Risky business

Article Abstract:

Lump-sum or fixed-price agreements entail a lot of risks for a number of reasons such as human variability, unpredictability of systems, variability of project conditions, variability of client and imprecise labor reporting. These type of contracts are not necessarily bad but firms should have a clear strategy that matches their strengths in order to deal with these kind of contracts. Low-cost production-oriented firms might assume the risks and seek lump-pricing to generate high returns. Niche-oriented, value-added firms are not in the best positions to take these risks and should look for less risky agreements.

Interpretation and construction

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Representing the city

Article Abstract:

A Louisiana appellate court has instructed the city to pay the retainer due to the contractor once the engineering firm that represents the city issues a recommendation of acceptance. The Diamond B Construction Co., Inc., sued and won in a trial court when the city of Plaquemine failed to pay the contract sum to the firm. According to the court, the city must pay the difference between the entire retainer due and the value of incomplete items to the engineering firm. This is also true if the city feels that the contractor has not fulfilled its obligations in accordance with the contract.

Plaquemine, Louisiana

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Spotting specs offenders

Article Abstract:

Owners, contractors and engineers cause most of the legal disputes from contract violations of construction projects. Owners who want to pay the least amount disregard project specifications. Contractors violate contracts by submitting low bids and then change orders from a different interpretation of the specifications to cover up losses. Designers who refuse to visit a project or see specifications as a document to be strictly followed are liable to be sued by contractors for unrealistic project demands.

Analysis, Breach of contract

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