Wood-Chip Heating Systems - Biomass Energy Resource Center

Contracting and Project Structure
Once a system manufacturer has been selected, the
owner is ready to prepare a contract for signature. The
contract should include the performance specifi cations,
any additional features agreed upon, the price of the
job, the completion date and the payment schedule.
The payment schedule should include retainage, so that
the manufacturer is not paid in full until the system has
been demonstrated to operate properly, as explained in
the next chapter.
There are two options for structuring the contract
for the biomass system. The fi rst is for the owner to
contract directly with the biomass system manufacturer
or installer. The second is for the biomass system
installer to become a subcontractor to a general
contractor. The choice between the two approaches will
depend in part on the overall scope of the project.
If the installation of the complete biomass system
is the only work being done, then the owner is likely
to contract directly with the system manufacturer.
Any building construction (for the fuel storage bin
and boiler room space) can be handled as a separate
contract, or the system manufacturer may be interested
in doing the building construction as well as installing
its biomass equipment.
If the biomass system is part of a larger project, it
is more likely that the biomass system manufacturer
or supplier will become a subcontractor to the general
contractor. Examples include the construction of a
new building with a biomass heating plant and the
conversion of an electricity or steam heated facility
to a biomass system with a new hot water heat distribution
system. In these cases, it is generally preferable
to select the biomass system fi rst, and then — having
established the cost of the biomass system — require
bidding general contractors to integrate the selected
system and its cost into their bids.
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