By Bruce Jervis
Project owners do not want to be surprised with claims for additional work at the conclusion of a project. Contract clauses usually stipulate procedures that give the owner some advance notice and an idea of the increased cost. An example is found in a subcontract on a recent private project in Ohio.
The subcontract included a “changes” clause, which pertained to issues with work already included in the contract, and an “extra work” clause, which was applicable to work outside the scope of the contract ordered or directed by the project owner. The changes clause required written notice prior to starting the work. The extra work clause required a cost breakdown and supporting documentation within five business days of completing the work.
The subcontractor and contractor argued as to whether a quantity overrun was changed work or extra work. A federal appeals court said it didn’t matter. The sub failed to comply with the claim procedures of either contract clause and was not entitled to additional compensation.
It is easy for claim procedures to be overlooked. Field personnel frequently are unaware of the procedures or do not appreciate their significance. There is an attitude that “they already knew about that,” so why bother with written notice. What has your experience been with claim procedures? Can you recommend practices for ensuring compliance? I welcome your comments.