Adapting a Proven Private Construction Agreement for a Public-Work Mixed-Use Development

Zeidel & Associates represented its long-time owner/developer client in adapting a previously negotiated private-project guaranteed maximum price (GMP) construction agreement for use in the context of a public horizontal construction of a mixed-use development in the Southwest region, which will surround a large manufacturing plant. The engagement allowed the client to leverage its successful contracting history with the selected general contractor while revising the form to address the statutory requirements applicable to public work.

Situation

The client is developing a large mixed-use project around the manufacturing plant and needed a GMP agreement for the first major horizontal construction phase. This initial contract was a critical early milestone in a multi-year development effort. The client normally develops private projects, often multifamily projects, that are subject to the statutory constraints applicable to private projects in the state, but not to the same public-work statutory regime. Here, the client was pivoting into public work and wanted to use a general contractor with whom it had worked successfully before. Their prior private-project contracts had been extensively negotiated, and the client wanted to preserve the benefit of that history in this new context. Because the project implicated public-procurement considerations, the agreement and negotiation strategy had to align with the state’s strict statutory requirements, which govern public improvements and include procurement rules for public construction, such as contractor selection, bidding, contract requirements, and delivery methods such as construction-manager-at-risk. The agreement also required review and approval by the client’s development partner, which added another layer of coordination and timing.

Approach

We worked closely with the client over several months to prepare, revise, and negotiate the GMP agreement so that it could function as a practical delivery document while also satisfying the applicable state statutory framework. Rather than starting from scratch, we helped the client use the parties’ prior negotiated private-project contract as the foundation for the new agreement, preserving commercially settled terms where appropriate and revising provisions that needed to change because of the public-work environment. Our role included working with local counsel to align the contract structure with the project’s public-facing requirements, addressing issues raised during negotiations, and helping guide the document through internal and external review. While the client had previously worked with the contractor, the public project nature of this situation required both parties to be flexible in positions each normally may not have taken in a private construction situation. For example, the client had less say in objecting to subcontractors once the project was underway. We also coordinated revisions necessary to obtain approval from the client’s project partner, balancing legal compliance, commercial objectives, and the realities of a large phased horizontal construction project.

Result

The parties ultimately reached agreement on the GMP contract, completing the first significant contractual step in a complex, long-range development program. By leveraging the parties’ prior negotiations and working from a familiar contract structure, we helped the client pivot efficiently into a public-work environment without starting from scratch. The finalized agreement positioned the client to move forward with the horizontal construction phase on a form that reflected both the commercial terms that had proven successful in prior private projects and the statutory requirements necessary for the public-project context.