Case Studies

Keys to Getting Paid on Extras Claims: Documentation

By March 29, 2018February 5th, 2020No Comments
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Rarely is there a project that does
not involve extra work. Whether it be directed by the owner or prime
contractor, or arising out of changed conditions, extra work occurs on nearly
every project. 

 

Generally, contractors are concerned
with performing the work, not documenting every little detail of the extra
work. This is especially true when there is a need to perform the extra
work as quickly as possible so as to not impact the construction schedule.

 

But if the contractor has not
adequately documented the extra work the owner or prime contractor may dispute
the contractor’s entitlement to compensation for the extra work. Often
this results in costly and time consuming litigation.

 

Recreating the documentation after the
fact is typically less accurate and, in some cases, will embolden the owner or
prime contractor in disputing the claim. Often, the owner or prime
contractor will conclude that the contractor did not accurately bid the
project, went over budget, and is now seeking to retroactively “create” extra
work issues.

 

Needless to say, taking the time to
document the extra work contemporaneously can expedite the resolution
(and thus payment of) extra work claims. The following are several methods
that can and should be utilized to contemporaneously document extra work
claims: 

 

1.   Notice. Of
course, reference must first be made to the construction contract
itself. Most contracts require formal notice of extra work claims to be
provided within certain time parameters (e.g., prior to commencing work
or as soon as possible). These notice procedures must be followed or else
the claim may be waived.

 

2.   Proposed Change
Orders (PCO) or Change Order Requests (COR).
Contracts may also require
that Proposed Change Orders or Change Order Requests be
submitted. Regardless of the contract requirements, PCOs and CORs should
be used. Even if the contractor knows that the owner or general contractor
will summarily reject the proposal, issuing a PCO/COR provides additional
notice that the contractor was performing (at least what it believed to be)
extra work. 

 

If the PCO/COR is issued prior to the
extra work being performed, it typically includes an estimate of the
anticipated costs (Rough Order of Magnitude). In such situations, the
PCO/COR should clearly indicate that it is only an estimate, and not a hard
figure for the work to be performed. 

 

3.   Field Change
Orders / Time and Material Ticket.
The contractor should use a Field Change
Order or Time and Material Ticket in the field each day that extra work is
performed. Even if the owner or general contractor will not execute the
change order or will only sign to “verify time only,” the forms provide daily
evidence of both notice and that the work that was performed.   

 

4.   Daily Logs or
Reports.
It is important that the daily logs or reports be as detailed as
possible; detailed descriptions of the manpower (including any subcontractors),
equipment (including operated and idle hours), major work activities, and any
delays or problems. Dailies should also reflect any oral instructions by
the owner or general contractor, informal meetings, or inspections.

 

Dailies should be clearly handwritten
or else transcribed from handwritten notes. The author may not be
available down the road and an illegible document provides no value in a
dispute with the owner or general contractor.

 

5.   Invoices.
Needless to say, invoices for materials and equipment rentals must be kept in
writing and preserved to ensure payment for any extra third-party costs.

 

6.   Photos / Videos.
Photos and videos are critical to claims for extra work, especially changed
conditions. Photos or videos should be taken prior to the work commencing
and throughout the performance of the work. Photos or videos should have a
time and date-stamp.

 

7.   Meeting Minutes
/ Notes.
Meeting minutes and notes are contemporaneous records that may
reflect that extra work was directed by the owner or general contractor, or at
least discussed between the parties. Again, the more detailed the better.

  

8.   Requests for
Information (RFIs).
Requests for Information support claims that changes
were made to the construction drawings, which necessitated that different or
extra work be performed. 

 

9.   Project
Schedules.
Weekly or monthly project schedules help to document that extra
work was performed or that changed conditions were encountered. Accurate
project schedules are critical for the presentation of delay claims.

 

10. Correspondence. Written
project correspondence, whether it be by email or letter, can reflect what work
was requested or directed, notice to the owner or general contractor, the
conditions encountered, the length of time to perform the work,
etc.  

 

Extra work occurs on nearly every
construction project. Although litigation may not always be avoidable, using
these methods to document the extra work contemporaneously may expedite
the resolution (and thus payment of) extra work claims.

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