Imprecise wording on change order forms often causes problems relating to what costs are included in the agreed price for the change. Contractors may argue that the change order language, such as compensation for”indirect costs, or time-related costs,” does not include loss of productivity or cumulative impact costs. The contractor argues,in defense of its position, that there is no way that it could have known the actual impact of later owner-caused changes at the time that the earlier change order was priced. Therefore, the contractor waited until the end of the job to quantify and request its impact or loss of productivity claim, and called it a “cumulative impact claim.” The owner, however, often refuses to pay any more than the price earlier agreed for change orders.
Thus, an owner’s primary defense to a disruption and/or cumulative impact claim is often to argue that, in executing the various change orders, the contractor agreed to the price of the change and thereby waived its rights to seek any further compensation. The argument advanced is that the contractor, by signing the change order, included any possible costs that would be associated with the cumulative impact claim and accepted any risk that the costs would be more than anticipated.
Richard J. Long, P.E.
Chief Executive Officer
Long International, Inc.
10029 Whistling Elk Drive
Littleton, Colorado 80127
(303) 972-2443 Telephone
(303) 972-6980 Facsimile
(303) 884-3060 Mobile
This article is published in ConstructionRisk.com Report, Vol. 16, No. 6 (June 2014).
Copyright 2014, ConstructionRisk, LLC