Construction Engineering 380
Contract Changes

Contract Changes
• Types of changes
– Cardinal change- drastic change, either single direction or accumulated change in scope
– Constructive change- proceed with work even though there is disagreement over price or justification
(usually document conflicts)
– Deduct change order- may not deduct to give the work to others without basis, and usually cannot reduce POH (except fed work)
– Minor (no cost CO) and tentative (wait for price)

Contract Changes
Construction contracts are unique because owner can make unilateral changes to contract (with consideration)

Contract Changes
• Changes in scope require change orders
• Changes in time require delay or acceleration claims
• Most claims are handled in change orders
• Change orders must be in writing and confirmed
• Contractor entitled to OHP

Contract Changes
• Document the changes in scope or time
• Estimate costs
• Estimate time
• Submit request for change order per contract
• Get approval (dual or three-way signature)
• Handouts of standard forms

Contract Changes
• Field changes are used when there is no time for prior approval
• Explain and document (notification clause)
• Architect issues change directive, then contractor submits claim (court or arbitrator)
• Constructive change for extra work caused by defective plans and specs or owner misrepresentation (MSP airport)
• Contractor not responsible for synthesis and coordination of plans and specs

Contract Changes
• Scope changes are different than constructive changes- owner adds work
• If scope change becomes excessive, original contract can be voided
• Contractor entitled to payment after new contract is agreed to
• Each party must give consideration (prevents holdings tactics

Contract Changes
• “evidence of writing” required for certain transactions
– Sale of goods over $500 (UCC)
– Scope of work exceeds one year
– Involves purchase, lease or mortgage of property
– Promises to pay debt of another
– Agency contracts
– Scope exceeds life of the entity
– Agreements on consideration of marriage

Contract Changes
• Owners entitled to change the contract
• Suppliers entitled to consideration, but
“pre-existing duty” takes precedence
• Promissory estoppel
– Party has given reason to believe payment is due
– Other party relied on that promise in conduct
– Other party performs work and incurs costs

Contract Changes
• Waiver- any party can agree to relinquish a right or ignore contract clauses
• Delays
– Inexcusable- contractor pays costs
– Excusable- each party absorbs costs-
• contract delays are usually spelled out in contract
• Law delays are granted by court or statute
– Compensatory- owner pays contractor for additional costs

Contract Changes
• Acceleration claims
– Speed up construction
– Increase rate of work
– Refusal to grant extension is same as acceleration claim
– Liquidated damages and no damages for delay clauses are very difficult to enforce
(exculpatory)
– Notice and documentation are critical
– Delays within schedule float are not qualified
(conveying system at MSP airport)