Volume 7 - Number 31 | August 3, 2009 - Construction Claims Advisor

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You are here: Home » Volume 7 - Number 31 | August 3, 2009

Volume 7 - Number 31 | August 3, 2009

EDITOR'S NOTES | Issue 7-31: The contract requirement for written change orders is one of the most common in the construction industry. It is also one of the most frequently violated. Contractors and project owners don't necessarily ignore the requirement in a consistent fashion. They ignore it intermittently. This creates problems.

In a case reported this week, a subcontractor got a late start due to mismanagement of a fast-track project by parties up the contractual chain. The prime contractor asked the sub to accelerate its work to keep the project on schedule. The subcontractor expressed concern about its increased labor overtime costs. The contractor allegedly agreed to pay those costs. But when the subcontractor tried to collect, the lack of a written change order stood in the way. It was difficult for the sub to argue that the requirement had been waived, as there had been other written changes to the subcontract, some involving overtime compensation.

Other cases reported this week involve a mechanic's lien that attached only to the improvements and not the land, as well as a bidder's right to challenge the prequalification of a competitor. The lienor was allowed to take priority over a construction lender despite the limited scope of its lien interest. The bidder was less fortunate. The protest should have been filed when the prequalification list was announced, not when the contract was awarded.

ORAL AGREEMENT TO PAY FOR ACCELERATION RULED UNENFORCEABLE: A prime contractor allegedly agreed to pay a subcontractor’s overtime costs necessitated by the prime’s acceleration of the pace of the work. But with no written change order, as required by the subcontract, any agreement was unenforceable. A dissenting opinion said partial performance by the prime and sub rendered the oral agreement enforceable.

LIENOR TRUMPS CONSTRUCTION LENDER DESPITE LIMITED LIEN INTEREST: A mechanic’s lien could not attach to municipally owned land, but could attach to the improvements constructed on the land by a concessionaire. The lien related back in time and took priority over the deed of trust filed by the construction lender.

PROTEST OF COMPETITOR’S PREQUALIFICATION WAS TOO LATE: A bidder was required to challenge the inclusion of a competitor on a list of prequalified firms prior to submission of proposals. The bidder could not wait until the competitor submitted a proposal and was named the contract awardee. The protest was untimely.