Author: Kevin

After my company was selected as the GC for a 10-story office bldg, we sent out bids for the concrete package,  and  3 subs have tight bids within 3%  off each other. the scope of work includes framework, rebar, pour, and finish. the concrete and pump will be taken care of by my company.

after the lowest bidder was selected there was an interview conducted with the subcontractor to make sure the scope of work and schedule are covered. their bid did not reference any drawings, but in the interview, they mentioned that the concrete work was shown on both architectural and structural drawings. This was asked because there were some concrete housekeeping pads, and steel stair infill was shown on arch, drawings and wanted to make sure that it was picked up. The sub acknowledged this and notes on this were taken on pre-award meeting notes.

The contract was awarded and the agreement was sent around the time the work began. the sub calls back asking why there was a reference made to the arch. drawings and we remind him of the housekeeping pads and stair infill. 2 weeks later the sub sends the signed agreement but the reference to arch drawings is crossed out. several walls were shown on the arch drawings but not on the structural drawings.

An (RFI) is written and structural engineer responds with appropriate sketches, but the architect does not attach a directional document such as a (CCD) to the (RFI). As a result, the sub refuses to accept the contract as originally written, and will, not install the walls unless a change order is issued. the walls are worth $50K and my company or the sub don’t have the funds to make amends.

In this case, the bid from the subcontractor should not have been accepted in the first place without seeing their architectural and structural drawings to make sure that everything was being acknowledged. the sub should have also not crossed out the reference to the architectural drawings on the agreement and the architect should have attached a directional document. the architect, GC, and sub all share faults for not communicating properly.  Although the owner was not involved directly, he would have to, unfortunately, put up money for the work to be done properly.

In this case, the main issue was that many agreements made between the client and the general contractor were only discussed verbally and not documented. In this case, the client contracted a GC and an Architect separately for the design of the $3 million executive home.  Once the permit was approved, the architect’s contract was closed out.

In the contract, the GC discussed in details what could be reimbursable, but it did not tie the GC to a fixed price. In the contract, the $3 million were referred to as the “budget”. The owner assumed that this amount was the lump-sum agreement because of verbal discussions and early “bid” estimates prior to the contract agreement. During the project, many changes had to be made mostly due to building code.

The GC believed this was a (T&M) time and materials project, therefore he felt that paperwork for change orders on a budgeted amount was not necessary. at 90% completion, the GC invoiced the owner for the 100% payment and also indicated that the project would overrun $500K. The owner then refused to pay the GC. the GC then pulls off the job and will not complete the work until the owner pays off remanding $1 million and the additional $500K, at that point the GC is dismissed by the owner and both parties sue each other.

Legally I believe that firstly the GC cannot pull off a job. The GC is at fault for not completing his part of the contract and abandoning the job. However, the owner is also at fault for not contracting a third party owner’s rep or agency construction manager involved that would’ve helped him out as this was his first time being involved in a construction project. The GC is also at fault for not submitting or notifying the owner about the changes that had to be made due to the building code. In order to avoid this situation, there should have been a fixed price set and the architect’s contract should’ve not been closed out until final completion as he would’ve had control in the situation. In this case, I believe that the owner has to pay the GC the remaining $1 million from the contract, but the $500K should be the responsibility of the GC as he never notified the owner of ongoing changes to the project.