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ConstructionPro Week, Volume: 3 - Issue: 36 - 09/05/2014

Can You Support a Site Condition Claim with Numbers?

By Bruce Jervis

 

A basic rule of construction contract law states that a “Type I” differing site condition exists when the actual conditions in the field differ materially from affirmative representations in the contract documents. The requirement for an affirmative representation is key. Silence or failure to warn is not enough.

 

Once a material difference from an affirmative representation has been established, the claimant faces more challenging issues. The claimant must prove that its interpretation of the representation was reasonable; it drew logical inferences and did not leap to unfounded assumptions. And, the claimant must prove it relied on its interpretation when pricing its bid.

 

This last factor was the undoing of a federal contractor alleging a Type I differing site condition. The claim had multiple weaknesses. The final blow, however, came when the claimant failed to offer any evidence of how its bid was priced in reliance on the alleged misrepresentation.

 

This raises some “best practices” questions. Are your estimating records and other bid-preparation documents sufficient for pricing a differing site condition claim or, for that matter, a claim of any nature? Can you establish reliance on owner representations as well as causation of increased costs? I welcome your comments.

 

Note: On Oct. 2, WPL Publishing will host a webinar entitled "Changing Trend in Risk Allocation -- Differing Site Conditions." For details about the 90-minute program, presented by Navigant Consulting Director Steven Collins and Navigant Construction Forum Executive Director James Zack, click here.

 

 

COMMENTS

"Due diligence" and "Best Practice" are the key elements in any differing site condition claims. I recently attended a negotiating meeting with a client that ran right into these terms. The KO readily admitted the contractor had a legitimate claim; but did not follow the FAR rules for timely notification to the KO which watered down his claim. Then he could not back up his price with like line items from his proposal pricing. He had too many large lump sum items rather that unit prices. His negotiated price was knocked down to the Government estimate which used Means unit pricing for the work. He was admonished by the KO that his claim did not meet the rules for Due Diligence. If he had detailed proposal estimating he probably would have gotten 30-40% more, as it was obvious that the GE did not cover all the line items actually accountable if proved. Lesson learned: If you are shotgunning bids, do not bother claiming for changes.
Posted by: Ronald Vietmeier - Friday, September 05, 2014 11:11 AM










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