Since changes to the contract scope often involve additional work as well, it was understandable that boards, panels and courts could characterize many such claims as “Constructive Change Claims” – meaning that, although the procedures of the contract’s Changes clause probably were not used, the results of the Government’s, Owner’s or General Contractor’s action or inaction were essentially the same as if a formal contract change order or change request had been issued.

Constructive Change theory allows the contractor to be paid for changes to the manner, method, or scope of work, even where there is no formal Change Order. Recovery may be allowed under other contract adjustment clauses when there is some action or inaction by the owner or owner’s agent that amounts to an order or directive to the contractor. The theory has been well established in federal contract forums, and has gained acceptance in most other jurisdictions, under custom and standard form construction industry contracts.

DOES YOUR CONSTRUCTIVE CHANGE CLAIM SATISFY THE NECESSARY CONDITIONS?

A contractor’s entitlement to constructive change damages arises in various circumstances. For example:

  • The alleged Constructive Change results from oral or written directions issued by the owner to the general contractor (or by the general contractor to a subcontractor).
  • The directive modifies the terms of the contract and the contractor reasonably relies on the apparent authority of the individual issuing the directive.
  • If yes, the contractor may recover the additional costs associated with the direction as a change to the contract.

    For example, in a recent Holloway case wherein we worked as the contractor’s expert, the contractor was entitled to recover loss of labor efficiency damages for government-caused rescheduling of the work and performing out of sequence, which resulted from a grading change directed by the contracting officer. The change was deemed a Constructive Change and the contractor was allowed to recover its claimed loss of labor efficiency due to a disorderly operation. The court allowed an equitable adjustment for the labor losses that were the direct and necessary result of the Constructive Change involving labor disruption.

    Contact Info

    J. Steve Holloway, GC
    The Holloway Consulting Group, LLC
    10885 W. Beloit Pl.
    Lakewood, CO 80227
    Tel: 1-303-984-1941

    Email: hollowayconsultinggroup@gmail.com

    CONTACT FORM





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