Disputes are a reality in the construction industry. Few things in business are as frustrating as or hinder company growth more than project-related disputes.
Changes and Additions
In a fixed price contract, the contractor, is entitled to the contract price plus an equitable adjustment of that price to include changed or extra work. Quite frequently the issue arises as to when a change has taken place. Typically, a general contractor or owner will take the position that an extra cost change has not occurred when a lower tiered subcontractor encounters conditions or problems it had not anticipated at the time of contract formation.
A contract change takes place when any site condition, management error or changed condition takes place which differs from the work as defined by the contract documents. Changes may include additions to or deletions in the work; changes in the method or materials, equipment required, correction of drawings or specifications, acts or omissions of other contractors, and frequently changes in the original and most efficient production schedule.
Many disputes in construction center around changes to either the scope of work or the amount of labor or materials required to accomplish the job.
Change orders, work changes, extra work orders or other directives may be either oral or written. In most cases, a change order becomes a dispute when one party claims a right to an increase or decrease in the contract price. In a perfect world, all change orders would be signed in the field and approved by the owner and/or architect (known as “field change orders”). In practice, that is so very often not the case. More often, with the best of intentions, contractors succumb to the job exigencies and the paperwork and necessary approvals are not accomplished on time. On some projects, such as public works, subcontractors may be required to perform the change order and then assert their claim later.
[Except in the middle of a battlefield, nowhere must men coordinate the movement of other men and all materials in a construction project…. Even the most painstaking planning frequently turns out to be mere conjecture and accommodation to changes must necessarily be of the rough, quick and ad hoc sort, analogous to ever-changing commands on the battlefield].
Blake Construction Co. v. C. J. Coakley Co., 431 A.2d 569, 575 (D.C.App. 1981).
A constructive change is a change where a contractor performs work beyond the contract requirements, but without a formal order.. Miller Elevator Co. v. United States, 30 Fed.Cl. 662, 678 (1994). Also, circumstances may have the effect of requiring a contractor to perform in a manner different from the terms of the contract. Constructive changes include defective plans and specifications, changed conditions, changes in the methods of performance, delays in the submission/approval process, rejection of legitimate “or equals,”.
Legal scholars have recognized five distinct types of constructive changes: (I) disputes over contract interpretation during performance; (II) [owner] interference or failure to cooperate; (III) defective specifications; (IV) misrepresentation and nondisclosure of superior knowledge; and (V) acceleration.” 30 Fed.Cl. at 678, citing Ralph C. Nash, Jr., Changes and Claims, Construction Contracting 534 (George Washington University 1992); Ralph C. Nash, Jr., GOVERNMENT CONTRACT CHANGES, pp. 10-2 through 10-5 (2d ed. 1989).
Defective performance by an upper-tier contractor can give rise to an extra being claimed by a lower-tier contractor having to perform additional work to complete its work. See, e.g., National Underground Construction Co. v. E. A. Cox Co., 216 Ill.App.3d 130, 576 N.E.2d 283, 159 Ill.Dec. 614 (1st Dist. 1991).
Every company can encounter special problems while working on public (government) contracts. When contracts encounter heavy losses or the prospect of litigation, company managers can turn to the Law Offices of Richard Reichstein to file REQUESTS FOR EQUITABLE ADJUSTMENT TO RECOVER LARGE DOLLAR AMOUNTS.
EQUITABLE ADJUSTMENT is a little known contract remedy specifically developed for public contracts when the expectations of the bidders are not met because of:
- Unrealistic Inspection Requirements
- Defective Specifications
- Delay Attributable To Government Personnel
- Reinstating Canceled Contracts
- Converting Termination For Default Into Termination for Convenience
- Reimbursement For Actual Costs & Lost Profit
- The Law Office has drafted and filed Requests for Equitable Adjustment on behalf of both Prime and Sub-Contractors and received large settlements…even in cases where the Company had given up hope of ever receiving fair treatment.
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