It is standard counsel that for changed work or changed contract terms, contractors should rely only on written change orders executed by the project owner’s duly authorized representative. Anything less puts the contractor at risk.
In the field, however, it is difficult to meet this standard. Time constraints and the need to coordinate multiple parties pose a daunting challenge. Parties adopt a less formal approach to changes – not because of inherently sloppy business practices – but because of the practical needs of the project.
The change order challenge is particularly acute on public construction projects. The doctrine of “sovereign immunity” creates a firewall for government entities, protecting them against imperfect change orders. Arguments that might be available to a contractor on a private project (waiver of contract requirements, partial performance, implied consent, etc.) may not be available on a public project.
An example is found on a recent county project in Georgia. The contractor submitted more than 30 proposed change orders to the county’s project manager, who processed them and entered them in a change order log. But approval of change orders required a vote of the county board of commissioners. The county manager could authorize the contractor to proceed with the work, but only under extraordinary circumstances, such as delay to the schedule’s critical path.
The other case in this issue involved a contractor’s recovery of administrative costs after a termination for the convenience of the government. The time expended by company executives was compensable, as were severance payments to employees and fees paid to outside legal counsel.