Technical Insights by Kent Winger, PE

Contractors on public works projects run the risk of waiving claims rights under a contact if they don’t (1) comply with the timing provisions for providing notice of problems and (2) submit change orders and pricing variations within the specified time limits. These provisions are prevalent in the general conditions, general requirements, and technical specifications. Yet they can be overlooked or minimized by contractors because they can seem burdensome and maybe the contractor does not know the full extent of the additional costs incurred at the end of the timing period.

Notice is contractually required when the contractor encounters, among other things, disputed extra work and delay, and differing site conditions. Some provisions require that notice must be provided 1 day after encountering the problem. Other provisions may require notice 3 days, 5 days, and up to 3 weeks after an occurrence. Timely notice could allow an owner to take actions to eliminate or at least mitigate the impacts of the events at issue, thereby reducing the owner’s exposure to additional costs. Without notice, an owner may not be aware of the problems until it’s too late to effectively do anything. For example, if permits are causing the delay, the owner may be able to work with other agencies to obtain the permit.

There are also timing provisions regarding the submittal of pricing for disputed extra work costs and requests for contract time extensions. Some provisions require that supporting entitlement, schedule, and pricing be submitted 20 calendar days after providing notice of the issue in dispute or the differing site condition. Although precise damage calculations may only be known after the affected work is complete, some reasonable attempt to comply in a timely fashion with the timing provision is needed. At a minimum, a contractor should provide a rough order of magnitude of the additional costs and request a waiver of the provision until such time that a final cost can be determined (which may involve time and materials records). Not complying with both the notice and pricing timing provisions may result in the contractor waiving its rights to pursue claims under the contract.

It is also important for a contractor to know how each jurisdiction views notice and timing provisions. In jurisdictions that require strict compliance with the contract documents, a contractor may have a difficult time getting past lack of timely notice in order to address the merits of the claims. In jurisdictions that allow substantial compliance, actual knowledge through observations, meeting minutes, requests for information (RFIs), or communications may be deemed sufficient compliance with the notice provisions provided the owner was not prejudiced by the lack of notice. In other words, even if notice had been properly provided, the owner would or could not have done anything different to help resolve the problem.

In conclusion, negotiating change orders for disputed extra work and delay presents challenges for contractors. Following these three steps will minimize these challenges and reduce the stress on contractor and owner alike:

1. Start off by ensuring project staff are aware of the timing provisions in the contract.
2. Deliver notice of problems and pricing for the extra work within the contract time limits.
3. Finally, if pricing cannot reasonably be determined, request an extension of the contract time until the costs are fully understood.