Construction Engineering 380

Contract Changes

Contract Changes

• Types of changes – Cardinal change- drastic change, either single direction or accumulated change in scope – Constructive change- proceed with work even though there is disagreement over price or justification (usually document conflicts) – Deduct change order- may not deduct to give the work to others without basis, and usually cannot reduce POH (except fed work) – Minor (no cost CO) and tentative (wait for price)

Contract Changes

Construction contracts are unique because owner can make unilateral changes to contract (with consideration)

Contract Changes

• Changes in scope require change orders • Changes in time require delay or acceleration claims • Most claims are handled in change orders • Change orders must be in writing and confirmed • Contractor entitled to OHP

Contract Changes

• Document the changes in scope or time • Estimate costs • Estimate time • Submit request for change order per contract • Get approval (dual or three-way signature) • Handouts of standard forms

Contract Changes

• Field changes are used when there is no time for prior approval • Explain and document (notification clause) • Architect issues change directive, then contractor submits claim (court or arbitrator) • Constructive change for extra work caused by defective plans and specs or owner misrepresentation (MSP airport) • Contractor not responsible for synthesis and coordination of plans and specs

Contract Changes

• Scope changes are different than constructive changes- owner adds work • If scope change becomes excessive, original contract can be voided • Contractor entitled to payment after new contract is agreed to • Each party must give consideration (prevents holdings tactics

Contract Changes

• “evidence of writing” required for certain transactions – Sale of goods over $500 (UCC) – Scope of work exceeds one year – Involves purchase, lease or mortgage of property – Promises to pay debt of another – Agency contracts – Scope exceeds life of the entity – Agreements on consideration of marriage

Contract Changes

• Owners entitled to change the contract • Suppliers entitled to consideration, but “pre-existing duty” takes precedence • Promissory estoppel – Party has given reason to believe payment is due – Other party relied on that promise in conduct – Other party performs work and incurs costs

Contract Changes

• Waiver- any party can agree to relinquish a right or ignore contract clauses • Delays – Inexcusable- contractor pays costs – Excusable- each party absorbs costs • contract delays are usually spelled out in contract • Law delays are granted by court or statute – Compensatory- owner pays contractor for additional costs

Contract Changes

• Acceleration claims – – –

Speed up construction Increase rate of work Refusal to grant extension is same as acceleration claim

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Liquidated damages and no damages for delay clauses are very difficult to enforce (exculpatory)

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Notice and documentation are critical Delays within schedule float are not qualified (conveying system at MSP airport)