Scope Growth and an Overdue Invoice on a Boutique Hotel Courtyard
A landscape architecture firm holds a $148,000 lump-sum agreement with a developer for a 0.6-acre boutique hotel courtyard, covering schematic design through construction documents plus bidding support. The agreement lists hourly rates for additional services ($165 principal, $130 project designer, $95 technician) and states that client-directed revisions after written approval of a phase are additional services. The developer approved the design development package at 60% construction documents with a signed comment sheet. Three weeks ago the developer's project manager phoned the firm's project manager: the operator wants the water feature moved 14 feet off the structural slab, three additional photorealistic renderings for investors, and $400,000 of value engineering. The team has already logged 96 unbilled hours. Invoice #4 for $62,000 is 75 days unpaid; the contract permits suspension after 14 days' written notice. The developer's next draw is scheduled in three weeks.
1. Analyze which of the three client requests are additional services, and how the firm should price and authorize them.
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Read the contract first; it controls. Client-directed revisions after written approval of a phase are additional services, and the changes arrived after a signed DD approval.
Water feature relocation: driven by the operator, not by a design error, and moving it 14 feet off the structural slab touches structure, waterproofing, and possibly slab layout. Clearly additional. Price a redesign of the affected area, structural consultant fees, and coordination time.
Renderings: three photorealistic images for investor marketing were not in the scope list. Additional. Offer a fixed price per image with a defined number of revision rounds so the request does not become unlimited.
Value engineering to cut $400,000: ambiguous. If the construction budget was a stated design constraint and the documents exceed it, VE is arguably the firm's obligation. If the budget moved after DD approval, it is additional. Determine which before pricing, and say so in writing.
Process: issue a written supplemental services request covering all three, with hours already incurred plus a not-to-exceed estimate for the remainder. The 96 hours can be billed if the work was authorized, even orally - but prove it: have the firm's project manager write a confirming memo now recording what the developer's PM said and when. Do not continue the work past the authorization point.
2. Should the firm suspend services over the unpaid invoice? Lay out the options and the risks.
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Options, roughly in escalation order.
One, a demand letter with a deadline. Cite the suspension clause, state the amount, and set a firm date. This is required before suspension anyway and preserves the record.
Two, suspend after the 14 days' notice. Contractually permitted, and the timing is strong given the draw in three weeks. But suspension stops the firm's cash flow, invites a delay counterclaim, and may end the relationship. Do not threaten it unless the firm will actually follow through.
Three, negotiate partial payment of the undisputed portion now, with the balance to follow. Often fastest.
Four, lien or bond claim. Deadlines are short and unforgiving, and some states require a preliminary notice. On a private project a mechanics lien for design services may be available; verify that landscape architecture services are lienable in that jurisdiction before relying on it.
Five, escalate principal to principal rather than PM to PM.
Recommendation: notice plus a principal-level call offering partial payment, with suspension held in reserve, and bill the 96 hours before the next invoice so the receivable matches work performed. Confirm with counsel whether accepting partial payment waives any lien rights.