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Owner Directed Change

18 replies [Last post]
Fri, 2008-09-19 21:19
Brad Richey
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My contract allows for delay claims for owner directed changes. We have asked and recieved approval to take care of differing site conditions and requested time for these issues. The owner has since came back and said he would pay for the additional rock but not allow the time extension, I have proven with a schedule analysis. His reasoning is the rock was not an owner directed change it was a site condition. My position is we asked him and he directed us to fix the issue therefore it was owner directed. Is there any case law on this to anyones knowledge?
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Replies

Sun, 2008-09-28 16:41
#1
Andrew Flowerdew
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Brad,

It’s tying up an "Owner Directed Change" with unforeseen ground conditions - have to say the two do seem potentially different to me.

Yes you found more rock, it is a change to what you originally thought and I assume the Owner has told you to continue and get on with it.

But there maybe a difference between say, approving extra expenditure on a change in quantities and actually instructing you to do something different, such as change the size of the hole you’re excavating.

It’s not uncommon for parties to try to classify things to suit their purposes, happens every day, but I’m far from sure which side is trying to be clever here by trying to slot the circumstances into what will suit them best.

Unforeseen ground conditions, if it is the Owners liability, will give you some recourse, maybe time, maybe money, maybe both.

From the Owners perspective, he believes it’s money and no time. From your perspective, time and money is due.

You appear to have quite detailed procedures to follow “authorization to proceed on changes” and “owner to provide direction to proceed” and I would guess that the contract sets out in what circumstances each is to be followed.

All I can suggest is that you start in the unforeseen ground conditions clause and follow it through word by word – it will probably tell you which procedure is the one to follow and then you will have your answer.
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Sun, 2008-09-28 11:41
#2
Samer Zawaydeh
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Dear Brad,

One solution is to ask an influential person "Project Sponsor" to take interest in solving this issue. He will have the respect of both parties and his solution will be respected.

Another thought would be to ask your upper management for a "creative problem solving session". It would be a 1-2 day session at a resort away from the project and you will get the chance to solve this issue.

Good luck,

Samer
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Sun, 2008-09-28 07:13
#3
Charleston-Joseph...
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Anoon,

This happened in one of my projects.

We analyzed the contractor behaviour and come up with something like:

a. Grandstanding positioning for future claims
"Pogi points" or goodwil with the intent of getting
b. additional or more projects from the client
c. mitigation claims and associated cost.
d. The contractor commercial department including contract personel were just doing their professional job

Cheers,
Charlie
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Sun, 2008-09-28 00:57
#4
Anoon Iimos
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sometimes i just loved your fabricated words charlie,

"timeline is already 75%, progress is 85% and no issues was ever settled with regards to EOT claims and associated cost".(i want to make it italic but i can’t!)

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Sat, 2008-09-27 15:17
#5
Charleston-Joseph...
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Dear Brad,

It is a pity you got stuck in this kind of no understanding from the owner at an earlier stage. This is normal IMHO.

I think it will be worse as the project progress. This is also a sign that the project will not be successful.

Will anyway, I agree with Andrew, your TIA that shows extension of time will only valid if you have a valid claim.

So the first steps is to establish a valid claim.

What is a valid claim? What are the criteria that such claim is indeed valid? What about the procedural issues in the claim process? These are included in the contract. Have you done this?

Granted that you have done this and your TIA is correct. Your case is airthight, the question is why are you not able to convince the owner.

It is very easy to say that the owner is blah, blah, blah but take note there are always two side of the coin. We really have not heard what the owner is saying.

In conclusion, and for the sake of project progress, the best to do is to follow what is in the contract, document all actions to claims and ...

Continue with the work, good work.

I’m saying this because I got involve in a 4 years XX billion USD project wherein the project team lock horns since day one regarding claims, associated cost, EOT. Till to date, timeline is already 75%, progress is 85% and no issues was ever settled with regards to EOT claims and associated cost.

What happen is only normal day to day encounter for huge projects.

Cheers,
Charlie
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Sat, 2008-09-27 14:18
#6
Samer Zawaydeh
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Dear Bard,

I would suggest that you getting from the Engineer supporting documents in favor of your case.

Why does the Owner have problem with giving Time Extension since he is willing to compensate for the extra cost.

At the same time it would be advisable to come to a win-win solution since this is the start of a long Contract. Let the Owner know the size of problem that you are facing and ask him to compensate you for something of equal weight in the future.

Getting into a lawyer situation will consume your time and money and eventually it will be much costlier with all the time wasted on solving the problem.

