Orderly Documentation Supports Cost Recovery for Changes

Continuing with the effect of changes on a project, unforeseen labor difficulties may be an item whose extended costs can be recovered, albeit with more difficulties. Obviously, any problems that may lead to a change must omit those created by the contractor’s own forces. Suspension of the work might cause damages to a contractor. Suspensions can take a variety of forms––from financial problems to shutdowns by safety officials. No matter what the suspension, unless caused by the electrical contractor, a change procedure should be in place and initiated. Suspension changes may be hard to collect for, but if the contractor doesn’t ask, the chance of voluntary reimbursements is nil. One of the more serious changes is one that involves termination of either the contractor or the total project. A recent Engineering News-Record (ENR) story related work that was being stopped because of the demise of many dot-coms. Termination of the contractor may be for cause; just another reason to pay particular attention to the wording of the contract. Another type of termination could be the abandonment of a project at any stage in the contract. If the contract is terminated before any work has started, damages may be hard to come by. Changes may be sought for a variety of reasons, including back charges from suppliers, new layout plans, and a variety of tasks performed before work begins. Keep in mind that, just because a fee is refundable, there is contractor time and overhead attached to these necessary processes to get refunds or credits. Anticipated profits are a valid cause for a claim. Obviously this type of change will require a good basis for any claim to withstand opposition from all parties. Among the more difficult changes are those attributed to weather. Many specs will state that weather cannot be the basis for a change request. The spec and contract writers make assumptions that contractors should know the weather patterns of the area and should make allowances for those interruptions. However, no one can predict the effects of floods, odd patterns of snow depth, or the one-day rain that sets the project afloat. The net consideration is: “Did the contractor consider the weather in the geographic area of the project for the period that the project will be under construction?” and “Can they prove it?” with the latter being the big question. Any anomalies, such as El Ni,o effects, are usually easier to prove. Contractors should realize that changes are frowned on by awarding authorities. Too many contractors assume that changes can make a bad job whole. Wrong! Changes most often cost the contractor more than they collect. Cost reporting and sound judgment will soon point out that no one ever recaps all the costs involved in a change; contractors are better off concentrating on completing the project, turning their assets, and moving to the next project. Changes can take a variety of forms, not only to the reason for the change, but also what type of response the change will get. Ideally, a request for a change can be fully supported, and the person who makes the judgment about granting the change is convinced and grants it. Unfortunately, this scenario is the exception rather than the rule. At some pre-job meetings, architects have flatly stated that there will be no changes allowed or considered—a flag of caution that the contractor will have a difficult time getting a reasonable change. If there is one major obstacle to a successful change, it is the documentation to support the changes requested. Electricians are notorious for avoiding paperwork, yet the best information is that which comes from the people who have first-hand knowledge––those on the project. The chain of information starts with the estimator’s work, especially the basic schedule he or she uses to arrive at anticipated crew sizes and crew days. It is important that logical approaches based on industry customs and practices be used in making the schedule. Rarely is the first schedule produced by the prime contractor the one that best resembles someone’s wishes; warning bells should trigger an objection if it means that schedule will force expenses not rationally anticipated. Next in importance when supporting changes are paperwork logs. They may include requests for information, shop drawings, and other types of communication. Available resources can help organize an efficient contractor’s paper trail. Of primary importance is a simple log that indicates when and to whom the items were sent, a brief description of the contents, and leaving room to record the receipt of replies. The same type of log should also be kept for telephone calls regarding the project. Keeping such logs will greatly help to prove either problems or how well the parties respond to contractor needs. Proper organization of project files can go a long way towards finding items when needed. The best defense against negative actions and litigation is a well-organized project file that contains all the facts. DAVID is a professor of electrical technology at Long Beach City College, Calif., and a consultant, and expert witness. He can be reached at (562) 597-1877 or by e-mail at edavid@lbcc.cc.ca.us.

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