Key Factors That Determine If a P&ID Change Justifies a Compensable Change Order Claim

Piping and Instrumentation Diagrams (P&IDs) that engineers develop as part of Front-End Engineering Design (FEED) packages often change during detailed design as part of the Engineering, Procurement, and Construction (EPC) contractor’s lump sum contract. Disputes often arise as to whether such changes entitle the contractor to a time extension and additional compensation.

The following issues affect the compensability of P&ID changes after the FEED package is issued:

1. Contractual Language and Change Order Provisions
Contracts often define what entitles the EPC contractor to a “change” (e.g., a new functionality, a performance guarantee change, or a significant deviation from the FEED that is not considered design development). If P&ID revisions are part of agreed-on design development scope, they may not entitle the contractor to a time extension or additional compensation if the change affects work on the Critical Path Method (CPM) schedule’s critical path.

2. Is the Change Within the Original Scope?
If the EPC contractor agreed to develop the detailed design from a FEED package, then some degree of P&ID evolution is expected and included in the EPC scope. But if the change introduces new equipment, systems, or performance and functionality beyond what the FEED and contract define, it may be outside the agreed-on scope.

For example, updating instrument tags, line sizes, or specs during detail design is expected and would not be claimable. Adding double block valves and bleed valves around process control valves to enable maintenance on the control valve by bypassing the control valve and thus not taking the process unit out of service would not be claimable as an out-of-scope change.

However, the addition of new control valves or safety systems not shown in the FEED P&IDs or rerouting or resizing major process lines would typically be considered claimable. A change that affects commissioning or startup logic may also be compensable. Additional instrumentation for new safety or regulatory provisions not in effect at the time that the EPC contract was agreed on would also typically be claimable. Also, if the change is due to updated owner specifications or project standards, the change would typically be compensable.

3. Is the Change a Result of Owner-Initiated Modifications?
If the owner requests changes that modify capacity, functionality, or operating philosophy, these are typically claimable. For example, a new vapor recovery loop, additional flowmeters, and integration with offsite units would typically be considered claimable.

4. Did the Contractor Assume Responsibility for Finalizing the P&IDs?
Contracts often state that the EPC contractor will “develop and complete” the FEED. In such cases, rationalizing and completing the P&IDs—including equipment sizing, adding or modifying the control logic, adding piping tie-ins, etc.—is typically within the contractor’s risk during detailed design. Also, the responsibility for correcting a design error in the FEED depends on the risks that the contract transfers to the contractor.

5. Timing of the Change May Affect Compensability
Did the owner request the P&ID changes after contract award? If yes, and if these changes are not typically considered design development, then they may be compensable. Also, P&ID changes made after design freeze, resolution of Hazardous Operability Analysis (HAZOP) issues, or Issued for Construction (IFC) drawing issuance are more likely to be treated as claimable Change Orders, particularly if they require rework of already-completed deliverables or affect procurement and construction.

6. Impact on Cost, Schedule, or Risk
A change that has no schedule or cost impact may not rise to the level of a Change Order. However, a change that adds or increases the size of equipment, increases commissioning complexity, leads to additional procurement or fabrication cost, or causes construction rework likely justifies a compensable claim. Also, a change that causes knock-on effects in other disciplines (e.g., civil, structural) could justify a compensable claim if it passes the other hurdles identified herein.

7. Conclusion
To justify a compensable Change Order and potentially a time extension due to P&ID revisions, the EPC contractor must show that one or more of the following conditions apply:

• The change fits the contract’s definition of a compensable change.
• The change is outside the original FEED scope or contract assumptions.
• The change is a result of owner-initiated modifications.
• The change is not within the contractor’s detailed design responsibility.
• The timing of the change was after design freeze, resolution of HAZOP analysis issues, or IFC drawing issuance.
• The change leads to material cost, time, or risk implications.

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