Construction Engineering 380
Chapter 13
Owner Obligations
Owner Obligations
• Fee structure is determined by the project
needs
• A variety of compensation methods are
legally valid
• Cost and time methods
– Multiple of direct salary expense
– Multiple of direct personnel expense
– Professional fee plus expense
– Hourly rates
Owner Obligations
• Project attribute methods
– Fixed sum
– Percentage of total project cost
– Multiple of billings
– Square footage
– Unit cost
– Royalty
Owner Obligations
• Additional services and reimbursables can add
to fee basis
• Compensation (fee) should be based on risk,
owner attitudes, and technical difficulty
• Payment schedules are articulated in the
contract:
–
–
–
–
interim
packages
monthly
late
Owner Obligations
• Failure to perform is usually considered a
material breach and cause for damage
recovery
• Prevention or hindrance (owner won’t
answer questions required to complete
design) does not prevent recovery
• Unjust enrichment and forfeiture are wellestablished legally (process is clear)
Owner Obligations
• Procedure for completion of design in
alternative delivery or fast-track is not as
clear
– Financial exigency
– Bankruptcy
– Repudiation
– Unwillingness or inability to perform (death of
a partner)