Change orders can be a contentious aspect of construction contracting. The change order process can affect almost every participant in the project – owners, designers, prime contractors, sureties, and subs – and the potential disagreements vary. Often, closely associated with change orders are delay claims and delay damages.
Both topics are illustrated in this issue of Construction Claims Advisor; the first two cases involve change order scenarios. The second of these cases also involves delay damages, as does the third case, which addresses the ongoing controversial subject of when a delay claim can be submitted on a government project.
A commercial contract in Nebraska stipulated that extra work would be performed on a time and materials-basis, with direct labor cost marked up 25%. The project owner directed extra work, the design engineer monitored that work and the contractor performed the work at a labor rate of $65 per hour. The contractor signed off on a change order, which increased the fixed contract price. The contractor then sued the project owner seeking a 25% mark-up on labor and sued the engineer for interfering with the performance of the change order work.
The other case involved a public project owner’s advance approval of a change order, contingent upon a state release of funding. The contractor completed the base scope of work and stood by awaiting word on the change order. The state declined to authorize funding. A Texas court was asked whether the contractor could seek recovery of its standby costs.
The third case in this issue involves a matter of interest to anyone involved in federal contracting. When a contractor challenges a default for late completion on the grounds of excusable delay, must the contractor submit a proper delay claim? If so, can the claim be filed after the appeal of the default termination?