University of Calgary Continuing Education
Construction Contract Law and Documents
Week 12
Changes
•Delays
•Claims
•Contract Documentation
•
Why do companies lose money?
They do work for nothing
Either they don’t insist on proper
instructions, or
They don’t keep proper records to
prove their costs, or
They don’t ask properly for more money
Changes to the Work
No right unless stated
Right necessary to prevent Owner being
held “hostage”
Safeguards

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Work must be consistent with base
contract
Contractor must do the work – no matter if
there is an agreement with respect to price
Changes to the Work
Both time and cost
Time

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Failure to agree to reasonable extension is
direction to accelerate
Float owned by contractor
Change in time is change to project overall
time – non-critical activities my not effect
end-date but simply increase risk
Changes to the Work
Cost

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What is cost?
What components are already in and which
are extras?
Delays
Work interruption caused by anyone
Notice must be given
Accurate records are key to claim
Equally important to record what
happened as well as what was delayed
Claims
Request for compensation for work
undertaken or delays encountered for
which no compensation has been
received.
Typically as a result of work done under
protest or pursuant to a change
directive
Claims
When to start the claim – the day of award
Critical that a “base line” is defined
Generally the original project schedule

Provided at the outset to owner

Don’t use up float – the long bar

Make sure that all assumptions documented
Treat Project Plan as insurance
Claims
Project Plan – critical to recovery of
additional monies

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Must be able to show how you were going
to achieve the work
Updating to account for progress allows
you to take advantage of situations where
you have improved the project schedule
and incorporate situations where you have
delayed yourself
Claims
Must find your basis for claim in the contract
Proper notice must have been given
Isolate the claimed extra from the base
contract
Identify all delays – including those caused by
you
Ideally, each change must be isolated from all
others to determine the “impact” of it
Claims
Impact of change

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Each change will create consequential
changes in all other surrounding activities
Possibly change equipment utilization,
resource profiles
When evaluating – ensure all implications
investigated
Claims
Impact of change

Change itself
 Adding xxx m3 of material

Material changes
 Effect on material order – did you have sufficient in your
original commitment to allow you to price this at same
level.
 Material price escalation
 Site handling – does this overstress logistical abilities of
jobsite – cranes, access, personnel
Claims
Impact of change

Installation of materials – impact on labour
 Resource profile – using critical trades
 Overtime loading – extensive overtime causes fatigue
and loss of productivity
 Crowding – loss of productivity
 Move work to different season or time of day –
productivity
 Move to different season – wage escalation
Claims
Impact of change

Impact on site plant
 Additional site equipment required
 Site services – roads, power, heat, scaffold
 Change in fuel rates due to shift in time
Claims
Impact of change

Site Supervision
 Stress supervision – inefficiency sets in
 Additional QC required
 Review of documents more extensive
 Other work suffers from lack of supervision
Claims
Impact of change

Office supervision
 Engineering costs – estimates and revised
schedules
 Project Management Costs – more intensive
work, review project planning

Financial
 Effect on cash flow
Claims
Impact of change

Measurement of impact
 From base line – add change and determine
change to overall end cost and time
 As change proceeds – updates will show
ongoing impact
Claims
Impact of changes on each other
Impact of number of changes – magic
number (15-25%)

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When job changed more than xx% - revert
to cost reimbursable
Not materially the same job
Project Documentation
Project budget

Your cost – not revenue

Enumerate all resource profiles

Show all anticipated cost changes (ie:
prices)
Project Documentation
Project schedule

Detailed so that changes in order of work
can be identified
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Show resources on critical activities
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Show owner supplied deliveries or work

Allowance for approvals shown explicitely
Project Documentation
Updating Project Plan

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Critical to ensure credibility (we do this normally –
not just to show the error of the other party)
Must reflect true activity – don’t try to hide your
own dirty laundry
Should be accurate record of the plan revisions
necessitated by changing conditions
Project Documentation
Correspondence

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Must be formal and organized
All formal documentation, initially, should be to the
notice address
Subsequent, project kickoff meetings would define
operational changes to flow of documents – must
be confirmed in writing to notice address
Separate files for each claim – suggested
Project Documentation
Review Contract

Note all notice requirements
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Note notice address

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No matter what, unless you have a formal
instruction, always send Notices to Notice Address
Pay particular attention to notices regarding
delays, unexpected work, changes to the work –
these are the prime source of claims for extras.
Project Documentation
Routine
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Each level of management should review
reports from level below
Each level of management should prepare
material for level above
Concept of overlapping and complementary
information
Project Documentation
Examples
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Superintendent daily diary (independent
corroboration of all site activity – personnel
changes, tardiness, everything)
Weekly site report by superintendent
 Perhaps prepared by site engineer by endorsed by site
supervisor
 Reviewed by Project Manager

Monthly report by project manager
 Reviewed by company management.