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Slideshow discussing AIA, EJCDC, and ConsensusDoc form construction contracts
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Making Changes and Resolving Disputes During The Construction
Project
Melissa Dewey BrumbackRagsdale Liggett [email protected]
www.constructionlawnc.com
1. Spells out rights & responsibilities2. Protects from others' performance3. Establishs procedure for changes4. Courts will apply and enforce
Importance of Contracts
Types of Contracts
1. Oral contract ("handshake") 2. Proposal or Estimate 3. Written Contract a. Form contract b. Other contract
Types of Change Contracts can address:
1.additional/reduced scope of work2.material spec changes3.defective plans/specs4.poor performance by others5.scheduling changes 6.sequence of work changes7.acceleration/suspension8.unexpected site conditions
Changes Prior to Contract Execution
1. The Form Contract 2. Scope of Services
Form Contracts
• American Institue of Architects (AIA)• Engineering Joint Contracts Doc. Comm. (EJCDC)• Consensus DOCS• Constr. Owners' Assoc. of America (COAA)• Assoc. General Contractors of America (AGC)• Design-Build Institute of America (DBIA)
Form Contracts
1.Terms well defined2.Familiarity3.Court Decisions4.Not as flexible
With Every Contract:
• changes of scope? • notification requirements?• dispute resolution if can't agree?
Scope of Services
• Well-defined• Spell out assumptions• Excluded Services
Changes During Construction
The Contract "Change" Clause
• Mechanism to deal with change on construction project
• Allows flexibility for site conditions & other unknowns
• In all standard form contracts• Should include in any other contracts
When terms are agreed to: AIA A201 at 7.2.1: • Written change order signed by owner,
contractor & architect• Specifies money and time adjustments
When terms are agreed to:
Consensus DOCS 200 at 8.1.2: • Written change order signed by owner &
contractor only• Specifies money and time adjustments
When terms are agreed to:
EJCDC C-700 at 10.03: • Written change order signed by owner
& contractor upon Engineer's recommendation• Specifies money and time adjustments• Also addresses changes where time/money are
in dispute
When terms cannot be agreed upon:
AIA A201 at 7.3.3: Construction Change Directive (CCD) • mutual acceptance of lump sum• unit prices stated in contract• cost in "a manner agreed upon"
When terms cannot be agreed upon (Partial Payment):
AIA A201 at 7.3.9: • Architect makes interim determination for
monthly certification• Claims can be asserted later
When terms cannot be agreed upon:
Consensus Docs 200 at 8.2.1 and 8.2.2: Interim Directed Change Concensus Docs 200 at 8.3.3: Owner pays 50% of Contractor's estimate pending final determination
When terms cannot be agreed upon:
EJCDC C-700 at 12.01.C.2: Directives dealt with in CO process • Payroll and labor: 15%• Payment to subs: 5%
Authority to Issue Contract Changes:
Reserved for Owner Exception: minor changes
What if there is no signed change order/directive? May be out of luck Federal project: definitely out of luck May qualify for equitable theories of relief (i.e., the court may save you from yourself)
Exceptions to Written Authorization Requirement:
Implied Authority (principal-agent) Ratification (owner knowingly accepts) Oral Modification to Contract (not on Federal contracts)
Do NOT rely upon!
Types of Changes
Ordered Change v. Constructive Change
Issues with Constructive Changes:
Cannot be used where express provision applies to the extra work Compensation: based on value to owner, not costs to contractor Document costs to prove
Requirements for Making CompensableContract Changes
Notification
In writing (requirement may be waived) As soon as aware!
Timlieness of Notice
14 days (Consensus Docs) 21 days (AIA) 30 days (EJCDC)
Documentation of Change
1.description of the changed work 2.number of days the work is extended 3.amount to be compensated 4.signature and date of owner, architect, and
contractor 5.back-up proposals, invoices, tickets, logs,
etc.
Liability Issues
Waiver
Standard of Care
In acceptance with standard of others employed in same profession-- "reasonableness" Indemnity Issues
Oral Modifications
By conduct or practice Where owner aware and architect orders work (estoppel) Again: Do NOT rely upon!
RESOLVING DISPUTES DURING THE CONSTRUCTION PROCESS
Site Conditions
• Constructive change
• Mutual mistake• Cardinal change
Site Conditions
Removal of "changed condition" clause
Disruption
Suspension of Work by Owner Discretionary Contract amount and time adjusted
Delay on the Project
Excusable Delay
Not foreseeable Not controlable ("act of God") Time extension only
Compensable Delay
Caused by Fault Time extension & money Actual damages must be proven "No damage for delay" provision limits recovery to time only
Compensable Delay: Indirect Damages
Overhead, interest, profits, rents, equipment idle time, mobilization, increased material costs, etc. Reoverable if not speculative May be limited/waived by contract(Form contracts waive or limit)
Concurrent Delay
Caused by Fault of more than one party Time extension & money only if allowed by contract Actual damages must be proven
Delay by other Primes
All contractors owe duty to not delay/hinder any other party Includes design team No need for contractual privity on state multi-prime contracts
Acceleration
Expediting work Trade stacking
Avoiding contract provisions
1.Impossibility2.Mutual Mistake3.Duty to Disclose4.Breach of Warranty (Spearin doctrine)
Melissa Dewey Brumback Ragsdale Liggett PLLC Raleigh, North Carolina 919-881-2214 (direct) [email protected] www.constructionlawnc.com