Volume 6 Number 12 | March 24, 2008 - Construction Claims Advisor

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You are here: Home » Volume 6 Number 12 | March 24, 2008

Volume 6 Number 12 | March 24, 2008

EDITOR'S NOTES | Issue 6-12: If you want to know about local conditions, the best people to ask are the locals. “Just ask the locals” isn’t just a marketing campaign by New York City Mayor Michael Bloomberg to generate a more positive tourism trade in the Big Apple. The concept plays into business dealings as well. The Armed Services Board of Contract Appeals denied a differing site conditions claim because it said the contractor didn’t do its homework. It should have talked with and listened to local contractors about local conditions for a dredging project.

Congenial relationships in business can create a pleasant working environment. A handshake can be as good as a signed contract. However, when those relationships sour, at least one party will reach for the signed contract and demand that the original agreement be upheld. It’s the classic environment for a claims dispute as shown in a conflict between a contractor and residential developer.

Can a contractor get away with adding a $9.5 million line item adjustment to a $1.7 million public works contract? Not according to the New Jersey Superior Court, Appellate Division. Because the bid was unbalanced and the contractor did not follow adjustment protocol, it could only recover the actual cost of the work, which was $52,330.

REASONABLE PRE-BID SITE INVESTIGATION INCLUDES INQUIRY OF LOCAL CITIZENRY: A claim for a differing site condition on a dredging project loses ground because the contractor failed to perform a proper pre-bid site investigation.

CONTRACTOR RECOVERS REASONABLE VALUE AFTER OWNER WAIVED WRITTEN CHANGE ORDER REQUIREMENT: When relationships between an owner and contractor are amicable, the owner often relaxes certain contract formalities, such as change order requirements. However, when the relationship sours, the owner reverts back to the letter of the contract and disputes arise.

COURT DENIES CONTRACTOR OF $9.5 MILLION WINDFALL ON UNBALANCED BID: A contractor tries to use a contract ambiguity to pad its bill with a $9.5 million line item charge. The court doesn’t buy into the logic and reduces the line item to a more realistic $52,000 payment.