Employers' and Contractors' Perspectives on the Treatment of the Volume of Construction Contract Changes

Abstract

Construction contract variations have been the core and pre-eminent genesis for the delay of, disruption in, and cost overrun of construction projects. In the case of construction projects suffering a substantial number of changes, contractors’ claims can become complex whereby it might become extremely difficult to accurately account for all impact costs resulting therefrom including costs which cannot be directly attributable to a specific change, not ready foreseeable, and/or if foreseeable, not readily computable as they are a result of the synergistic effect of changes. The contractor therefore is only reimbursed for direct impact costs and thereby obtains a compensation that is actually less than the full compensation for the change orders and variations being negotiated and/or for which consensual negotiation has been completed and the related cost and time implications have been agreed upon This gives rise to different perspectives between employers and contractors in relation to the treatment of the large volume of changes and thus to different approaches in packaging contract variations related claims. Accordingly, this might establish grounds for filing for cumulative impact claims and/or cardinal change claims. This research thus aims to (1) investigate different contractors’ and employers’ perspectives in expressing and treating the large volume of changes involved in construction projects including potential and uncommon contractor’s approaches in packaging and filing claims related to contract changes, (2) define what constitutes a cumulative impact claim and a cardinal change, (3) deduce the success and failure criteria and the legal/contractual consequences of these claims, and (4) identify contractors and employers strategies to avoid/mitigate such claims (Pre and Post Contract signature). There is not enough research concerning this topic in the literature and there exists a gap in addressing the admissibility and treatment of the abovementioned claims resulting from substantial amount of construction contract variations. The findings revealed (1) key success and failure criteria for cumulative impact claims and cardinal change claims, (2) guidelines that shall establish whether a change will qualify for a cardinal change along with the legal consequences if the same had been induced, and (3) different contractor’s and employer’s strategies and perspectives in dealing with the large volume of changes.