Dive Brief:
- Construction resumed this week on the stalled $192 million Daytona Beach Convention Hotel & Condominium project in Daytona Beach, Florida, after developer Protogroup's new general contractor secured the necessary permits to take over the job, according to The Daytona Beach News-Journal. Scheduled for completion in 2020, the project will reportedly be the most expensive hotel/condo development in city history, and one of its two towers will be the tallest in the area at 380 feet.
- Protogroup fired Philadelphia, Mississippi-based contractor W.G. Yates & Sons Construction Co., leaving the project without a general contractor. Because of permitting rules, this forced the city of Daytona Beach to issue a stop-work order, which was lifted once Port St. Lucie, Florida-based contractor Gryffin Construction was cleared to begin work. City officials said there were five new permits issued for the project — one for site work, two for south and north tower foundations and two for construction on both towers. Gryffin said it would retain most of the subcontractors that were working with Yates.
- Yates spokesman Kenny Bush told the News-Journal that they received no warning they would be released from the project and that Protogroup was happy with their work until just a week before the termination. Bush said Protogroup had breached their contract by not paying any of their invoices since June and by "wrongfully withdrawing the building permit." Protogroup denies Yates' claims of nonpayment and said the company was paid in advance.
Dive Insight:
The commercial construction industry has very few "surprise" firings, as Yates claims happened on the Daytona Beach project, because most standard construction agreements require a specific set of notices before termination for cause. For example, if a contractor or subcontractor is behind schedule, the standard contract will likely require that they are given a notice of default with a set period of time to cure the default before they can be terminated.
However, popular contracts like those published by the American Institute of Architects also allow for "termination for convenience." This can be an expensive option for the party terminating the agreement. If an owner, for instance, terminates a contract without cause, then the owner would still be on the hook financially. In AIA A201-2017 General Condition of the Contract for Construction, the owner has to pay for completed work, plus costs associated with the termination and possibly a predetermined termination fee, if one is identified in the contract. Some contracts could also give the terminated contractor the right to collect overhead and profit on completed work.
