The “total cost method” of quantifying construction claims used to be considered bad practice. The technique compares the cost of the work as bid with the cost of the work as performed and attributes all the cost increase to the acts or omissions of the project owner. This was subject to attack as imprecise and lacking proof of causation by the owner. Now, however, the technique has been resurrected as the improved “modified total cost method.” When used properly, it enjoys great success.

A recent Ohio case illustrates the effective use of the modified total cost method when pricing an acceleration claim. The contractor’s expert made all the adjustments needed to thwart the owner’s attack on the claim quantification. He segregated the aspects of the work affected by the accelerated pace of work, he adjusted the contractor’s pre-bid estimate upward to make it reasonable, he tested the reliability of the contractor’s job cost system, and he itemized and broke out labor hours incurred in matters unrelated to the acceleration.

Other cases this week address an anti-indemnification law and the interrelationship between licensing requirements and mechanic’s liens. A construction equipment rental agreement was considered a construction contract, so an indemnification clause in the agreement was rendered unenforceable by statute. And, a mechanic’s lien was valid because the contractor was licensed when it performed the work, even though it was unlicensed at the time of contract execution.