Friday, May 8, 2020

A Commercial Modular Factory Sues Developer Over Non-Payment

Modular factories that work in the commercial side of construction face many challenges even though modular is predicted to be the most sought-after way to build hotels, dormitories, affordable housing and apartments Post COVID-19.



No production, no income.

One situation almost all of commercial factories face is keeping their production lines operating without long breaks between projects. For example, if a project were scheduled to begin within a day or so of the last module of the previous project rolling off the assembly line but the next project got delayed due to a financing or zoning problem that takes a month to resolve, the line goes down for a month.

Even a week’s delay in putting a project on the line could mean hundreds of thousands of dollars in lost revenue.

A less talked about problem

There is another situation many modular factories face that is not as obvious as an empty production line. It is when the project is completed but payments are held back and the factory has to take the developer to court.

Not only is this a long process, it also costs the modular factory time and money. In the meantime, getting materials and paying labor becomes an almost start-up experience. The factory may have to extend their A/P or take out loans to meet their fixed and payroll costs.

From an article by John Beague in Pennsylvania Real-Time News

"On May 7th a modular construction company in Columbia County claims a university in Connecticut owes it $705,039 for change orders on a housing project.

Modular Steel Systems Inc. of Bloomsburg accuses Fairfield University in a suit filed Thursday in U.S. Middle District Court with breach of contract and unjust enrichment.

Modular Steel says it was contracted to provide 92 modular units for a project known as Fairfield University Townhouse Style Junior Housing in Fairfield, Connecticut.

Despite being a subcontractor, Modular Steel says it dealt with representatives of the university including its architect, who directed changes to windows, doors and cabinets.

The company agreed to make the changes but, according to the complaint, it has not been paid $542,684 for the work.

It also accuses Fairfield of not releasing $192,335 in retainage. The suit seeks payment of the $705,039."

From an article by John Beague in Pennsylvania Real-Time News

3 comments:

  1. Commercial change orders - handle with care.

    ReplyDelete
  2. Change orders need to be approved in writing by authorized agent, and not by email or verbal.

    ReplyDelete
  3. MMC: nice bling but see here. Beware.

    ReplyDelete