July 13, 2022
Definitions of Construction Claim Types for Contractors
U.S. federal and state courts recognize 19 basic construction claim entitlements for a contractor’s recovery of damages. This post summarizes the definitions of these construction claim types that may apply to a contractor’s and subcontractor’s recovery of time and costs. Certain of these have multiple definitions, with examples provided.
- Actual Acceleration (Directed Expedited Work): Request from an owner, architect-engineer, or construction manager to complete a contractor’s work, or any part thereof, prior to the prevailing completion date.
- Constructive Acceleration (Unrecognized Expedited Work): Insistence by an owner, architect-engineer, or construction manager on timely completion despite excusable delays. (Look for refusal by the owner or prime to grant justifiable time extensions.)
- Acts of God (Natural Disaster): Natural disasters, including but not limited to floods, fire, earthquakes, tornadoes, hurricanes, lightning, drought, high tides, and other unusual and severe conditions.
- Acts of Government (Sovereign Acts): Actions or inaction by federal, state, county, city, municipal, or other government agencies or officials that stop, delay, disrupt, hinder, or otherwise affect a contractor’s ongoing or planned work.
- Weather (Severe Conditions): Weather conditions that deviate substantially from the normal, average, or reasonably expected weather for the particular locality of the project and the current season of the year. Deviations may take the form of otherwise normal conditions, such as rain, snow, or extreme temperature, that persist for an unusually long period.
- War and Other Hostilities (Hostility Outbreak): War, civil unrest, or other combative hostilities that stop, delay, disrupt, or hinder a contractor’s ongoing or planned work or a party’s ability to secure necessary labor, materials, supplies, or tools.
- Cardinal Change (Major Alterations of Scope): Request by an owner, architect-engineer, or construction manager that a contractor perform work that is far in excess of or entirely different from the work called for by the contract (e.g., erecting two structures where the contract called for one or excavating for foundations when the contract calls for only structural framing).
- Constructive Change (Unacknowledged Modification): Change in contract work by an owner, architect-engineer, or construction manager without issuance of a formal change order; insistence by the owner, architect-engineer, or construction manager on performance in a manner different from that allowed by the contract or refusal to accept performance in a manner allowed by the contract. The owner, architect-engineer, or construction manager requires performance of work not called for in the contract but refuses to issue a change order. Examples of constructive changes include, but are not limited to, constructive acceleration, constructive deceleration, erroneous contract interpretation, defective specifications, unreasonable inspection practices, and changed method of performance.
- Defective and Deficient Contract Documents (Unworkable Plans): Errors or omissions in the contract drawings or specifications, impossibility or extreme difficulty in performing contract requirements, incorrect dimensions, and unattainable performance requirements.
- Delay of Approvals (Slow Turn-around): Unreasonable delay by an owner, architect-engineer, or construction manager in approving shop drawings, schedules, samples, job tests, or other items that a party timely, accurately, and completely submitted.
- Delayed Issuance of Change Orders (Change Delay): An owner, architect-engineer, or construction manager unreasonably delays issuance of change orders such that time or resources are wasted. Even if a contractor expects a change order to be issued, the contractor may suffer loss of skilled labor, idle equipment, inefficiencies, or other costs caused by any unreasonably long delay between the promise of a change order and its actual issuance.
- Delayed Notice to Proceed (Late NTP): An owner, architect-engineer, or construction manager fails to issue a notice to proceed (for a contract as a whole or any divisible part of the contract) on the date set forth in the contract or unreasonably delays issuance of the notice to proceed where the contract does not set a specific time for issuance of the notice.
- Delay in Answer for Requests for Information, Field Questions, and Field Changes: An owner, architect-engineer, or construction manager fails to provide timely and/or adequate answers to requests for information, questions that arise in the field, or instructions regarding field changes.
- Late Drawings (Drawing Delay): Drawings or sketches that a contract requires to be furnished to a contractor, or that a contractor can reasonably expect to receive, are furnished late or not at all, thereby affecting the orderly performance of the contractor’s work.
- Subcontractor Delay (Sub Problems): Actions or inactions of a subcontractor for which a contractor is not responsible that stop, delay, disrupt, or hinder a contractor’s ongoing or planned work.
