Price adjustment clauses are common in construction contracts. Unit-priced contracts are frequently adjustable based on the actual quantity of work performed. Even fixed-price contracts may allocate the risk of certain latent conditions or other contingencies. All these contracts usually include a separate clause pertaining to changed or extra work.
Is the contractor required to invoke the change order process in order to obtain a price adjustment? As a general rule, the answer should be no. The occurrence of contingencies expressly addressed and allocated in the contract should not be considered “changed” work. Price adjustment clauses are typically narrow in scope and should be applied accordingly.
A subcontract for subsurface structural supports called for additional hourly compensation when the sub was “drilling in obstructions.” Did this apply to a multi-day effort to free a stuck drill? The Vermont Supreme Court answered in the negative. Any increased compensation should have been sought through the change order process, a step the subcontractor failed to take.
The other case in this issue involved a project manager’s authority to sign a claim release form on behalf of a corporate contractor. The project manager was found to have both actual and apparent authority to do so. The corporation was bound by the release.
