Thursday, January 19, 2012

Or Equal

In specifications for things like construction in is not uncommon for a specific piece of equipment to be specified by name with the words “or equal” used.In doing that you are establishing the named equipment’s specification as being the requirement to be provided. The “or equal” is to allow for other competitive products to be used so there is competition and the equipment supplier doesn’t consider themselves to be single sourced. Or equal can also be potentially used when the specified equipment may not be available within the time frame needed for the schedule.

The key in the use of or equal is making sure that you as the buyer have approval over whether a substitute item is really equal. From that perspective you as the buyer want to have the final right to decide whether the item is equal. If you don’t what can occur is the contractor may propose using something and arguing that it is equal simply because they were able to buy it for a better price. If you have the right of approval, and feel that it isn’t equal you have two options. You can refuse to approve it and require the original, or you can make the approval be conditioned based upon being provided a credit for the difference in value or cost. Their contract price was based upon providing the item or equal and not something less.

In some cases you may simply not want another supplier’s equipment used for other reasons. For example, if you had an existing building that had all Carrier HVAC (heating, ventilation and air conditioning) units and were building an addition, you probably wouldn’t want the contractor to propose Crane HVAC units be used. While the Crane unit may be equal to the carrier one, mixing the manufacturers would increase your life cycle cost because you would need to have two different inventories of supplies and spare parts. You want your right to approve the “or equal” as an absolute right so that only you can determine what’s equal. In doing that you hopefully get the benefit of competition from the “or equal” language in the contractors negotiation with the equipment supplier, but still have the right to control what is best for you.

If the item really is not available in time to meet the schedule, you might need to approve an alternative. Just make sure that you get a credit for anything that is less or will cost you more.

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