negate this and open inspectors to liability? Why not include language which leaves the use of instruments to the inspector’s discretion and make it clear that it’s not a technically exhaustive inspection.

NACHI went a step further in setting the Client's expectations here, by specifying that we arent required to use specialized tools. ANY tools for that matter. It is a good inclusion, and is pretty clear. Although E2018 doesnt specifically exclude specialized tools, it doesnt INCLUDE them, either. Bottom line is that in both standards (NACHI and ASTM), the engagement is outlined by the Inspector and the Client, and ancillary activities, SME's, etc may require more $$. So, to answer your question, NO it wont negate the clause, but anytime you exceed a Standard of Practice you could open yourself up for liability. So, be careful!. If you want to exceed the standard, and assume the riisk, its on you.


5.3 Documents to be reviewed and included in the inspection report
The inspector should review all documents provided by the client and owner. only relevant documents.

The client, as a part of the engagement, and defined within the SOW, may want the Inspector to gather doce. I do it for around $75 an hour. There are specific timeframes for delivery of docs requested (10 business days), where if you request them and they arent delivered, you may still get paid if its part of the scopw of the inspection. In all cases, the only doicuments we should review are the ones we agree are part of the engagement, and are being compensated for.

[Nick Gromicko]

There are some major differences between ASTM and InterNACHI's SOP.

First: ASTM puts the burden of procuring appropriate documents on the inspector, making him run around to AHJ's and building departments to gather up public documents to reveiew

InterNACHI shifts that burden onto the client (unless the client wants to pay the inspector to perform that task in the scope of work). The client, who likely has a contractual agreement with the property owner, is in a far better position to procure all the documents the inspector may want to review (maintenance records, repair invoices, warranties, etc). Furthermore, we don't want the inspector to be liable for failing to procure some fire record or something. And furthermore, we don't want everything, the building, the documents, the people to interview, all there on-site, on the day of the inspection. Furthermore we want to increase seller disclosure duty via the client. Remember, the seller only has a duty of disclosure to the inspector in so much as he has a duty of disclosure to the buyer (and hence buyer's inspector).

Second: ASTM spends much time talking about opinions of probable costs to remedy.

InterNACHI took all that crap out of there, hence InterNACHI's SOP 7.5. We did this for several reasons:

1. Historically inspectors do NOT do repair estimates. Commercial inspectors should not deviate from this historical tradition.

2. The potential for conflict of interest, and just plain conflict is increased when inspectors and repair contractors start working together and giving estimates.

3. The inspector is generally unqualified to do repair estimates.

4. The inspector who hires outside consultants to do the estimates, doesn't know at the time of the inspection what is in need of repair at that point, and so can't bring the appropriate repair contactors at that point (the day of the inspection).

5. It is not desireable for the outside consultant to also be a local repair contractor giving an estimate as it is a conflict of interest. So the inspector can't use his consultant to also do the estimate, which means he has to find yet another consultant.

6. Most arguments between client (typically the buyer) and the owner are over what level of repairs are needed and how much is going to be spent on repairs. Inspectors don't want in the middle of those arguments, and certainly don't want to be the one to settle them by putting $dollar amounts in writing.

[Nick Gromicko]

The scope of work can define what items the client is interested in of course. A client might say, "I'm mostly worried about the roof."

However a scope of work can't possibly contain those items that an inspector discovers that might be of interest to the client. How could they? They haven't been discovered at the time the scope of work is agreed to. So the burden of deciding what items might be of interest to the client, falls upon the inspector. Those items are the sum of what the client revealed is of interest to the client PLUS those items (that the client may not be yet aware of) that in the inspector's opinion are likely of interest to the client (like a leaking sewer line no one knew of).

[Joe Farsetta]

Actually, ASTM is very contradictory. First it says that documents should be reviewed. Then it says that the time and money needed to do that may exceed its usefullness. Then it says that the inspector should be paid for it. Then it says that once the inspector requests the docs, they have 10 days to receive it, or there is no further obligation to review them. Then it says if the inspector gets the docs after 10 days, but before 30, maybe they should review them anyway. Then it says that the costs of the docs should be low. Then it says that blueprints cost a lot.

Your head will be spinning. Bottiom line is that the requirement under ASTM is only on the Inspector if the inspector agrees.

As to maintenance costs, ASTM specifies that it is based on representative sampling, and limits what a material defficiency is to specific defects observed. he scope is NOT all inclusive. Cost estimates can be based on unit costs provided by the client, the inspector's personal experience, a contractor, a database, or estimating program. It can be a bulk price (guestimate), and not be accurate. It need not be based on an accurate count. It says this in the ASTM standard.. It states that it is a best guess, and that its probably not accurate. Finally, it says that if the inspector needs a specialist to get the price, the requirement becomes out of scope. There are contradictions and blanket disclaimers throughout the ASTM doc. You just need to understand what it really says, and whereto find what you are looking for.