- Supplier Delay (Supplier Problems): Actions or inactions of a supplier of equipment or materials that are provided by others that stop, delay, disrupt, or hinder a contractor’s ongoing or planned work.
- Changes in Planned Method of Construction: An owner, architect-engineer, or construction manager directs changes in a contractor’s planned method of construction resulting in increased time and cost of performance.
- Schedule Changes: An owner, architect-engineer, or construction manager changes the schedule for performance of a contractor’s work resulting in delays and inefficiencies.
- Directing Manning Levels: An owner, architect-engineer, or construction manager directs a contractor to increase or decrease manning levels through no fault in the contractor’s performance.
- Changes in Quality Assurance Requirements: An owner, architect-engineer, or construction manager directs changes to the quality assurance requirements, testing procedures, or specifications that increase a contractor’s time and cost of performance.
- Differing Site Conditions (DSC) (Unexpected Circumstances): A Type I DSC is generally defined as one in which actual physical (subsurface or latent) conditions encountered at a site differ materially from the conditions represented in contract documents. A Type II DSC occurs when actual physical conditions encountered at the site differ materially from the conditions normally encountered and generally recognized to exist, given the nature and locale of the work. A contractor should immediately notify the owner, architect-engineer, or construction manager before disturbing the condition encountered.
- Directed Change: An owner, architect-engineer, or construction manager directs a contractor to perform additional work.
- Disruption/Congestion: An owner, architect-engineer, or construction manager’s actions, inactions, or instructions interfere with, stop, delay, disrupt, or hinder a contractor’s ongoing or planned work. Examples include multiple trades working in the same location, changes, shifting the location for performance, defective and deficient plans and specifications, incorrect contract drawings, differing site conditions, unusually severe weather, strikes, unavailability of equipment and materials, defective work, equipment breakdowns, failing to schedule and coordinate the work, and failing to respond to requests for information in a timely manner, such that a contractor’s work cannot be performed efficiently.
- Implied Warranty: Several implied warranties are recognized: 1) neither party to a contract will do anything to prevent performance thereof by the other party, or that will hinder or delay the other party in its performance; 2) the plans and specifications are sufficient and adequate for the purpose intended; and 3) on multi-prime projects, the owner or construction manager will coordinate the activities of the respective contractors so as to avoid disruptions.
- Impossibility of Performance: Commercial Impracticability (Impractical Performance): Contract performance becomes extremely expensive (e.g., costs double), dangerous, or difficult, and where such expenses, dangers, or difficulties were unexpected. Unprofitable work, hardship, or high costs alone are usually not enough.
- Impossibility of Performance: Supply Impracticability (Unavailable Material): Unreasonable difficulty in locating or obtaining necessary materials, supplies, tools, or equipment; unavailability of materials despite exhaustive search for alternative sources; cost of obtaining items is commercially senseless or unreasonably high (e.g., costs approximately double what was planned); procurement or delivery is not possible at the time or place needed.
- Impossibility of Performance (Infeasible Work): Examples include: a contractor (or any other contractor) cannot perform work according to contract terms due to specification errors or unattainable performance requirements, specified equipment does not satisfy specified performance requirements, performance requirements are beyond state-of-the-art, and/or damage or destruction to the structure upon which contract performance is dependent.
- Maladministration: Early Completion Prevented (Slower Finish): Actions or inactions of an owner, architect-engineer, construction manager, or other party that prevent a contractor from completing a project, or any part of a project, on the date planned, when and if that date is before the established contract completion date.
- Maladministration: Improper Inspection (Excessive Scrutiny): Unreasonably burdensome, improper, or overzealous inspection of a contractor’s work by an owner, architect-engineer, or construction manager that stops, delays, disrupts, or hinders the contractor’s ongoing or planned work, and an incorrect or erroneous standard applied or test performed during the inspection of the contractor’s work.
- Maladministration: Inadequate Supervision (No Oversight): Failure of an owner, architect-engineer, or construction manager to oversee or supervise work in progress on a site, and representatives of the owner, architect-engineer, or construction manager are inaccessible on a day-to-day basis to address a contractor’s problems and concerns during construction.
