On 10/4/2018 at 7:02 PM, rockstar.esq said:

George,

You've nailed it on the cozy relationships being a deterrent to throwing blame around.  Cities really don't have much excuse for their design contract procedures.  If they can write in liquidated damages penalties for construction being late, why can't they write in  penalties for the Architects design coming in over budget?  I'm not aware of any penalties for designs that don't pass building department review either. 

 

 

As an Owner we have actually done just that.  We have written into the contracts that the Architect must redesign on their dime if the project comes in over budget.  We also, require the Architect to provide a detailed estimate at each design phase and we hire a 3rd party estimator to provide an estimate also and we reconcile the two estimates so everyone is on the same page.  I have simplified the language but that is the gist of it.

This thread has revealed many interesting points.  I really appreciate everyone's input.  JeepinJoe, good on you for putting the basics of accountable design into your contracts!  If  clients followed your lead, more of their projects would get built.  

Maybe this is too extensive of a question, but I'm interested to know if it's legal to have a "pay when paid" provision in a subcontract.  General Contractor typically have a provision that states that they aren't obliged to pay the subcontractor for work completed until and unless the General Contractor has been paid for said work.

For the purposes of this question, let's say that the subcontractor has 100% completed their work and everyone is happy with it.  

 

 

 

Dear Rockstar,

Theoretically, you can have such a provision in a subcontract but there are many jurisdictions which prohibit this sort of thing by statute as a matter of public policy.  Too many subs were getting stiffed and, oddly enough, the generals were somehow staying in business and making a profit.

Performance bonding can sometimes be an insurance but let me tell you, from experience, that collecting for anything from a bonding company is not a joy and pleasure.

Often, the subs have significant protection through liens on the project property.  

George,

Thank you for your answer. One of the bigger challenges of "pay when paid" is that the generals don't feel any obligation to disclose when they're getting paid, or how much.