Case 3: Bid-design-build

This general contractor has been awarded a two-story speculative office building project on a lump sum bid basis. The mechanical, electrical, and plumbing (MEP) systems, including the heating, ventilation, and air conditioning (HVAC) and fire protection systems, were also bid on a lump sum but design-build basis, with very little criteria information available for them to base their bids on. The subcontractors were responsible for preparing their own documents and having them stamped by a state-licensed engineer and obtain their own permits. The general contractor did not submit these documents to the owner for approval, as it was not specified that they had to do so. The MEP systems subcontractors have routinely received city inspections and approvals for work in place. As the project nears completion, the owner and his architect have just walked the project, and they have discovered that several areas of the design-build MEP subcontractors work is not up to their expectations. This includes:

HVAC: The ceiling is being used as a return air plenum. This is much less expensive than utilizing a ducted return air system. It is also noisier, less efficient, dirtier, and requires plenum-rated electrical cabling.

Plumbing: The bathroom plumbing fixtures appear to be more residential than commercial-grade. They are less expensive, but they do meet code.

Electrical: The light fixtures that are being installed are 24 prismatic versus more energy-efficient, more expensive, and more attractive deep cell parabolic.

Fire protection: The fire protection sprinkler heads have not been installed center of ceiling tile, and are not lined up in the large open office areas and hallways.

MEP controls: The HVAC systems have been ganged under very large control zones such that there are only two thermostats per floor. Even the conference rooms, break rooms, and corner offices are not on separate zones.

The owners representative is now withholding a current pay request for $300,000, requesting the general contractor correct what he feels are deficiencies. Can he do this? Should the general contractor keep proceeding? Should the GC force the subcontractors to fix the problems? Do subcontractors care about client satisfaction? How will this be resolved? What could the GC have done to keep this from occurring? How would your answer differ if this were a negotiated project versus lump sum bid project?