There were many issues in this case study from the start. The owner contracted a GC for the construction and a separate Architect for the design. After they got the permit, the architect’s contract was closed out. This was a bad decision made by the owner because he lacked knowledge about the industry and it was his first construction project, usually the architect can help with those issues. The contract was made by the contractor at discussed in detail what was reimbursable but did not tie the GC to a fixed price. The $3 million was referred to as a “budget” in the contract. This meant that a change in price could happen. The Owner thought because of verbal discussion with the contractor prior to the contract execution, that the $3 million was a lump sum agreement. The meant that the owner didn’t read and understand the contract and thought what was said verbally was the final amount.  During construction changes had to be made because of building code. The contractor decided that the project was a Time and Material project and did not submit change order against the “budgeted” amount. The GC invoiced the owner for 100% amount of the original $3 million, at 90% completion. The GC tells the owner that the project would overrun $500,000. The owner doesn’t agree and wont pay and the contractor pulls off the job. I think that both are at fault for not making the contract clear and using verbal combination and what they believe is right, to continue construction. The owner didn’t understand the contract and the GC decided not to submit a change order. If the owner knew it was his first project, he should have not ended the architect’s contract. There was a lack of communication between the GC and owner.

Bryan Gonzalez

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