making changes on the construction project
DESCRIPTION
Slideshow discussing AIA, EJCDC, and ConsensusDoc form construction contractsTRANSCRIPT
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Making Changes and Resolving Disputes During The Construction
Project
Melissa Dewey BrumbackRagsdale Liggett [email protected]
www.constructionlawnc.com
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1. Spells out rights & responsibilities2. Protects from others' performance3. Establishs procedure for changes4. Courts will apply and enforce
Importance of Contracts
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Types of Contracts
1. Oral contract ("handshake") 2. Proposal or Estimate 3. Written Contract a. Form contract b. Other contract
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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
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Changes Prior to Contract Execution
1. The Form Contract 2. Scope of Services
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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)
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Form Contracts
1.Terms well defined2.Familiarity3.Court Decisions4.Not as flexible
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With Every Contract:
• changes of scope? • notification requirements?• dispute resolution if can't agree?
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Scope of Services
• Well-defined• Spell out assumptions• Excluded Services
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Changes During Construction
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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
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When terms are agreed to: AIA A201 at 7.2.1: • Written change order signed by owner,
contractor & architect• Specifies money and time adjustments
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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
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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
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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"
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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
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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
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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%
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Authority to Issue Contract Changes:
Reserved for Owner Exception: minor changes
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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)
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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!
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Types of Changes
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Ordered Change v. Constructive Change
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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
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Requirements for Making CompensableContract Changes
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Notification
In writing (requirement may be waived) As soon as aware!
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Timlieness of Notice
14 days (Consensus Docs) 21 days (AIA) 30 days (EJCDC)
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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.
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Liability Issues
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Waiver
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Standard of Care
In acceptance with standard of others employed in same profession-- "reasonableness" Indemnity Issues
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Oral Modifications
By conduct or practice Where owner aware and architect orders work (estoppel) Again: Do NOT rely upon!
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RESOLVING DISPUTES DURING THE CONSTRUCTION PROCESS
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Site Conditions
• Constructive change
• Mutual mistake• Cardinal change
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Site Conditions
Removal of "changed condition" clause
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Disruption
Suspension of Work by Owner Discretionary Contract amount and time adjusted
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Delay on the Project
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Excusable Delay
Not foreseeable Not controlable ("act of God") Time extension only
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Compensable Delay
Caused by Fault Time extension & money Actual damages must be proven "No damage for delay" provision limits recovery to time only
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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)
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Concurrent Delay
Caused by Fault of more than one party Time extension & money only if allowed by contract Actual damages must be proven
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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
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Acceleration
Expediting work Trade stacking
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Avoiding contract provisions
1.Impossibility2.Mutual Mistake3.Duty to Disclose4.Breach of Warranty (Spearin doctrine)
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Melissa Dewey Brumback Ragsdale Liggett PLLC Raleigh, North Carolina 919-881-2214 (direct) [email protected] www.constructionlawnc.com