Holloway Consulting is a construction consulting firm that provides a wide range of advisory, management and disputes services to all parties in the construction process, including law firms, public agencies, developers, owners, design professionals, surety and insurance carriers, construction managers, general and trade contractors, etc.

This page provides construction owners’ views of issues that have arisen in Holloway’s projects and disputes on Guaranteed Maximum Price (GMP) Contracts and Cost-Plus contracts:

Construction Contract Experts

Guaranteed Maximum Price | Cost Plus Contracts

GENERAL COSTS OWNERS BELIEVE ARE NOT BILLABLE

GC1 – Costs/billings, in the aggregate, which would cause the GMP to be exceeded. (This is consistently an area of GMP disputes.)

GC2 – Billed costs that exceed the earned budget for pay items in the contractor’s periodic or final pay applications. (The issue of whether or not each line item in an Application For Payment represents a “mini-GMP” is a consistent issue in contract disputes.)

GC3 – Unnecessary/excessive costs related to substandard contractor performance for inadequate administration, supervision, coordination, and planning; inadequate equipment, material and labor; and, work not performed in the most expeditious and economical manner. (For example, a general contractor’s billings to the owner will often incorporate subcontractor billings. On occasion, a subcontractor’s billings will include costs resulting from performance problems and inefficiencies.)

GC4 – Rework costs due to poor coordination, repair damaged defective or nonconforming work related to improper performance of the work and poor workmanship; remediation work; and the costs of disposal/replacement of materials and equipment incorrectly ordered or supplied.

GC5 – Billed costs at rates or quantities higher that the standard paid or purchased at the place of the project, or for the size and complexity of the project.

GC6 – Excessive billed costs for delay, impact, acceleration and inefficiency resulting from non-compensable issues. (This issue is similar to GC3 above.)

GC7 – Costs associated with bid error. (Attempts to recover bid error, whether in fixed price or GMP contracts, are a consistent theme in contract disputes.)

GC8 – Costs lacking sufficient support or backup to prove that they were indeed incurred and paid. (Contracts such as AIA Document A111 allow the owner to base his/her determination of the final cost of the work on the contractor’s accounting records. When these records were deficient or nonexistent, some owners have chosen not to pay the related billed costs.)

GC9 – Miscoded costs or costs otherwise charged improperly to the subject project and contract. (Miscoding costs to the wrong cost code is common to construction accounting, but we have also seen contractor’s bill costs from an entirely different project.)

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The Holloway Consulting Group, LLC
Construction Advisers, Managers and Experts
12081 W. Alameda Pkwy., #450
Lakewood, CO 80228-2701
Denver Phone: (303) 984-1941
International Toll Free: (888) 545-0666
Fax: (303) 716-0432

Email: steve.holloway@disputesinconstruction.com
Blog: disputesinconstruction.com
Web: hcgexperts.com

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