- Maladministration: Inadequate Utilities (Missing Utilities): Failure to receive or delay in receiving utilities (e.g., electrical power, water, etc.) in violation of a contract, or that were reasonably expected. Also includes utilities that are available but are inadequate to properly support contract performances.
- Maladministration: Lack of Access (Unreachable Work): Impaired access to work areas; small or cramped work space; access restricted by other work, strikes, unsafe conditions, etc.
- Maladministration: Lack of Information or Decision (Awaiting Instructions): Time spent awaiting instructions, decisions, or clarifications from an owner, architect-engineer, or construction manager causing work force or activities to be shifted while waiting, or efforts wasted because information arrives late.
- Maladministration: Lack of Permits (Missing Authorizations): Failure of an owner, architect-engineer, or construction manager to secure permits or licenses necessary for the performance of the work, delay in securing permits.
- Maladministration: Lack of Right of Way (Blocked Roads): Roadways or routes to or from a project are blocked or are otherwise unavailable or impaired.
- Maladministration: Payments Not Made (Funds Withheld): Progress or other payments delayed or unreasonably withheld in violation of a contract or its progress payments clause; unilateral downward adjustment in contract price.
- Maladministration: Scheduling Difficulties/Failure to Coordinate the Work (Coordination Problems): Failure of an owner, architect-engineer, or construction manager to properly sequence or coordinate work, adhere to project schedule, timely update schedule, or provide accurate scheduling information; illogical work scheduling or sequencing; manipulation of schedule that stops, delays, disrupts, or hinders a contractor’s ongoing or planned work.
- Owner-Furnished Items: Failure to receive or delay in receiving property, equipment, materials, tools, or data in violation of a contract; receipt of property, equipment, tools, or data unsuitable for their intended use.
- Strikes (Labor Strife): Any unforeseeable strike or refusal by workers to perform work. (Contract may bar relief for even unforeseeable strikes.)
- Superior Knowledge/ Misrepresentation (Undisclosed Facts): Performance undertaken by a contractor without knowledge of facts that the contractor later learns are vital to contractor performance; and the contractor had no reasonable way of learning the facts; and the owner, architect-engineer, or construction manager knew the facts and either failed to disclose them or deliberately concealed them.
- Suspension of Work/Delay (Work Stoppage): Actions or inactions of an owner, architect-engineer, or construction manager that force a contractor to stop its ongoing or planned work.
- Termination: Two types of terminations may occur: 1) Termination for Default provides an owner the right to terminate a construction contract for default, and generally arises only when a material or substantial provision of a contract has been breached or a party has failed to perform a material obligation. If substantiated by the owner, then no recovery of costs may be available; 2) Termination for Convenience allows one party (usually the owner) the right to terminate another party (usually the contractor) without cause, for convenience. If one party terminates another for convenience, the terminated party has the right to compensation that the contract’s terms may limit.
- Unjust Enrichment: A contractor is entitled to be put back in the same position it would have held had an owner’s breach of the contract not occurred. The doctrine of unjust enrichment provides that a “person shall not be allowed to profit or enrich himself inequitably at another’s expense.” Under unjust enrichment, the defendant (owner) unjustly receives and retains something of value at the plaintiff’s (contractor’s) expense. Unjust enrichment precedes restitution, which is the restoration of the contractor and owner to a just and equitable state. Unjust enrichment is the act or state of imbalance or inequity, and restitution is the return to equity.
- Variation in Quantities: Changes may occur that may cause significant deviations from the approved design, which could significantly increase or decrease the required quantities to be installed and the contractor’s time of performance and costs.
Construction Claim Types for Contractors
U.S. federal and state courts recognize 19 basic construction claim entitlements for a contractor’s recovery of damages. This post is the first of a series discussing each of these 19 types.
Acceleration Claims on Engineering and Construction Projects
This article covers types of acceleration, key elements of acceleration required by the courts, acceleration claims outside of the U.S., notice requirements, and more.
Labor Strikes – Contractor’s Potential Recovery of Delays and Damages
This article offers a brief discussion of the history and legal consequences of strikes in the construction industry.