ConstructionPro Week, Volume: 2 - Issue: 36 - 09/06/2013

Can Advocacy on Behalf of Subs Harm Contractors?

By Bruce Jervis

Prime contractors, when attempting to resolve payment and scope of work disputes with subcontractors, frequently advocate on behalf of a sub against the project owner. The hope is that the project owner will authorize additional funds which can be used to compensate the subcontractor. This advocacy, however, has its pitfalls.

In advocating to the owner on behalf of a subcontractor, the contractor may take positions which are contrary to the contractor’s interest vis-à-vis the sub. It is difficult to be the advocate for a party which may become one’s adversary. An example is found in a recent federal court case from Alabama.

The prime contractor sent a letter to the project owner stating that the contract documents called for 32-inch step width escalators and the equipment installed by the contractor’s sub complied with the contract requirements. Under pressure from the owner, the contractor later reversed course, agreeing that the contract required 40-inch escalators and insisting the subcontractor absorb the cost of replacing the equipment.

When sued by the subcontractor for the replacement cost, the contractor attempted to keep the letter to the owner out of evidence, contending it had merely expressed a position as an advocate. The court admitted the letter, however, as evidence of the prime contractor’s interpretation of the subcontract scope of work. The subcontractor successfully recovered from the prime contractor.

What is your opinion on this? Is it possible for a contractor to advocate on behalf of a subcontractor without compromising the contractor’s ultimate position? Subcontractors are not supposed to communicate directly with project owners, so is there really any alternative for contractors? I welcome your comments.

COMMENTS

As a General Contractor you have to stick up for both the owner and the subcontractor. Regardless of the pressure from either the owner or a subcontractor. If the construction documents stated 32-inch steps and the architect approved the shop drawings, then you never should have agreed to make your sub pay for the replacement cost. Stand your ground or you will be the one paying.
Posted by: Michael - Friday, September 06, 2013 10:06 AM

In at least some cases, the GC can have it both ways by being careful with the language it uses. In a situation where my GC client's sub sought extras, the GC went to bat for him but always reminded the sub that the GC's obligation to pay was contingent upon the Owner agreeing and paying.
Posted by: Rob - Friday, September 06, 2013 10:31 AM

it is a sad day in this industry when telling the truth bites you in the ass but the owner and architect get off scott free.the fact that the GC tried to keep the letter to the owner out of evidence shows his true colors.
Posted by: phil plossl - Friday, September 06, 2013 11:15 AM

All too often, A Sub gets the shaft because he is the lowest on the totem pole. If you adhere to the contract, follow the drawings and instruction in writing, then things should be paid for accordingly, I'm afraid there are no friends in this game. DOCUMENT, DOCUMENT, DOCUMENT is the only way for everyone.
Posted by: Jan McAlindon - Friday, September 06, 2013 1:55 PM

Our continental law system considers both contracts to be independant. Taking this, it is the Contractor who has to harmonize the scope of both contracts to avoid such conflict and any direct communication
Posted by: Burkard Lotz - Monday, September 09, 2013 3:55 AM

The general contractor and their sub-contractors are suppose to be a team working together to accomplish an acceptable completion to what is drawn and specified concerning the project. The general contractor and their subs must band together to see this end is met. To often the general contractor makes the mistake of banding to closely with the owners and forgets who is making them the money. Remember anything can be written into a contract; however, if it does not comply with state law it can not be enforced although signed by all parties.
Posted by: Carl Beck - Monday, September 09, 2013 8:22 AM

The questions that comes out from this case is why the contractor reverses his claim from the sub contractor to the owner side and is there any interest by the owner made contractor doing that.

With any contractual work, prime contractor stands in middle way between owner and sub contractor of work. Contractor has to represent the responsibility of owner interest in field and to get the quality of final work from the sub contractor based on client interest. As result, there is no any interest communicates between owner and sub contractors. So any conflict comes to the sub contractors should be forward to the contractor who has the responsibility to interfere the sub contractor work and get evidence of work completion.

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Can Advocacy on Behalf of Subs Harm Contractors?