How to Prove the Change in Scope Claims

“Changes regarding the scope of work on Construction Projects are common causes of Claims.”

Changes continue to be a significant issue for construction.

In our case; the Engineer issues revised drawings that change the scope.

The Contractor believes that the situation comprises variation, but there is no Owner’s formal acknowledgement regarding the variation. 

Despite all, the Contractor proceeds in accordance with the revised drawings.

Then, the Contractor encounters delay and incurs additional cost as a result of change in scope.

At the end, the Contractor sends a Notice to the Engineer emphasizing that the situation constitutes a variation under the contract and the intention to claim additional payment and extension of time.

But, how will the change in scope claim be proved?

𝐈𝐧 𝐭𝐡𝐢𝐬 𝐝𝐨𝐜𝐮𝐦𝐞𝐧𝐭, you will find 𝐭𝐡𝐞 𝐤𝐞𝐲 𝐢𝐬𝐬𝐮𝐞𝐬 and 𝐭𝐡𝐞 𝐩𝐫𝐨𝐜𝐞𝐝𝐮𝐫𝐞 to be followed while proving the change in scope claims.

1   The Work is Beyond the Contractual Obligations

1.  The Contractor should establish that the additional work is beyond the consideration of the Contract Documents.
2.  One of the best ways to demonstrate this is to point out any defect in the drawings and specifications that are the responsibility of the Employer.

2   The Work is Instructed by the Employer

1. Where the change is initiated by the Employer’s formal instruction, it is easy to demonstrate.

2. But in the case of “Constructive Changes”, it may be more difficult to demonstrate the situation. Usually, the Contractor has to prove that the out-of-scope work is a Constructive Change. And, the burden of proof of Constructive Change belongs to the Contractor.

Constructive Changes Changes in scope are not instructed by the Employer, but rather results from events, conditions or other circumstances that change the basis of the agreement as defined by the Contract Agreement.

3   The Employer Agrees to Compensate the Contractor

The Contractor has to establish that the Employer is liable for the costs incurred due to the additional work done.

1. Make the Amount Clear The Contractor should segregate the costs of the changed work so that the amount expended in performing the changed work is clear. Unclear costs will inhibit and delay the recovery chances.

2. Submit the Actual Costs Incurred The Contractor is to submit the actual costs incurred for the performance of the additional work to the Employer.

Constructive Changes

1. In case of “Constructive Changes”, it may be more difficult to establish the agreement of the Employer.

2. The argument; “The Employer is enriched at the Contractor’s expense for the additional work performed.” can be used.

3. In the event of Constructive Changes, it is important to establish that the owner is aware that the work is being performed and necessary.

4   There is no Contractor’s Fault

The Contractor must prove that the extra work was not the result of its own failure to perform.

5   The Claim Amount is Fair and Reasonable

The Contract should always serve as the primary basis for determining the acceptable methods for the pricing of change orders.

Specific methods that may be used by the Contractor to quantify the costs include;

1. Actual Costs

2. Total Cost Method

3. Modified Total Cost Method

4. Jury Verdict Method

5. Quantum Meruit

This information is provided for your convenience and does not constitute any “Legal Advice”. This document is prepared for the general information of the interested persons. This should not be acted upon in any specific situation without appropriate legal advice.

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