Terminating a project contract and liability?



We have a project (tenant finish out/restaurant)  that we've completed CD's, the project manual, and obtained a permit from the city. We obtained bids from contractors, and issued addenda during the bid process.

(After the permit drawings were issued to the city, we spent some additional time detailing the set with information the city doesn't care about but is important for the contractor, and created a BID set.) 

The owner, who had a PDF copy of the permit drawings, unbeknownst to us, solicited a bid from another contractor. This contractor did not have the bid drawings, project manual, or addendum (nothing major changed). Their bid is substantially lower than the four other bids we have received from contractors we are familiar with.

One, it irks me that the owner did this without our knowledge because it undermines our project management and also can potentially damage ongoing relationships with other contractors in town.

Two, I'm not sure I trust the bid that this outside contractor has put together.

I know an owner has the right to enter into a construction contract with whoever the like but my question is....if we don't feel good about the contractor selected and we terminate our agreement with the owner because, one, we don't like how he was been working other angles behind our back, and two could have cause for concern as to the quality of the construction / amount of additional time we would have to spend staying on top of a contractor trying to go on the cheap all over the project.....

What happens to the project liability if we terminate the contract with the owner and do not perform CA? Is there any way we can be released from liability on the project?

Jun 17, 15 4:33 pm

happens all the time...not sure of the liability of it all, but your client got what they wanted now they are giving you the boot, they don't want CA because they don't want to pay for it and have some persnickety architect running up costs for ever little ding and scratch along the way.  They will do CA themselves and cheapen the shit out of your design....probably been thinking about all the shit they would cut once you were out of the picture for a long asses.  

Jun 17, 15 5:39 pm

sounds like the owner is giving the contractor the boot, not the architect

also sounds like the appearance of a conflict of interest.  if the architect's 3 (i made that number up) contractors agreed to give a 10% kickback to said architect, that would be unethical.  for the owner to get an unbiased bid that turned out much lower, that just reinforces the idea that the architect has a sweetheart deal with the contractors.  now it appears the architect wants to back out, since they didn't get their sweetheart deal.  not saying that happened, but i am saying the appearance of that happening is there.

i think part of the architect's responsibility is to help the owner get fair bids.

Jun 17, 15 5:53 pm

no way curt...

owner takes CDs and solicits another bid without notifying architect?  That reads no more architect all over it...

Jun 17, 15 5:57 pm

If the owner's contractor did not have the complete bid set it can't be a viable bid. Isn't it your contractual responsibility to review it?

I don't know what your contract says but if you walk off the job because

  • we don't feel good ...
  • we don't like ...
  • concerned about additional time

you may very well invite a lawsuit for failure to perform. In any case there is no release from liability for work you designed, except maybe by statute of limitations.

curt's observation notwithstanding - it's always important to understand and respond to the client's concerns - Jaffe's First Law may apply here, but you won't know until they fail to pay.

Did the client break the contract? If not, stop whining and take care of your responsibilities.

Jun 17, 15 6:28 pm

I'm with Miles.  The client is probably going to be a discipline problem, but that's not grounds for unilaterally breaching the contract.  Your fee presumably should have included a fudge factor for this sort of nonsense which is fairly typical in the industry (unfortunately).

Make sure you're getting paid and continue performing on your end of the bargain.  You can certainly let your client know your concerns about quality, etc., and that if this contractor didn't have all the documents that the other bidders had, client isn't comparing apples and apples.  Do it in writing, and do your due diligence during construction to cover your ass and make sure what you designed and stamped is what is built.  You can't stop the client from interacting directly with the contractor without you in the loop.  Cover your ass and trudge onward.

Jun 17, 15 7:47 pm

Check your state's laws before you terminate a contract at this stage.  Some states require that an architect who provides construction documents must provide a minimum amount of CA on the project.  You can terminate the contract, but then you may still be obligated to provide CA on your own dime to satisfy minimum state requirements - unless there are extreme extenuating circumstances (former client bars you from the site, you're medically incapacitated, that sort of thing.)

Jun 17, 15 8:08 pm
null pointer

You know what you do? You withdraw your plans and have him spend $x,000 on another architect.

Been there, done that. Most DOBs will then void work permits and force a permitting restart. the end.

The f end.

Jun 17, 15 8:18 pm

^ That strategy worked here until about 25 years ago when clients threatened to sue the municipality.

Revoking work product that has been paid for is an invitation to a lawsuit. Now if you refined the fee ...

Jun 17, 15 8:34 pm
null pointer

Well, I've done it for non-payment.

Pretty damn well covered there. If a product costs $100.00, paying $99.99 and running away with it is still a crime.

