{"id":901478,"date":"2023-08-09T15:28:11","date_gmt":"2023-08-09T21:28:11","guid":{"rendered":"https:\/\/www.myconstructionexpert.com\/blog\/?p=901478"},"modified":"2023-08-09T15:28:15","modified_gmt":"2023-08-09T21:28:15","slug":"contractor-termination-construction-administration","status":"publish","type":"post","link":"https:\/\/www.myconstructionexpert.com\/blog\/contractor-termination-construction-administration\/","title":{"rendered":"Construction Termination Part 2: How to Handle Construction Administration when the Contractor is Getting Fired"},"content":{"rendered":"\n<p>Melissa Dewey Brumback | <a href=\"https:\/\/constructionlawnc.com\/2023\/06\/29\/termination-issues-2\/\" target=\"_blank\" rel=\"noreferrer noopener nofollow\">Construction Law in North Carolina<\/a><\/p>\n\n\n\n<p>If you\u2019ve been working as a design professional for any length of time, you know that you must be a chameleon on the construction project.&nbsp; You need to \u201cstep into the skin\u201d of both &nbsp;the Owner and the Contractor to determine who is at fault, and who should pay.<\/p>\n\n\n\n<p>You are usually the Initial Decision Maker (IDM), and so you have a duty under the AIA documents to act fairly and impartially in making those decisions.&nbsp;&nbsp;<em>See&nbsp;<\/em>AIA B101\u00a73.6.2.4.<\/p>\n\n\n\n<p>Even if you are not under an AIA contract, you still have that duty if you are the IDM or handling construction administration for the project.&nbsp; More often than not, however, it will be the owner asking you to support its termination of the contractor \u201cfor cause\u201d.<\/p>\n\n\n\n<p>Should you do so?<\/p>\n\n\n\n<p>Before making any decisions, see what the contract says about when a <a href=\"https:\/\/www.myconstructionexpert.com\/blog\/prompt-pay-subcontractor-or-pay-consequences\/\" target=\"_blank\" rel=\"noreferrer noopener\">contractor can be fired<\/a>.\u00a0 There is usually one set of specific facts that supports this.\u00a0 In A201\u00a714.2.1, the Owner may\u00a0terminate\u00a0the Contractor if the Contractor:<\/p>\n\n\n\n<ol class=\"wp-block-list\">\n<li>repeatedly refuses or fails to supply enough properly skilled workers or proper materials;<\/li>\n\n\n\n<li>fails to make payment to Subcontractors or Suppliers in accordance with the respective agreements between the Contractor and the Subcontractors or Suppliers;<\/li>\n\n\n\n<li>repeatedly disregards applicable laws, statutes, ordinances, codes, rules, and regulations, or lawful orders of a public authority; or<\/li>\n\n\n\n<li>otherwise is guilty of a substantial breach of a provision of the Contract Documents.<\/li>\n<\/ol>\n\n\n\n<p>You may have noticed that these are not set formulas. &nbsp;If job staffing varies from day to day, when does the lack of manpower rise to a justifiable reason to terminate a Contractor for cause?&nbsp; What if the lack of proper, sufficient material for the jobsite is due to outside forces like lack of manpower in the community due to post-pandemic shortages?&nbsp; And what is meant by the nebulous phrase \u201cotherwise is guilty of a substantial breach?\u201d<\/p>\n\n\n\n<p><strong>The Owner will be looking to the design professional to certify that one of these \u201ccauses\u201d exists.<\/strong><\/p>\n\n\n\n<p>If you make an independent investigation and decide the Owner does not have \u201ccause\u201d, you can remind the Owner of its ability to terminate \u201cfor convenience\u201d at any time.&nbsp; &nbsp;The&nbsp;<strong>difference between \u201ccause\u201d and \u201cconvenience\u201d<\/strong>&nbsp;has to do with how much, if any, money the contractor is entitled to from the owner.&nbsp; Simply put, if it is for convenience of the owner, the contractor will get money for lost profit and opportunity; if he is fired with reason, he may end up owing the Owner money.<\/p>\n\n\n\n<p>When terminating a Contractor for cause, the Owner risks a later finding that its action in terminating the contract was without just cause.&nbsp;&nbsp;<strong>If this happens and you assisted in making the determination that the Owner\u2019s termination was justified, you will be sued.&nbsp;<\/strong>&nbsp;Almost as sure as the sun sets in the West\u2014if there is a wrongful termination lawsuit, you will be part of it.<\/p>\n\n\n\n<p>So, make the decision carefully, and document, document, document the reasons for it.<\/p>\n\n\n\n<p>First, are there any\u00a0<strong>less drastic steps<\/strong>\u00a0could be taken?\u00a0 For example, the Owner could elect to stop further work until a contractor corrects bad construction.\u00a0 (<em>See<\/em>\u00a0AIA A201 \u00a72.4).\u00a0 Or, the Owner can\u00a0carry out work itself, with proper notice and a 10 day opportunity to cure.\u00a0 (<em>See<\/em>\u00a0A201 \u00a72.5).\u00a0 The Owner may not be aware of these options\u2014so point them about if they could stop the nuclear termination option.<\/p>\n\n\n\n<p>Second, \u00a0review the contracts to ensure all\u00a0<strong>proper notices<\/strong>\u00a0are being given.\u00a0 Prior to termination, the Owner\u00a0must\u00a0give a 7 day written notice to the Contractor and, depending on the contract used, an opportunity to cure.\u00a0\u00a0<em>See<\/em>\u00a0A201 \u00a714.2.2.\u00a0\u00a0 The notice should be given to both the Contractor and any relevant surety. If the Contractor does not begin work to correct the deficiencies within 7 days, then the Owner can terminate the agreement and complete the work through alternative Contractors.\u00a0 While the notice requirement is the Owners and not yours,\u00a0<strong>tell the owner, in writing, what they must do.<\/strong><\/p>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n\n<p><strong>When one of your cases is in need of a construction expert, estimates, insurance appraisal or umpire services in defect or insurance disputes &#8211; please call Advise &amp; Consult, Inc. at 888.684.8305, or email <a href=\"mailto:experts@adviseandconsult.net\" target=\"_blank\" rel=\"noreferrer noopener\">experts@adviseandconsult.net<\/a>.<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Melissa Dewey Brumback | Construction Law in North Carolina If you\u2019ve been working as a design professional for any length of time, you know that you must be a chameleon on the construction project.&nbsp; You need to \u201cstep into the skin\u201d of both &nbsp;the Owner and the Contractor to determine who is at fault, and&hellip; <a class=\"more-link\" href=\"https:\/\/www.myconstructionexpert.com\/blog\/contractor-termination-construction-administration\/\">Continue reading <span class=\"screen-reader-text\">Construction Termination Part 2: How to Handle Construction Administration when the Contractor is Getting Fired<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":false,"jetpack_social_options":{"image_generator_settings":{"template":"highway","enabled":false},"version":2}},"categories":[9],"tags":[9895,224,18],"class_list":["post-901478","post","type-post","status-publish","format-standard","hentry","category-construction-contracts","tag-advise-consult","tag-construction-contract","tag-contractor","entry"],"jetpack_publicize_connections":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v25.0 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Construction Termination Part 2: How to Handle Construction Administration when the Contractor is Getting Fired - Advise &amp; 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