A global manufacturer’s in-house legal and construction teams chose us for a major expansion of its physical plant. This project involved a capital expenditure of $85 million and a Cost-Plus Guaranteed Maximum Price (GMP) Agreement for engineering, procurement, construction (EPC) and startup. The contractor’s EPC responsibilities were based on performance specification / bridging documents which addressed our client’s proprietary manufacturing process. The EPC contractor – approaching its GMP limit well before project completion and facing very substantial liquidated damages – sought to increase the GMP due to rapidly escalating costs, by $14 million, as its costs were increasing by about $1 million each month. While some attributed this setback to post-pandemic supply chain disruptions, others suspected the escalation might conceal underlying issues with cost estimates and evolving design issues. This critical project, with hundreds of workers on-site daily, required continuous progress, leaving no room for work stoppages. Yet, the EPC contractor, by prematurely reaching its GMP, risked being unable to invoice for ongoing work. Because of our experience with similar disputes, contracts and projects, we were engaged to provide strategic guidance, including an assessment of options for short and long-term “win-win” outcomes and advance preparation with forensic accountants and other experts should the dispute escalate to work stoppages and/or formal dispute resolution. Jeremy was honored to directly advise the Fortune 500 company’s President & CEO and General Counsel.