I think the NACHI model does a good job of providing a more straight forward approach and interpretation.

[Joe Farsetta]

The scope of work can define what items the client is interested in of course. A client might say, "I'm mostly worried about the roof."

However a scope of work can't possibly contain those items that an inspector discovers that might be of interest to the client. How could they? They haven't been discovered yet. So the burden of deciding what items might be of interest to the client, falls upon the inspector. Those items are the sum of what the client revealed is of interest to the client PLUS those items (that the client may not be yet aware of) that in the inspector's opinion are likely of interest to the client (like a leaking sewer line no one knew of).

First of all, a commercial inspection isnt a residential nspection. There are many differences, and often the client is more experienced and saavy. So, its best to pre-survey the property prior to the inspection. I teach to communicate with the client during this pre-survey, and understand what is needed and what they want. Often, through self-assessment, the inspector will automatically know which SME's to bring.

Like I said, the process is completely different, and critical to limiting liability and delivering a quality product. As to discovery of defects, report everything.

I do not subscribe to many of the items specified in 2018. However, of the client requires compliance, as many will, it is important to know the doc. Like I said, I think NACHI has gone a long way in weaving through the muck and mire and developing a workable doc.

Just remember, this aint a home inspection.

[Nick Gromicko]

The whole ASTM document review thing is nutty.

It is my opinion that most of the time, a document review that ocurrs on-site at the time of the inspection, (without the inspector driving all over town procuring documents that the seller probably has, documents the client already has, or documents that offer little new and useful information), will likely be of nominal cost to the client and thus holding to the main idea that:

anything the inspector does to acquire information should likely cost less than the value to the client of that information.

Hence: 5.2 and 5.3 of InterNACHI's SOP.

[Joe Farsetta]

Nick,

NACHI's done a good job. But, sometime document review can be an important step in discoving the history or condition of a property. Like we can request a copy of a previous inspection. Or can request a copy of an ADA compliance review. Or can request COs. We can request maintenance records, contracts, invoices, warrantees.

These are all very good things, and they may not be available on the day of the inspection. But, remember, a commercial inspection can actually be a lucrative project, with many inter-related tasks, and span the course of multiple days. This is especially true if one is dealing with a campus environment.

Like I said, it aint a home inspection!

[Nick Gromicko]

The scope of work agreement can make an inspector a lot of money.

[Nick Gromicko]

In writing up a scope of work agreement, here is a simple formula for helping a client decide what he wants to pay you to do above and beyond the SOP:

I=cost to hire the inspector to do or inspect something.
D=total cost to repair all the damage caused as a result of failing to uncover and repair a defect because the inspector didn't do or inspect something. In a commercial propety this might include business downtime.
O=odds that the defect the inspector would have uncovered exists at all.

If I < D X O, hire the inspector to do it.

[Joe Farsetta]

It aint a home inspection. It can be simple, or a hell of a lot more complex. As such, and depending on what your client wants, charge a lot more.

Its justified, and the reason for all of this.

[Nick Gromicko]

Joe's right, especially when you have a client with a low tolerance to risk who will purchase additional services where I is much greater than D X O.

[Marcel R. Cyr]

It appears to me that the most critical item here in this Commercial Inspection, is being able to manifest a Scope of work and Agreement that will precisely identify excactly what will be observed, inspected, noted, checked and not checked items.

To me this Scope outline would be greater in length than the SOP so as to cover all aspects of Commercial Buildings.

Saying that Inspecting a house is easier than Inspecting Commercial Properties would be far from the truth if you know what to look for in Assessing or Inspecting a Commercial establishment.

With a truely broken down Scope of everything that can be inspected in a Commercial Property, the client could very easily go down the list and check off every item that he wishes to pay for or have Inspected.

If the Inspection includes a variety of components that may require outside expertise, the Inspector will know right off hand and can be priced occordingly.
The broken down Scope of the work would eliminate any confusion as to what is part of the SOP or is not. So right from the getgo, both the Inspector and Client know what needs to be done, agreed to and payment for that particular services agreed too.

Since not two people will observe defects, defieciencies, quality, standard or unstandard products, or workmanship the same way, a typical report may be way off course to the expectations of the Client. If this should occurr, then the feud begins along with the fingure pointing if something should go wrong.

