Termination by Owner for Convenience typically results in what compensation to the contractor?

Termination by Owner for Convenience typically results in what compensation to the contractor?

• A. No compensation
• B. Contractor pays for shutdown costs
• C. Contractor gets paid including shutdown costs
• D. Only costs incurred to date

Answer: (C)

When the owner terminates for convenience, the contractor is entitled to be compensated for the work actually performed and for reasonable costs to wind down the project, including demobilization. The contract typically requires payment for the completed work, plus shutdown (demobilization) costs and a reasonable overhead and profit on the work that was performed. This makes the contractor whole and covers the costs of stopping work early due to the owner’s decision. That’s why the best answer is that the contractor gets paid including shutdown costs.

When the owner terminates for convenience, the contractor is entitled to be compensated for the work actually performed and for reasonable costs to wind down the project, including demobilization. The contract typically requires payment for the completed work, plus shutdown (demobilization) costs and a reasonable overhead and profit on the work that was performed. This makes the contractor whole and covers the costs of stopping work early due to the owner’s decision. That’s why the best answer is that the contractor gets paid including shutdown costs.