Construction contracts frequently specify one or more methods for pricing changed work. Despite the effort to define pricing in advance, however, the matter is a recurring source of disputes. This was illustrated in a recent California case.

The contract contemplated both time and materials and lump-sum change orders. One provision required the contractor to provide "documented actual cost." But, it was unclear whether this pertained to time and materials change orders or all change orders. As a practical matter, the project owner issued time and materials directives for smaller items of changed work. For major items, the owner attempted to negotiate forward-priced, lump-sum contract modifications based upon engineering estimates.

Not all the change orders were successfully forward priced, however. When the contractor sued to recover payment for unpriced changes, the owner argued that the claim was barred because the contractor relied on engineering estimates and failed to itemize and document its actual change order costs.

Other cases this week involve the role of an unresolved change order dispute in a finance/design/construct contract and the duties owed by a construction manager to a contractor. The builder could not refuse to convey the completed project to a public entity based on a dispute involving two percent of the project value. And, the CM owed no duty of due care to the contractor, as this would conflict with the CM's obligation to protect the interests of the project owner.