ConstructionPro Week, Volume: 3 - Issue: 2 - 01/10/2014

Do Contractors Speak from Both Sides of Their Mouths?

By Bruce Jervis

 

A prime contractor’s relationship with the project owner obviously differs from the contractor’s relationship with a subcontractor. This is true both financially and contractually. Consequently, it may be advantageous to represent things one way to the owner and another way to the sub. Yes, contractors occasionally speak out of both sides of their mouths.

 

A recent example arose on a VA project in New York. Road work was delayed when the project owner refused to allow a subcontractor’s heavy crushing equipment into a cemetery. The prime contractor took the position with the VA that this was an excusable delay and requested a 48-day extension of the prime contract performance period. At the same time, the contractor told its subcontractor the delay was not excusable. The contractor defaulted the sub for failure to maintain the subcontract schedule.

 

A federal court rectified this situation. The court ruled that the contractor had violated the implied covenant of good faith and fair dealing. The contractor, not the subcontractor, had breached the subcontract.

 

Have you seen this from either a project owner or subcontractor perspective? Have you ever discovered that a contractor’s representation of a situation differed from the contractor’s representation to a third party? From a contractor’s standpoint, are you always consistent in handling matters such as changed work or scheduling? I welcome your comments.

 

COMMENTS

There are times when "talking from both sides of your mouth" are necessary but i believe there are fair, ethical ways, and subjects where this applies. For example we have learned that if the contract with the owner calls for a completion date of June 1, we create a project schedule for our subcontractors that represents a completion date of May 10 and we dont let the actual date out to anyone. This is only good practice that benefits us , the owner, and the subcontractor. In the example in the article above the Contractor was just plain unethical and THAT in unacceptable.
Posted by: Carl Shields - Friday, January 10, 2014 11:32 AM


I have worked for Key general contractors in the construction of Key projects in Silicon Valley and other projects in Northern California . We always regarded subcontractors as key members of our contractor packages that enables us to obtain contracts either competitively or in our design and build projects. We were successful in having subcontractors return to either negotiat Projects with us or bid competively.

As a general contractor/consultant, my feeling is that subcontractors play a key role and that the contractor has an obligation to take care of the relationship. In the case cited, the general contractor should have advised subcontractor of their negotiations with owner.

Presently many general contractors are just brokering subcontractors who gt jobs based upon lowest price, and if this was the circumstances in the case cited, I can understand that they would not have had a long term relationship with the subcontractor.

Contractors have to recognize that how they treat subcontractors affects reputation of course and ultimately the subcontractor prices they get. In the construction industry reputation is everything and to hear of the action this contractor followed is very dissapointing as this type of action is what gives other general contractor a bad reputation with the public.
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