This new athletic club involves very complex mechanical, electrical, and plumbing (MEP) systems, totaling over 40% of the entire construction budget. The owner had a bad prior experience with a fully designed-bid-built mechanical project. Under the recommendation of the architect and estimating consultant, they decide to employ design-build (D-B) mechanical and electrical subcontractors directly.

Assume in the above case the client carries the design portion of the MEP contracts and a negotiated general contractor will ultimately carry the construction portion of the contracts when a guaranteed maximum price (GMP) contract is developed. The design agreements are very loose and the subcontractors' deliverables and detailed schedules of values (SOVs) are not defined. The subcontractor-design team reports that the documents are complete, and the general contractor submits their GMP to the owner. It is significantly over their earlier budget, especially in the areas of mechanical and electrical. The subcontractors refuse to negotiate their construction estimate and the owner announces they will bid this portion of the work out.

1. Is this ethical?

2. Is the owner guaranteed a lower construction price if this portion of the work is put on the street for open bidding?

3. Will the original design-build subcontractors submit competitive lump sum bids on their own drawings?

4. If so, will they be successful in submitting change orders for discrepant documentation?

5. What are the risks for all parties?