Whether your role is in helping analyze the contractor’s work on the project to certify a contractor’s termination for cause, or you are being shown the door yourself, and everything in between, termination is a subject that is ripe with potential problems.

Consider these summary tips as part of your practice, every time the termination idea arises:

1.  Remember that you are the neutral and must be impartial between Owner and Contractor
2. After you have made a fair decision, document your decision to the Owner and Contractor
3. Provide options less nuclear for Owners– stop work; removing scopes of work; etc.
4. Guide your Owner on proper termination, notice provisions, and the like
5. Document project status, regardless of who is doing the firing and who is leaving the project
6. Document next steps in the work on the critical path if you are the one leaving the project
7. Discuss the use of your subconsultants if you are leaving
8. Protect your plans and specifications, and only release them with protections (licensing fee; limiting language on the plans; and/or indemnity agreements)

Did you miss any of the series?  You can find it all at these links:

• Part 1  Introduction to Construction Termination Issues
• Part 2  Contractor Termination
• Part 3  Contractor Quitting the Project
• Part 4  Architect/Engineer Termination
• Part 5  Architect/Engineer Quitting the Project

Or, use this link if you’d rather have a downloadable PDF of the entire series.

Still have a burning question that I haven’t yet addressed?  Let me know below or drop me an email.

Until next time……… Hasta luego!

Photo by Petr Kratochvil /Public Domain Photos

Architects and Engineers are sometimes pleasantly surprised to find out that they, also, can terminate those crazy, hard to deal with Owners—at least, if the Owners fail to make payments as required.

“It’s not you, it’s me!” (It’s you)

You can also terminate for Owner delays to the work, or where you think the contractor should be fired but the Owner disagrees.   Again, the standard 7 days written notice is required.  (See B101 §9.4).

Do you have to walk off the job if they are not paying you?  No—you could exercise the smaller remedy of suspending services (with 7 days written notice) until payments are caught up or the contract performance is corrected by the Owner.   (See B101 §9.1).   Suspension rather than outright termination is a softer approach when working with an owner you do not want to burn (too many) bridges with.

Can the Owner use your plans and specs?

The default AIA design professional contract provides that the drawings and specifications are the copyrighted work of the DP (B101 §7.2) and that the Owner is given the limited, nonexclusive license to use them only for the Project.  (B101 §7.3).  However, all bets are off if you quit because they are not paying you.  [Under ConsensusDocs, copyright issues are essentially the same].

 In a “rightful termination”, the owner’s license to use your work terminates.

So, you should remind the Owner– in writing, of course– that they are forbidden from using your plans.  Now, you can negotiate a release of the documents in exchange for a release of liability or indemnity agreement.  The AIA provides for a “licensing fee” under B101 §11.9.

The right to your designs is a critical one—protect it, and use it to protect yourself.  Consider both the licensing fee and an indemnity agreement to protect you in the case where you are leaving a project that is still being constructed.

Have you ever “fired” a client?  How did they take it?  Was it a relief to not have to continue working with them?  Share below, or shoot me an email.

And stay tuned for the conclusion of our series next week, in Part 6:  Termination Final Remarks

Photo (c) Pixy.org 

What if you are told that your own design services are no longer needed or welcome on a project?  Can they do that?  What happens then?  How do you protect yourself.

As you probably realize, while rare, the Owner does have the legal right to fire you “for cause”.  See B101 §9.4, as long as the Owner gives you 7 days written notice.  In fact, the Owner can terminate your contract for any reason at all (maybe you root for the wrong basketball team?) by terminating you for convenience (i.e., for any reason whatsoever) under B101 §9.5, again with 7 days written notice.

As with Contractor terminations, the money you get when fired for convenience is much greater than when you are terminated for cause.   If you are fired “for convenience”, you get paid for all services previously rendered as well as termination expenses, including anticipated profit on the value of services not performed. See B101 §9.7.

But, what about when you are terminated for cause?  While unusual, this can–and does– happen.  It means you will not be seeing the lost, but anticipated, profits on the job.  Usually this is not as significant as a contractor termination, as during the construction phase you are presumably being paid monthly pursuant to a written contract.

If you are being fired, document everything!  Document what has happened, the status of submittals or product samples that you may have but have not yet approved, the pending dates with inspectors—you name it.  Put together a nice letter to the Owner telling them everything currently going on with the project.  This will protect you as much as it protects the owner.

Secondly, notify your subconsultants.  The owner may want them to continue on—you will have to have frank discussions with them about whether they are willing to continue if you are terminated, and in general they will not be able to do so unless you assign the agreement.  This is leverage you can use while exiting stage left—use it to get better termination terms or protections from the Owner.

Finally, if you are being terminated because the Owner does not agree with your pay application or work completed determinations, document those disagreements as well.

Next week, Part 5—what to do when YOU want to be done with it all

Ever been terminated or released from work on a project you designed? It’s never pleasant, but it can be handled.  Share your details below, or shoot me an email. 

Photo (c) and Designed by Wannapik

Last week we discussed an Owner terminating a Contractor “for cause”.  Today, it’s time for a 180:  what is your role as the architect when the Contractor is quitting?

First, be aware that there are valid reasons for a contractor to quit within the contract itself. Most of these have to do with either (a) time delays/stand stills or (b) failure of the Owner to make payments as required.

Never thought being a designer required Referee skills, did you?

The Contractor can suspend or terminate a contract with the Owner for cause, provided a 7 day written notice is given to Owner and Architect.  See A201§14.1.3.  (This can be an email notice as all AIA notice clauses now allow).

If this happens, what do you do?  First, consult with the Owner to see if there is truth in the Contractor’s assertions.  See if payment can be caught up, or any disputed money put into an escrow, or other options that will keep the Contractor working.  Ultimately, if the project comes to a stand-still, money will be lost.  Where money is lost, parties are sued.  Keep the project moving to lower your own risks of being sued.

If there is no way to salvage the situation, make sure to fully document the  Project status at the time the contractor quits work.  Photographs, videos, a line in the file as to how much money had been earned and paid by the termination date.  All will be key evidence in the inevitable law suit.

While the contractor’s decision to quit is out of your hands (you don’t have to certify anything), documenting the state of the Project can only help all parties later on.

Next week, Part 4—when they want to fire You!  (the audacity!). 

Until then, have you seen a contractor walk off a job site?  Did you agree with them?  Were you surprised when it happened?  Share your war stories in the comments, or drop me a line.

Photo © World Series Boxing via Creative Commons License