Unfavorable Sub-Contract Case Study

2435 Words 10 Pages
Over the years the construction industry has developed a reputation for shady deals and untrustworthiness. Contractors specifically are the root cause of the mistrust between the industry and the public. When it comes to the relationships between contractors and subcontractors though there is still a mistrust even though both sides share the same unfavorable reputation. Often times contractors bully subcontractors into signing contracts that put them in terribly unfavorable positions. And after that subcontractors bully sub-subcontractors into signing equally unfavorable sub-contracts. However, not all contracts are terrible, what causes them to be so one sided are specific clauses that are inserted in an attempt to transfer responsibilities …show more content…
City of Carlsbad. Originally the city hired P&D to consult on engineering the redesign of a golf course at a price of $556,745. Their contract expressly stated that all changes and modifications needed to be in writing in order to be allowed. However, this protocol was not followed for amendments Nos. 1 through 4 which increased the contract price by $63,525.50. P&D was authorized by the city to begin extra work before the written change orders were completed. Amendment No. 5 was requested by the city to confirm the final scope and price of the remaining work, as instructed P&D submitted amendment No.5 which totaled $209,956. The city project manager came back saying that price needed to be engineered below $100,000. After negotiations, amendment No. 5 was signed at $99,810, as was customary on this job though the extra work began before the amendment was executed. Once the work was completed P&D tried to recover compensation for the extra work that didn 't fall under amendment No.5. The city refused so P&D sued them for the $109,093 that was chopped off of the original amendment No.5. They jury, as any layperson would, accepted P&Ds version of the story and awarded them the $109,093 that was requested. After all, P&D did the work asked of them so ethically they should be entitled to the added value of their efforts. Following this ruling, the city appealed this decision and won. P&D lost their award because as stated by the court …show more content…
By nature, a contracts are not erroneous and it does not mean that those signing or proposing said contract are inherently fallacious. As we 've discussed throughout this paper, the ethical-ness of a contract boils down to the people and the extent that each clause is enforced. There could exist a contract that favored the contractor far more than it did the subcontractor or owner and that project could go absolutely perfect and there could be no issues through the entire course of the project. People by nature want to be congenial and help each other and it is understood that we must first protect ourselves. But when we shift responsibility and blame from one party to another and put another party at a great disadvantage right from the start, we create an atmosphere of mistrust and hostility which leads to disastrous results. The contractors that treat subcontractors with respect and appreciation are usually the ones that end up with the best results and the ones that have the best reputations. To conclude, if we as the next generation of construction managers, contractors, and subcontractors continue the same detrimental practices as our predecessors, our industry will keep the untrustworthy reputation that has existed for decades. The companies that handle their business ethically are growing and expanding tremendously so let that be something that we as a generation can

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