Best,

Samer
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Sat, 2008-09-27 12:52
#7
Brad Richey
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everyone is in agreement the issue was a true delay but the owner is playing games. We have changed our requset for authorization to proceed on changes to request the owner to provide "direction" to proceed with the additional work whatever it may be. We will work through this. It seems like a case that would be a common claim and instead of paying a lawyer I was using this as a research channel of my own. thanks for all of the helpful comments from all the members
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Sat, 2008-09-27 10:29
#8
Samer Zawaydeh
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Dear Brad,

What is the position of the Engineer on this issue? Did the Engineer make any determination regarding the EOT?

Best,

Samer
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Wed, 2008-09-24 11:08
#9
Toby Hunt
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Brad
If you want some assistance with this, I have colleagues within my firm who are based in offices all over the US who would be more than happy to have an initial conversation with you.
Regards
Toby
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Wed, 2008-09-24 07:19
#10
Andrew Flowerdew
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Brad,

Either answer could be right, as pointed out by Mike earlier it comes down to who the contract says takes the risk of the changed ground conditions and who is to do what when such circumstances arise.

Sadly your schedule analysis is not worth anything as far as a claim is concerned unless you can first come up with the contractual basis for the claim.

What the contract says is not going to be contained in one clause, there will probably be separate clauses for:

1. Contractors obligations
2. Instructions
3. Ground conditions
4. Unforeseen Ground Conditions
5. Warranty on Employer supplied information, (bore holes).
6. Notices
7. Change Orders
8. Extension of Time
9. Valuation of Change Orders
10. Valuation of Extension of Time

Possibly more apply and some of the above could be mixed up in the same clause. They all have to be read in conjunction with one another to finally ascertain who took what risk, who has to do what and what you are entitled to as a result.
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Mon, 2008-09-22 03:11
#11
Mike Testro
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Hi Brad

We have all fought similar battles with obdurate Owners - they are not unique to USA. The trick is to never take no for an answer. Keep bombarding him with letters and minutes of meetings. Redraft the programme with the extra time on it and report progress against it. Start to get local lawyers involved in the background. If it is really important then start the contract dispute process.

You have a long run ahead of you and it is not good policy to back down at the first challenge.

Best regards

Mike Testro
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Sun, 2008-09-21 13:59
#12
Brad Richey
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first thanks for the replies. Everything points to the fact we are due an extension. The TIA proves the days and the contract states we are not responsible for unforseen conditions. The sticking point is we are to absorb the first 30 days of "owner directed" changes then we can start persuing time extensions and general conditions for them. The owner is sticking to the words Owner Directed and saying the rock does not fall into that catigory and therfore I can not claim this against our 30 days. this is a 5 year $500M project and I want to put this to bed early. Nothing in our contract supports his position and yet he is looking for a loophole I want to know if anyone has fought this battle in the past?
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Sun, 2008-09-21 12:52
#13
Samer Zawaydeh
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Dear Brad,

Can you please clarify why the additional works should not have a time extension, if it requires a time extension per your analysis? Did the Owner do a critical path analysis and found out that these activities have plenty of float and do not require time extension.

Thank you,

Samer
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Sun, 2008-09-21 09:04
#14
Mike Testro
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Hi Brad

As always your situation depends on what is in your contract.

It seems that you have a classic "unforessen circumstances" situation and your contract will tell you who takes the risk when these things happen.

In FIDIC 5 & 6 clause 12 was the trigger (now 4.12).

What does your contract say?

Best regards

Mike Testro
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Sun, 2008-09-21 02:12
#15
Anoon Iimos
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perhaps your contract might say, "all other items not included but are deemed necessary to complete the intent of the works, shall be shouldered by the contractor"

and that includes the Rock!
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Sat, 2008-09-20 15:42
#16
Brad Richey
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Gentleman,
Thank you for the response. I do have the change request authorization in writing and have analysed the soils report. The request we have in are bad probe holes and truly unforseen conditions. The disagreement is whether it is "owner directed" or not. The contract stipulates the contractor only gets time for Owner direct and is saying rock issues are different from an "owner desired" change like a wall move.

Brad Richey
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Sat, 2008-09-20 13:11
#17
Samer Zawaydeh
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Dear Brad,

You should have received a soil report at the start of the Contract. Please compare this report to the actual site condition. If it differs, then you have reason to ask for time extension.

Good luck,

Samer
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Sat, 2008-09-20 06:09
#18
ashraf alawady
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Hi Brad,

owner directed changes should be issued officialy and in writting by the owner and if it was verbally instructed then you could confirm the verbal instruction within 7 days from the day that verbal instruction issued.

if you don not have any thing in writting then no any contractual support to your case .
i advise you to sort out this case with amicable settelement.
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