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Developers and contractors in dispute over project costs

On Behalf of | Mar 21, 2024 | Construction Law News

Construction can be a complicated endeavor in Colorado. Developers, contractors and subcontractors will have estimates, plans and contracts to try and complete the project as it was designed. However, problems can arise. If they cannot be addressed through discussion and negotiation, it might be necessary to move forward with litigation. For everyone involved, it is imperative to know how to address disagreements to reach an acceptable resolution.

Large scale project developers are sued over shortfall

A construction project that provides a combination of cost effective housing and a food hall is dealing with a dispute between the developer and its contractor. According to the contractor, it was not paid $2.4 million it was owed.

The project was a large-scale undertaking with myriad entities involved. State and federal governments took part. The contractor says that costs went beyond the cap it initially agreed to of $7.25 million. This was due to changes the developers asked to be made. The contractor claims that the developer did not adhere to the contract and a mechanic’s lien was put on the property to recover what they lost. Subcontractors who were brought in to work on the project are also saying they were shorted.

For its part, the developers claim that the excess costs were because of missteps by the construction company. The project’s cost was not supposed to go beyond $7.25 million. The contract did not stipulate how to address price increases. There are also allegations of construction defects that needed to be repaired.

While the project was in progress, there were widespread increases in construction costs due to scarcity of materials and supply chain snafus. The construction company and subcontractors subsequently fell behind on the project and there was substantial turnover in its staff.

Disagreements are common with construction projects

In a residential or commercial project, construction contracts and different perspectives about them frequently occur. Whether it is the crafting of the contract, challenges that arise while it is underway and problems after it is completed, these issues can be costly and time-consuming.

From the viewpoint of the owner, a project that is not completed based on the contract with its time constraints and parameters adhered to can be financially catastrophic. The construction company and subcontractors who are not paid for work they did or are dealing with cost overruns that have not been covered will also face challenges. For every aspect of construction law, it is important to be prepared and know how to reach a solution whether that is through negotiation or by going to court.