Delay Claims, Changed Conditions Claims and Extra Work Claims in California Public Contract Law
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Just like with private construction contracts, there may be unforeseen circumstances or other conditions that make it necessary for contractors or subcontractors to adjust the contract and request payment for additional or changed work. There is a specific process that California public works goes through to approve such claims.
Reasons for Additional Claims
There are a variety of situations that can result in the need for additional claims and compensation. Some conditions may change the price of goods or materials that the contractor based the bid on. Other conditions may justify an increase in payment due to more work. The contractor may experience unforeseen conditions on the job. He or she may have incurred a delay due to the public work, such as delays in responding to requests for information, delayed responses to change orders, delayed approval of shop or architectural drawings or suspension of the work. Others may have interfered with the contract. Such delays could result in inefficient labor delegation, increases to the cost of material or labor or interruption and delays that cause an increase in the work and time necessary to finish the job.
A general rule in California public works contracts is that if extra work is necessary, a change order should be issued. Extra work may include additional labor, services, materials or equipment that are necessary because of work that was not part of the original contract. A change order should be issued if the government entity states that such work should be necessary. If it refuses to have a representative authorize the work, the contractor may have to pursue a claim for extra work based on a breach of the contract. When there is not a separate contract for the additional work, California law holds that the contractor should be paid for the reasonable value of the extra work.
Some public work contracts contain clauses regarding delays and stating that they will not be financially responsible for delays. However, California law limits the enforceability of such delay clauses. Courts will look to the language of the contract to determine the duties of the parties. For example, if the contract requires the municipality to provide materials or approval in a timely manner and then the city does not comply with this duty and causes a delay, the court may not enforce a no damage for delay clause. Additionally, the courts will not uphold such clauses when the delay is unreasonable under the circumstances and were not contemplated by the parties at the time they entered into the contract. Likewise, if the delay is caused by the city’s breach of contract, such clauses are generally not enforced.
Although public works and private projects may both suffer from delays or the need for extra work, the process tends to be more complicated with public works contracts due to the limited right to sue the government. The procedure the public agency uses to resolve such claims must be strictly followed. There are often deadlines for making a claim. There may be a specific form that is filed with the governmental agency. Failing to carefully follow these guidelines can result in the claim being barred.
Contractors should carefully read through language in their contracts regarding notice of claims before commencing work. Before providing additional work, the contractor should carefully review the process and seek any necessary approval to protect its claim. Contractors should read other supplemental documents to their contract, such as the Specifications, the California Green Book or the Project Manual, for example. In other situations, terms of the contract may also be included in a local statute or ordinance.
If a claim becomes necessary, the contractor must follow the notice of claims provision that applies. This process may require the contractor to provide notice to the public works agency before any additional work or costs are incurred. The contractor may be required to declare in writing when it perceives there has been a delay caused by the government agency. Some notice requirements may be very strict, such as one to three project days from the date of the incident giving rise to the claim. These notices provide the governmental entity to resolve the issue promptly and avoid possible litigation. The contractor should keep track of documentation that supports the public works’ instructions and communications regarding such changes and delays. Additionally, it should maintain receipts, certified mail records and other documents that support its claim.
Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer.