Construction Claim Entitlements

You don’t have to be an attorney to understand the basics of claim types and entitlements – the legal basis of construction claims. You can have entitlement but no damages; you can have damages but no entitlement. Unless you have both, you should not expect recovery under a contract claim.

 

Acceleration – Construction Schedule Acceleration is the process of completing or attempting to complete the original scope of work earlier than the contract completion date, or completing or attempting to complete the original scope of work plus additional work by the original contract completion date, or . . . attempting to complete the original scope of work on the original completion in spite of excusable delays, or . . . attempting to complete the original scope of work on the original completion in spite of non-excusable delays, or . . . a number of other combinations. Acceleration can apply to engineering, design, manufacturing or construction. Ultimately, the contractor must show that it actually took discrete actions intended to increase the units of work put in-place each day/week/month.

 

Cardinal Change – While there is no exact formula for determining whether a Cardinal Change has been ordered, the basic question remains essentially as follows: Was the “modified job” the same as the parties bargained for when the contract was let, or did the change fundamentally alter the nature of the work being constructed?

 

Constructive Change – Constructive Change entitlement permits contractors to be paid under the changes clause, even where no change order has been issued. Boards and Courts have held that where a contractor’s performance requirements were changed by some action or inaction which amounted to a direction to the contractor, there had been a constructive change which is compensable.

 

Contract Termination – When contract termination has occurrred before the contractor has begun the work, the contractor may be entitled to recover the loss of the expected profit, or the difference between the contract price and the anticipated cost of the work. If the owner has terminated the contract after the contractor has begun the work, the contractor may be entitled to recover the loss in various ways. If the contractor has completed the work in full compliance with the contract prior to termination, she should expect to recover the full contract price. Recovery and liability under terminated contracts varies widely.

 

Defective and Deficient Contract Documents – As a general proposition, common law imposes an implied warranty that the contract documents will be reasonably free of errors. This implied warranty allows the bidder to assume that the contract documents are reasonably correct and not defective, and that if those documents and specifications are followed, a satisfactory product will result.

 

Schedule Delay – A job condition and entitlement wherein at least one critical path work schedule activity has started later than planned and/or the duration of at least one critical path schedule activity has been extended beyond that of the original duration. These are the two ways in which schedule delay can occur.

 

Differing Site Conditions – If the site conditions differ from what was indicated in the contract or from what would be apparent to a Contractor making pre-bid inspections, and result in a change of the work or impossibility of performance, the Contractor may have entitlement to additional compensation to capture all of these costs, via an Equitable Adjustment.

 

Directed Change – A owner’s unilateral change – directed change – to the terms and conditions of the contract is the most common form of this entitlement.

 

Implied Warranty – An implied warranty is a contract law term for certain assurances that are presumed to be made in the contract due to the circumstances of the deal. Those relating to the plans and specs are most notable in construction disputes.

 

Impossibility of Performance – For such a defense to be raised, performance must not merely be difficult or unexpectedly costly for one party; there must be no way for it to actually be accomplished. There must be Impossibly of Performance.

 

Maladministration – The owner’s deficient, overzealous or otherwise flawed performance of its duties under the agreement.

 

Owner-Furnished Items – Some deficiency in the goods and services provided by the Owner such that the terms and conditions of the agreement have been violated.

 

Strikes – Most commonly this entitlement refers to the adverse impacts on the contractor’s operations by a strike under one its labor agreements.

 

Superior Knowledge – A principle in United States contract law that states that the government or Owner must disclose to a contractor otherwise unavailable information that is vital to contract performance.

 

Weather – Usually refers to the adverse impacts on the contractor’s time and cost caused by weather events that are outside of historical norms and those anticipated by the parties.

 

Work Suspension – Refers to the owner’s temporary or permanent suspension of construction work at the site. This entitlement is now an essential component for the recovery of unabsorbed home office overhead costs by the contractor under federal contracts



PSG Primavera Consultants have assisted clients from a broad range of industries on long and short term project engagements. 




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