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Initial phase of Orlando airport expansion terminated due to disagreements over risk allocation

Last month, the Greater Orlando Aviation Authority—the entity responsible for managing the Orlando International Airport—announced that it would be terminating a contract for the initial phase of a significant expansion of the airport. The expansion is aimed at developing 1,800 acres for mixed-uses, including a warehouse area for airport vendors.

The expansion is projected to cost about $1.8 million, when all is said and done. The contractor’s job in the first phase of the expansion was to construct between 16 and 21 new terminal gates, a parking garage and an area for ground transportation. 

The airport has said that no delays are expected to result from the contract termination. As we’ve previously discussed on this blog, complications and delays in critical aspects of construction projects can often result in overall project delays, which can come with massive costs to owners and contractors, depending on the circumstances and efforts taken to mitigate losses. Sorting how who is responsible for such delays, and exactly what the costs were, then becomes a necessary task.

One interesting aspect of the dispute is that while Orlando International Airport officials have claimed that the contract termination was due to the contractor attempting to shift risk to the airport, the contractor has said the termination was tied up with the contractor’s plan to achieve cost-savings on the project. This dispute occurred despite the fact that the contractor had worked on nearly a dozen previous projects for the airport.

On some level, one would expect that experience working together should have given the airport and the contractor familiarity with how to proceed on a project with a mutual understanding regarding risk allocation, but each project is different and the specific individuals in charge of managing a project can make a difference as well. The advice of legal counsel regarding the best interests of the parties can also make a difference.

In our next post, we’ll look a bit more at the issue of risk allocation in construction projects, and the role an experienced attorney can play in helping protect a party’s interests in a construction project. 

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