It is common for construction contracts to stipulate a claim limitation period. A formal written claim must be submitted by the contractor to the project owner within a certain number of days after the contractor becomes aware, or should have become aware, of the factual basis for the claim. Failure to do so constitutes a waiver of the contractor’s claim.
This waiver language is not always strictly enforced. It can be argued that if the project owner had actual knowledge of the basis of the claim, the owner’s rights were not prejudiced in any way by the late submittal of the written claim. Sometimes, however, the claim limitation period is strictly enforced with draconian results.
A public works contract in Alaska contained a 90-day claim period. The contractor encountered a differing site condition and promptly notified the agency project owner. The agency modified certain plans in response. The contractor submitted a preliminary informal claim, as called for under the contract. The agency did not respond. The contractor submitted a formal written claim, albeit more than 90 days after notifying the agency of the site condition. The Alaska Supreme Court ruled that the claim period had run notwithstanding the agency’s failure to respond to the preliminary claim. The claim was waived.
The second case in this issue involved pay measurement for unit-priced work. Re-work necessitated by natural causes was not included in the measurement. That cost contingency should have been carried in the unit price.
The third case addressed a low bid on a public works contract. The bid deviated from a non-material requirement in the bid solicitation. The municipal project owner abused its discretion when it refused to waive the deviation while waiving a similar deviation in the second low bid and awarding the contract at a $100,000 higher price.