Issue
The cost and time to perform change order work may increase as a result of COVID-19 impacts that arise after the change order is agreed upon. The Contractor can include contingencies for that risk in its lump sum pricing, but the Owner will have paid an unnecessary premium if those impacts do not materialize.
Proposed Solution
Consider utilizing a COVID-19 Rider with your change orders. The Rider details the types of COVID-19 impacts that entitle the Contractor to relief, as well as the specific relief. This allows the parties to use their standard process and format for change orders, with the COVID-19 issues addressed in the Rider. A one-page Rider is often all you need. The primary issues to address in the Rider are discussed below.
Continue Reading COVID-19 Riders for Construction Change Orders
In heavy-civil, excavation, and infrastructure work, the risk of encountering differing, unknown, or concealed conditions is significant, as it is nearly impossible to document or predict everything that the contractor will encounter below the surface when performing its operations. Although standard pre-bid site surveys, including soil and geotechnical reports, are good resources to evaluate potential concerns, they will almost never be all encompassing as to what a contractor will face when its work is in progress. Given these unique, complicated, and costly risks, some project owners will seek to pass liability for such risk onto the those performing the work. Indeed, owners may seek to transfer these unknown risks, including unforeseen conditions, to contractors making the financial burden significant for those bidding the work. Accordingly, it is imperative that the contractor balance the desire to submit a competitive price to win the work with the need to ensure that it has some type of remedy or recovery should it encounter such concealed or differing conditions. Faced with this balancing act, contractors performing excavation and foundation work should be intimately familiar with the site disclaimer, exculpatory, and risk-transferring clauses present in their agreements and the effect that such provisions may have on their ability to recover additional costs and time should they encounter differing conditions.
On September 23, 2021, James Newland, AIA, partner in Seyfarth’s Construction group, will be a panelist on the program: “Developing High Performance Structures Through Integrated Project Delivery (IPD),” presented by the Construction Management Association of America (CMAA).
Potential Damages
Seyfarth partner David Blake authored “
On August 26, 2020, James Newland, AIA, partner in Seyfarth’s Construction group, along with Andrew McCoy, Ph.D., Professor and Associate Director of the Myers-Lawson School of Construction at Virginia Tech, will present the a free Lunch and Learn program: Construction Risk Management, Changes, Delays, Inefficiency, and Claims.
Introduction
The outbreak of COVID-19 has been one of the most disruptive events to the global economy in recent memory. Businesses across every sector of the economy are scrambling to determine the legal repercussions of government travel restrictions, labor shortages, supply chain interruptions, financing impacts, and market price
For projects that involve excavation or foundation work, even the most diligent pre-bid site survey may not fully inform the contractor of what conditions to expect below the surface. The risks of encountering unforeseen subsurface conditions are so high that, rather than encouraging bidders to include large contingencies in their proposals, construction lawyers have drafted a special clause—the Differing Site Conditions clause. The purpose of the Differing Site Conditions clause is to allocate the risk for conflicting, inaccurate, or incomplete pre-bid information furnished by the project owner. While the Differing Site Conditions Clause should, in theory, be a pile driver’s closest ally, recent cases interpreting this clause highlight some of the challenges to prosecuting claims under this provision.