While working as the Construction Claims Expert, Holloway Consulting has assisted many of our owner and contractors clients in the identification and preparation of, and the defense of, construction claims under both public and private sector contracts. This article continues our summary of Construction Claims involving Owner Directed Change claims:

OWNER-DIRECTED CONSTRUCTION CHANGE CLAIMS

OWNER’S AUTHORIZATION

Of course, questions will sometimes arise as to whether the change was authorized by the clause or was completely outside the scope of the original contract. Such questions are often difficult to resolve but there is generally less risk to the contractor if he proceeds to perform the ordered work and later seeks recovery under the clause.

By definition, the owner recognizes the existence of a directed change. In our work as the Claims Expert, claims relating to owner directed changes have developed in at least three forms. The Owner either:

(1) Agreed that a cost and revenue adjustment was necessary but did not agree with the contractor’s estimated or proposed costs; or,
(2) Argued that the change fell within the scope of the contract, or,
(3) Argued that the change was a “no-cost” change.

The resolution of a directed changes claim based strictly on a cost disagreement places the heavy responsibility on the contractor’s ability to produce data supporting his dollar position that is complete, detailed, logical, and persuasive. In the event of an entitlement dispute, the contractor must also produce coherent support of his contention; again, the support of entitlement must be complete, detailed, logical, and persuasive. The contractor’s entitlement position should be reinforced to the greatest extent possible by reference to the language of the contract documents, relevant contract events, and case law.

An important consideration in our work as claims experts is the extent to which the impact of the changed work has on the unchanged work. At one time (as set forth in a 1942 Supreme Court case, United States v. Rice, 317 U.S. 61), when a contract provided that the owner could make a change (within the context of a changes article), then it was contemplated that changes would be made and the contractor should have included a contingency to cover delays arising from the changes. By and large, this is no longer the case and ripple effects of changes are generally considered to be excusable and compensable. However, . . .

Read more about Owner Directed Change claims

Email: steve.holloway@disputesinconstruction.com
Blog: disputesinconstruction.com
Web: hcgexperts.com

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