Construction contracts are sometimes stated as fixed price, but that price is the sum of a series of unit-priced line items. Payments under the contract are based on the fixed price. The unit prices may, or may not, be useful in pricing progress payments or changes in the work. Otherwise, what is their purpose? The Rhode Island Supreme Court was recently presented with an analogous dilemma under an architectural services agreement.
The design contract stipulated what it called a “fixed lump sum fee.” Progress payments based on that fee were to be made at various milestones in the design process. The contract also stated compensation was calculated as 11% of the estimated construction cost, with final payment to the architect subject to adjustment based on actual construction cost. The architect performed 80% of the design work; however, the project was never constructed as designed.
The second case in this issue involves a bidder’s right to withdraw a mistaken bid and recover its bid security. A Virginia state statute gave public project owners the right to reject mistaken bids, but it was silent regarding the rights of the bidder. Could a low bidder alleging a transcription error during the bidding process force the project owner to release it from its bid?
The third case interprets the “Damage to Work” standard federal construction contract clause. Is the storm surge placement of debris on the job site “damage?” And, is the removal of that debris “repair”?