Every effort of establishing a breakdown of a Scope for Commercial Building would be in parallel parameters with all 16 Divisions of the AIA documents.

Broken down in a fashion that would encapsulate all those aspects, some of the Division contents may not apply to a particular Inspection, but the Division in itself would in most cases.

With that in mind, an agreement would be very easily concluded and if one wishes to inspect solely by the SOP, it would surely be well indicated in this breakdown of the scope to the Client.

A breakdown of the scope could be outlined in a fashion that would depict all 16 Divisions or parts thereof that pertain to a particular Commercial property.

Not all Commercial Properties would have all 16 Divisions.

To let loose in the Commercial Property Inspection with all the open error avenues, ambiguities and language that I see is asking for someone to get in trouble down the line.

Why, because it leaves to much open for interpetation of the one that can speak the loudest.

JMHO

Marcel

[Nick Gromicko]

I agree with you Marcel. We should at least make a few sample Scope of Work documents.

One up-sell service you could offer is to offer to arrange to get 3 estimates from local contractors for every deficiency discovered that could require more than $XXX to correct.

Again though, you wouldn't know exactly what those deficiencies were at the point in time where you are authoring a scope of work (because the inspection hasn't been done yet), so you have to word it something like that above.

You might have an easier time up-selling this service AFTER the inspection and AFTER you deliniate the deficiencies and AFTER the client gets to meet you.

[Marcel R. Cyr]

Originally Posted by gromicko

I agree with you Marcel. We should at least make a few sample Scope of Work documents.

One up-sell service you could offer is to offer to arrange to get 3 estimates from local contractors for every deficiency discovered that could require more than $XXX to correct.

Again though, you wouldn't know exactly what those deficiencies were at the point in time where you are authoring a scope of work (because the inspection hasn't been done yet), so you have to word it something like that above.

You might have an easier time up-selling this service AFTER the inspection and AFTER you deliniate the deficiencies and AFTER the client gets to meet you.

Nick, what I am trying to point out here is the fact of having a Scope of the Work analysis break down that would follow down the line of the 16 Divisions of the AIA. All of these divisions can be broken down to identify all the pertinent items that you have listed in you SOP. Division one would encompass all the paper work search that is either accumulated by the Client or the Inspector.
Div. #2 would encapsulate all the exterior wether covered by the SOP or not. Would also have a listing for ADA compliance. Barrier free Business and so forth.

Division #3 would include everything pertaining to concreteyou have under shall inspect and also broken down to items not to inspect per the SOP, but included in the breakdown.
Div. #4, would encompass all Masonry items to inspect and again every item you have listed as what not to inspect.

You get my drift.

Let the Client choose from that listing before the inspection even begins, and check every item explained to the client he wants inspected.
Now here is the price for me to inspect your property based on all the items specifically noted on this breakdown.

The price is set before you even inspect, but know exactly what the Client wants.
With the breakdown one would know immediately whether or not he needs expert Sub. to come along and know what the cost will be.

The scope agreement would reflect that particular breakdown.

To walk in a Commercial Building and tell the Owner that you are following this ASTM guideline and start note observations like the drywall has a crack here, the base board is unglued, or movement in this 40' drywall corridor appears to show some sign of settlement, come on now, if an expansion joint would have been installed like your suppose to in 30' or less, it would not have happened and if it is above a doorway, well that is because the sheetrocker was to lazy to cut around it an not have the joint directly in line with the metal door frame.

I am the client, and I pay someone to give me the condition of the building that I want to buy.
He comes back and tells me he noticed a crack in the foundation,
he notice a crack in the exposed slab and walls possibly indicating some movement.
The suspended ceiling has drop-in lights and five work not in working order.
The walls and maintenace of various items need to be repaired like doors don't close the faucet is dripping, get the drift.

This is all something a commercial client will notice by walking around himself.

What does the building envelope consist of?

What kind of roof is on the building?

What does the structural componets show as far as integrity and longevity to meet snow loads for a particular area?

How does the Heating system functioning and condition and longevity expected.

What is the condition of the HVAC system other than the fact it is running?

Hell, if it is running and functioning, I don't need to pay someone to tell me that.

Follow what I am trying to say?

I know, I am French and will probably will come out backwards. ha. ha.

Thanks anyways.

Marcel

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[Nick Gromicko]

Most clients of commercial inspectors are not looking to choose from a menu of building components to inspect. None will pay to confirm the roof trusses are the right size to handle snow loads. I'm not saying that there isn't some client out there in the world who would want this, but that client is 1 in a million.

Nearly all clients simply want someone with construction knowledge to walk through the property with them and tell them what they see. InterNACHI's SOP is drafted with that in mind.