August 14, 2019

By: Todd Heffner, Associate, Jones Walker LLP

Plans and specs can be misinterpreted by the owner causing a contractor to do extra work or buy more expensive materials, and this article will discuss some practical advice for how to make sure you get paid for the issue.

Assume for a moment that your contract required you to achieve a certain level of efficiency for the HVAC system that was measured in terms of power consumption. Because the plans and specs did not specify a particular type of insulation, you determined the most cost-effective manner of meeting the contractual requirements was a combination of bat insulation and high SEER rating units. The owner’s rep learned of your plan and instead required to you go with the more costly option of spray-foam insulation. Or perhaps you bid a job where you planned to use 3/8” drywall and the architect ultimately required you to use 1/2” drywall because that was the architect’s intent. Such situations are encountered everyday on projects across the country and affect everyone on the job, from general contractors, to subs, sub subs, and even suppliers. So what do you do?

For many parts of the work, the contractor’s means and methods for achieving its scope are within its discretion, so long as the plans and specs and the contractual requirements are being met. Or in the first example above, there was a performance spec that had to be met, and it was up to the contractor to arrive at a certain performance level. These issues can generally be considered “constructive changes.” Constructive, because if a change order is actually given for the associated additional cost, then a potential dispute is avoided. And beyond costing more money, constructive changes can be tricky to deal with from a business relationship standpoint—you want a happy owner or up-stream contractor so that you can get repeat work, but you also want to be paid fairly for the work you perform. Below are a series of suggestions for how to arrive at a favorable resolution of constructive changes and get paid for the added work.

First, double check the plans and specs and your contract. Before raising the issue, it helps to make sure you are right about the position you are about to take!

Second—and this should be the case for just about any issue on a construction site—pick up the phone, or better yet, try and have a face to face meeting to resolve the difference in interpretation. The face to face meeting will provide the best opportunity to avoid talking past each other—you can look over the plans and specs together. It will also help avoid any misunderstandings and can lead to a better working relationship as the project progresses

Third, assuming you still have an issue about how the plans and specs should be interpreted, you need to document your position in writing. Start with a close read of your specific contract to make sure you give the proper form of notice. The changes clause requirements are in all likelihood what this type of issue will fall under. So ask for a change order, and do so quickly to avoid fights over proper notice down the line (many contracts will require notice within five days or less). These tight timelines for change order requests also mean you need to be sure to accomplish the first two steps described above quickly. On the change order request, be sure to include both: (1) an explanation for why you believe your interpretation of the plans and specs is correct, and (2) whatever details are available about the higher costs of complying with the directive being given (often times, given the tight deadlines for notice, you may not have the exact pricing of a change figured out yet—do not delay giving notice just because the cost is an estimate).

Finally, to prevail when there is a constructive change, it will also be important to demonstrate that the interpretation of the plans and specs you are advancing now was the same one you were using during the bid or proposal stage. This is not something the other side needs to be on notice for per se, it just needs to be documented. So if there is a lot of discretion provided by the contract plans and specs for how certain work can be accomplished, make sure your bid or proposal documents indicate how you intended to accomplish the work. Without such information, it will be much harder to demonstrate that the work is a change that entitles you to additional compensation.

These general strategies will be able to help you deal with two other plan and specification issues that could also be considered constructive changes: scope gaps and defective plans and specs. For example, another contractor was required to rough in the connections for a piece of equipment, and you are required to install the equipment. Based on the rough in, however, there is substantially more work and supplies needed to complete the install than was included in your bid. If you discuss the issue with the general contractor or owner, provide adequate notice, and have a detailed bid document. You are more likely to be compensated for the additional costs that you did not anticipate. Similarly, if the plans and specs were defective, requiring you to perform additional work to be able to complete your scope, open discussion, adequate notice, and organized records will help you get paid.

The steps above can be boiled down to three main themes that should be help avoid disputes on any construction project: (1) favor in-person or over-the-phone conversations when issues arise instead of email (as long as you are not otherwise sacrificing good project documentation practices); (2) provide timely written notice of any issue; and (3) have organized and complete records.

The views expressed in this article are not necessarily those of ConsensusDocs. Readers should not take or refrain from taking any action based on any information without first seeking legal advice.