A general contractor had previously submitted a budget of $14 million to the owner of a medical…

A general contractor had previously submitted a budget of $14 million to the owner of a medical office building (MOB) project. The budget was based on 70% design documents. The negotiated contractor was selected based on the experience of its project team and its approach to the project. The contractor had been given a preconstruction services contract for $20,000 to join the owner’s project delivery team. The contractor participated during the balance of the design phase of the project, performing value engineering and constructability analysis, and providing input to the construction drawings. During the last two weeks of the preconstruction phase, the general contractor mobilized on the jobsite. The owner neither directed nor stopped them from doing so. The terms of the prime construction contract had not yet been finalized. The contractor set up the site camp, brought temporary utilities to the site, and began the initial surveys and layout. The construction drawings were issued and incorporated all of the team’s input, along with the city permit comments. The general contractor then prepared a $15 million guaranteed maximum price (GMP) estimate based upon these revised documents, which exceeded the previous budget by $1 million. The owner was extremely upset and would not listen to explanations or reasoning why the estimated costs had increased. The general contractor was asked to move off of the site. When the GC requested to recover the additional $15,000 they had incurred for the two weeks on the site, the owner refused payment. Should the general contractor have mobilized onto the site? Why would they have been motivated to mobilize without a contract? Does the GC have any recourse for payment? What steps would you suggest for both the owner and the GC now? If the GC was entering into a lump sum contract, would their actions have been different, and why?


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