Since claims are basically a legal question––if they are not resolved promptly, they end up in mediation, arbitration, or in court.
A legal term for compressed project schedules is acceleration. Acceleration leads to productivity disruptions and, most often, a blizzard of paper with threats of a financial nature. Under the best circumstances, more workers will be needed.
Before contractors make an acceleration claim, they must prepare an estimate of an anticipated schedule based on realistic expectations for the type of project. Failure to prepare such a schedule can compromise the contractor’s chances of collecting on the claim. The anticipated progress of a project must be based on “custom and practice” of the industry.
At the other end of the spectrum is the delay claim. The delay is often hard to quantify or recognize, such as delayed delivery of a major piece of equipment. An example might be an item provided under other sections of the specifications that require part of installation under the electrical scope of work. Recognizable delays are one thing.
The problem occurs when another subcontractor is given a change order extending the time to complete the work, while other affected contractors are never asked how it will affect their planned work scope. Delays add hidden costs to a project, perhaps the least obvious one being the lost opportunity of using the cash flow, overhead, and profit for the good of the business. Delays impact morale and productivity, and pose other hidden disadvantages.
At times, a project can have so many changes that it bears little resemblance to what the bid originally covered. These changes can be difficult to specifically classify. In some jurisdictions, a contract is legally breached when it exceeds a dollar percentage, for example, 50 percent, as it relates to the original contract. Such actions are usually associated with project scopes that change radically. Breach of Contract claims should only be claimed with concurrence from your firm’s attorney, especially in states or provinces that have legal remedies for malicious prosecution.
A type of claim cloaked in justifiable confusion is called a constructive change. The term “constructive’s” effect is exactly the opposite. Constructive changes result when the designers, owners, or general contractor fail to act. A constructive change orders a contractor to proceed with some work that may also be part of another claim, such as for a time extension when legitimate interruptions have affected the electrical contractors’ efforts to abide by a schedule.
Similarly, there could be an arbitrary order to proceed with work that has been claimed as a change but has not been recognized as one. An example might be the usual admonition that the work abide by the prevailing codes and ordinances, which all contractors accept, but then a resident inspector demands adherence to a recommended practice that would affect the financial anticipation of the project.
Defective contract documents, inclusive of plans and specifications, often cause changes and resulting claims. Here, design professionals have cloaked themselves in all sorts of legalistic clauses, absolving themselves of responsibility for any and all errors. These practitioners expect the contractor to underwrite their design errors by making the project work.
While it is the electrical contractor’s responsibility to install the work in conformance to the code, they should not be expected to install the work to what an owner would like to see when the designer has failed to provide direction in the contract documents. For example, equipment schedules for restaurants include the type of equipment to be connected.
The designer then covers the unknowns by an ambiguous note that requires the electrical contractor to “provide all components to ensure the proper operation of the equipment.” If all that is knowingly anticipated is included in the base bid, the contractor is sure not to get the job. On the other hand, the unknowing will suffer drastically. The unscrupulous will see an opportunity for revision at a later date and will gamble.
A form of protection for unknown details is to prepare a separate bid for such items, based on an assumed scope. It is important to inform those accepting that, while there are design omissions, the work must be included in the price. Such costs, if included in the bid, should be specifically pointed out when submitting the bid in hopes that the awarding party will recognize that a design problem requires resolution.
Superior knowledge claims are associated with aspects of a project that are known but not passed on to the contractor when it will affect their work. On a project involving the placement of a unit substation, I recognized the problem of getting the unit in place and got estimates for rigging and hoisting. Then, when the pre-job conference took place, I found that, without my knowledge, a set of doors wide enough to accommodate the unit sub was installed, obviously avoiding an anticipated expense. Other known information may not be disclosed in the bid documents.
DAVID is a professor of electrical technology at Long Beach City College, Calif., a consultant, and an expert witness. He can be reached at (562) 597-1877 or by e-mail at firstname.lastname@example.org.