Jun 17, 15 9:21 pm
Olaf Design Ninja_

not sure what the big deal is here. you pick up the phone and as someone already stated let owner know that the contractor bid on the wrong set and then let the owner know you will call the contractor and make sure they get the correct documents. if owner states they do not want you to do that you explain to them what a Change Order is and how many they will get. they then go, well why did you give me that set of drawings ,and you say filing set to keep the project moving while we work on the details - trying to help you out buddy with your timeline. restaurant business is fast and tough ......if the owner wants you completely out who cares, you know they are not going to build exactly per your drawings, and most states do require CA so you show up unannounced and if they let you in you take a few photos and note the issues in writing to owner and report to the building department if anything is not to code. if they work under your permitted plans but do not do whats on the drawings they will not get sign-offs and will not be able to close-out the job. again who cares, if they learn this they will have to call you and pay additional fees for you to inspect, survey, revise, and refile... no reason to pull your application, because if they do not do whats on the plans they are in violation. and lastly the worst that could happen is something goes wrong and everyone goes to court, you call your insurance agent, they call a lawyer,lets say you had Arbitration in the contract, you go to arbitration and everyone notes - oh they built something that was not on the drawings.....of course if they did build exactly what are on your drawings well you are fucked. make sure your drawings are to code, which we hope you did because the building department is not liable for approving nyc at least the owner can always supersede your application with another architect regardless of what you say. the only thing you can worrying about then is copy right infringement. also in nyc a third party signs-off the special inspections, so if some firm wants to sign-off work that is not in accordance with your drawings - good for them, they are on the hook.......laslty also in nyc - people need sign-offs these days and this gets costly, legalization filings etc.....they will be back once they learn about reality and you bill them accordingly.

Jun 17, 15 9:33 pm

You could also call the owner's contractor and tell them they didn't have all the drawings.  That's usually a good way to scare someone away from a bid.

Jun 18, 15 9:25 am

No kick backs from any contractors...who the f*k does that? Half of the invited GC's were given to me by the owner...

My concern has to do with the quality / safety of the construction. If the owner intends to be heavily involved with a GC who might cut corners to account for an unusually low bid price, and the owner could be willing to go along with that because cheapest price is probably what drives their decision stamp is still on the drawings. It's not whining Jaff, the situation gives me some cause for concern so I'm looking into ways to CYA so the project doesn't come back and bite me or my company in the ass. 

Our contract has a clause that gives the architect or owner the right to terminate the agreement with or without cause with seven days written notice.

Jun 18, 15 12:29 pm

be aware that the appearance of a conflict of interest is usually more of a concern than an actual conflict of interest.

you're saying you set up a few contractors to bid a project, then the owner went around you and found out the project costs a lot less if they don't go through you.

i understand you're concerned with the quality and all that, but think about how it appears to the owner.

i understand you're concerned with your cya, but shouldn't you be a little concerned about the actual project too?

Jun 18, 15 12:40 pm

I would contact the owner and explain they will get clobbered with change orders unless the contractor is able to see all the updated docs. If you have a serious concern, have a discussion w/your lawyer on how to avoid liability if the owner gets upset about change orders resulting from the owner's actions. 

And contact the contractor and alert them to the updated docs.


If the contractor bid off the permit set, and you stamped the permit set - then it's OK to build off of, right? I mean, you stamped it, so it must be. (Really, this is why I avoid doing "permit sets" "bid sets" and "construction sets" and try to do just one set.)

If there are design or material changes, then the owner and contractor can wrangle it out in terms of price, but you'll need to let the owner know that it's their choice. 

Just do your CA as usual. If any corners get cut, put it in your field reports and send to the building dept. Refuse to sign pay requests for work that's not to spec or code. 

Often, having a pre con meeting w/ the contractor, and letting them know that you won't accept bull$hit helps a lot, as does rejecting early RFIs, change orders, etc that are BS. 

Jun 18, 15 1:17 pm

If this is your threshold for pulling the plug on a client you're in the wrong business. Review the bid and point out any deficiencies. Give the new bidder the full bid set. Do what you are supposed to do to protect the client's interest and see the project successfully completed.

If this, if that, Hey Zeus you sound like my wife. You're supposed to be a professional. Grow a pair and start acting like one.


Anyone mentioning the above comment to my wife is dead meat (if I survive).

Jun 18, 15 1:30 pm

Miles. Love it. Exactly - in my experience EVERY project has a "panic moment" when you think everything is horrid. You just grab your "pair" and do the work and plow through it. Otherwise, quit working in this profession. 

Jun 18, 15 1:34 pm

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