claimants can assert a lack of prejudice defense if the respondent was not prejudiced by lack of timely notice. In other words, the respondent would not have acted differently even if the claimant had issued proper notice, e.g., the claimed work had to get done for the project to move forward and there was no alternative. Third, a waiver of notice defense may occur when the respondent did not previously enforce strict notice requirements as a condition precedent for the negotiation of claims.
I. Pre-Claim Requirements
Standard contract agreements contemplate various types of claims that frequently arise on construction projects and for certain categories of claims these contract forms include pre-claim provisions that allow respondents an opportunity to review the impact and, if so determined, issue a change in the claimant's contract sum and/or contract time before the claimant initiates dispute resolution. Thus, it is important for the claimant to define the nature of a potential claim so it can evaluate whether any pre-claim steps are necessary before it invokes the dispute resolution process. Below is a sample of impacts that often require a pre-claim notice. Each of the examples below is based on a contractor being the claimant and an owner being the respondent and these two parties have entered into a standard contract form and the owner is responsible for the design on the project.
A. Design Issues
1. Differing Site Conditions
A differing site condition occurs when the contractor discovers subsurface or concealed conditions that differ materially from those indicated in the contract documents (Type 1 Differing Site Condition) or materially different from conditions ordinarily encountered in work in the location of the project (Type 2 Differing Site Condition), and this differing condition will cause an increase in the contractor's cost and/or time to perform the work. Standard contracts typically require the contractor to allow the owner the opportunity to decide on whether to authorize a change order to cover resultant impacts. If the contractor does not agree with the owner, it can initiate dispute resolution. The examples below review specific pre-claim requirements.
AIA A201 – Section 3.7.4: The contractor shall provide notice to the owner/architect before conditions are disturbed and no later than 14 days after the first observance of the conditions. The architect shall promptly review the condition and if it agrees with the contractor it will recommend an equitable adjustment in the contract sum or contract time, or both. If the contractor or the owner disputes the architect's position, that party may initiate the Article 15 claims process.
ConsensusDocs 200 – Section 3.16.2 and Section 8.2.1: Per Section 3.16.2, if the contractor identifies a condition at the site that is materially different than indicated in the contract documents or materially different from conditions ordinarily encountered in work in the contract documents, the contractor shall stop the affected work and give prompt written notice of the condition to the owner and the design professional. The owner shall investigate the matter and issue an interim directive that specifies the extent to which the owner agrees that a concealed or unknown condition exists and shall direct the contractor on how to proceed. Per Section 8.2.1, the owner's interim directive may direct the contractor to perform the work before agreeing on an adjustment in the contract price or contract time, or direct the contractor to perform work that the owner believes is not a change. If the owner's interim directive notes the owner's disagreement that a change exists, the contractor can move on to the dispute mitigation and resolution procedures found in Article 12. The contractor can also move on to Article 12 if it disagrees with the owner on the proposed adjustment in the contract price or contract time.
EJCDC C-700 – Section 5.04: If the contractor identifies a subsurface or physical condition that differs materially from that shown or indicated in the contract documents or differs materially from conditions ordinarily encountered and generally recognized as inherent in work of the character provided for in the contract documents, the contractor shall promptly halt the affected work and notify the owner and the engineer in writing about such condition. The engineer is to then promptly review the situation and make a recommendation to the owner. The owner is to then issue a written statement to the contractor that indicates whether any adjustment will be made to the contract. Upon receipt of the owner's statement, the contractor may submit a change proposal to the owner for any adjustment in the contract price or contract time no later than 30 days after the owner's issuance of the statement. If the contractor disagrees with the owner's statement, it can initiate the dispute resolution process per Article 12.
2. Other Design Issues
Other design issues include scenarios where the contractor discovers design additions, changes, errors, or omissions in the contract documents that will cause an increase in the cost and/or time to perform the work. Certain contracts note that the contractor should advise the owner of the issue so the owner can render a position on the issue before the contractor initiates dispute resolution. The examples below highlight specific pre-claim requirements.
AIA A201 – Section 3.2.2-4: Before starting each portion of the work, the contractor shall review, in the contractor's capacity as a contractor, the various contract documents and field conditions and report to the architect any errors, omissions, or inconsistencies in the contract documents via a request for information. If upon review of the architect's response to the contractor's request for information, the contractor believes it will cause an increase in the cost and/or time to perform the work, then the contractor shall file a claim per Article 15.
AIA A201 – Section 4.2.11-14: The architect shall promptly respond to requests for information about the contract documents. Thus, before a design claim is issued, it is prudent for the contractor to get the architect's response to a request for information.
AIA A201 – Section 8.3.1: If the contractor is delayed by: actions of owner/architect/separate contractor; changes ordered in the work; force majeure events; abnormal weather; and/or other causes beyond the contractor's control, then the contract time shall be extended as determined by the architect. Section 8.3.3 notes that Section 8.3 does not preclude the contractor's recovery of delay damages from the owner under other provisions of the contract (namely, Article 15). Thus, the contractor should give the architect the ability to render a decision before a claim is initiated.
ConsensusDocs 200 – Section 3.3: Before commencing the work, the contractor shall review the contract document and report any visible conflicts to the owner. Upon receipt, the owner shall promptly inform the contractor on what action, if any, the contractor shall take.
EJCDC C-700 – Section 3.03.A.1-2: If, before or during the performance of work, the contractor discovers a design issue, the contractor shall promptly report it to the engineer in writing. The contractor is not to proceed with the affected work until the matter is resolved.
EJCDC C-700 – Section 3.04.A-B: During the performance of work, the contractor shall issue questions in writing (requests for information) regarding the design to the engineer as soon as possible after such matters arise. The engineer to respond to the contractor's questions with reasonable promptness. Based on the engineer's response, the contractor can submit a change proposal to the owner.
EJCDC C-700 – Section 11.09.B: The contractor shall submit change proposals to the engineer within 30 days after the start of the event giving rise thereto. Note that the change proposal shall comply with Section 4.05.D–E. The engineer is to render an initial decision on the change proposal within 30 days of proper submission. If the contractor does not agree with the engineer's initial decision, it can move to the dispute resolution procedures in Article 12.
B. Administration Issues
1. Submittal
