Making Changes and Resolving Disputes During The Construction

Project   

Melissa Dewey BrumbackRagsdale Liggett PLLCmbrumback@rl-law.com

www.constructionlawnc.com   

1.  Spells out rights & responsibilities2.  Protects from others' performance3.  Establishs procedure for changes4.  Courts will apply and enforce  

Importance of Contracts

Types of Contracts 

1.  Oral contract        ("handshake") 2.  Proposal or Estimate 3.  Written Contract    a.  Form contract    b.  Other contract  

Types of Change Contracts can address:

1.additional/reduced scope of work2.material spec changes3.defective plans/specs4.poor performance by others5.scheduling changes 6.sequence of work changes7.acceleration/suspension8.unexpected site conditions   

Changes Prior to Contract Execution

 

1.  The Form Contract 2.  Scope of Services

Form Contracts

•  American Institue of Architects (AIA)• Engineering Joint Contracts Doc. Comm. (EJCDC)• Consensus DOCS• Constr. Owners' Assoc. of America (COAA)• Assoc. General Contractors of America (AGC)• Design-Build Institute of America (DBIA)   

Form Contracts

1.Terms well defined2.Familiarity3.Court Decisions4.Not as flexible  

With Every Contract:

• changes of scope?            • notification requirements?• dispute resolution if can't agree?  

Scope of Services

  

• Well-defined• Spell out assumptions• Excluded Services   

Changes During Construction 

 

The Contract "Change" Clause

• Mechanism to deal with change on construction project

• Allows flexibility for site conditions & other unknowns

• In all standard form contracts• Should include in any other contracts

When terms are agreed to: AIA A201 at 7.2.1:    • Written change order signed by owner,

contractor & architect• Specifies money and time adjustments

When terms are agreed to: 

Consensus DOCS 200 at 8.1.2:  • Written change order signed by owner &

contractor only• Specifies money and time adjustments

When terms are agreed to: 

   EJCDC C-700 at 10.03:  • Written change order signed by owner

& contractor upon Engineer's recommendation• Specifies money and time adjustments• Also addresses changes where time/money are

in dispute

When terms cannot be agreed upon:

 AIA A201 at 7.3.3: Construction Change Directive (CCD) • mutual acceptance of lump sum• unit prices stated in contract• cost in "a manner agreed upon"

When terms cannot be agreed upon  (Partial Payment):

 AIA A201 at 7.3.9: • Architect makes interim determination for

monthly certification• Claims can be asserted later

When terms cannot be agreed upon:

 Consensus Docs 200 at 8.2.1 and 8.2.2:    Interim Directed Change Concensus Docs 200 at 8.3.3:  Owner pays 50% of Contractor's estimate pending final determination 

When terms cannot be agreed upon:

 EJCDC C-700 at 12.01.C.2: Directives dealt with in CO process • Payroll and labor: 15%• Payment to subs:  5%    

Authority to Issue Contract Changes:  

 Reserved for Owner Exception: minor changes   

What if there is no signed change order/directive?  May be out of luck  Federal project: definitely out of luck May qualify for equitable theories of relief (i.e., the court may save you from yourself)

   

Exceptions to Written Authorization Requirement: 

 

Implied Authority (principal-agent) Ratification (owner knowingly accepts) Oral Modification to Contract (not on Federal contracts)  

Do NOT rely upon!  

Types of Changes  

 

  Ordered Change v. Constructive Change       

 

Issues with Constructive Changes:  

Cannot be used where express provision applies to the extra work Compensation: based on value to owner, not costs to contractor Document costs to prove  

Requirements for Making CompensableContract  Changes  

 

Notification

  

In writing  (requirement may be waived) As soon as aware! 

Timlieness of Notice

 

14 days  (Consensus Docs)   21 days (AIA)   30 days (EJCDC)   

Documentation of Change

1.description of the changed work 2.number of days the work is extended 3.amount to be compensated 4.signature and date of owner, architect, and

contractor 5.back-up proposals, invoices, tickets, logs,

etc.

Liability Issues  

 

 

Waiver  

Standard of Care

In acceptance with standard of others employed in same profession-- "reasonableness" Indemnity Issues  

Oral Modifications

By conduct or practice Where owner aware and architect orders work  (estoppel)  Again:  Do NOT rely upon!

RESOLVING DISPUTES DURING THE CONSTRUCTION PROCESS  

 

Site Conditions  

• Constructive change 

• Mutual mistake• Cardinal change   

Site Conditions   

Removal of "changed condition" clause   

Disruption

   

Suspension of Work by Owner Discretionary Contract amount and time adjusted

Delay on the Project  

 

Excusable Delay

Not foreseeable   Not controlable ("act of God")   Time extension only 

Compensable Delay

Caused by Fault  Time extension & money Actual damages must be proven  "No damage for delay" provision limits recovery to time only

Compensable Delay:  Indirect Damages

Overhead, interest, profits, rents, equipment idle time, mobilization, increased material costs, etc. Reoverable if not speculative May be limited/waived by contract(Form contracts waive or limit) 

Concurrent Delay

Caused by Fault of more than one party Time extension & money only if allowed by contract Actual damages must be proven   

Delay by other Primes

All contractors owe duty to not delay/hinder any other party Includes design team No need for contractual privity on state multi-prime contracts

Acceleration

Expediting work Trade stacking

Avoiding contract provisions

1.Impossibility2.Mutual Mistake3.Duty to Disclose4.Breach of Warranty (Spearin doctrine) 

    Melissa Dewey Brumback Ragsdale Liggett PLLC Raleigh, North Carolina   919-881-2214 (direct) mbrumback@rl-law.com   www.constructionlawnc.com