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Sunday, March 4, 2012

Change Orders: Making the Architect's Call on Contractor Claims

When construction contracts are based on drawings and specifications prepared by architects, the need for changes during construction raises questions about the completeness, correctness, and coordination of the architect’s drawings and specifications – in short, questions about the architect’s performance. Of course, change orders may also be precipitated by changes that are beyond the control of the architect, like changes in the project owner’s criteria for the project, or some changes in codes and regulations, or other conditions that were not foreseen or perhaps could not have been foreseen by either the owner or the architect.

Regardless of the actual causes of change orders, architects are commonly judged on the basis of “how many” change orders are executed on their projects. Simply quantifying the number of change orders on a project can be very misleading when it comes to gauging an architect’s performance. Given the possible sources of change orders cited above and also the fact that the architect does not have control over the number of change order requests or claims that a contractor may submit or the number of changes that a project owner may request or direct, it is easy to understand that the quantity of change orders is not an accurate way to measure an architect’s performance. Instead, it may be fairer – though still possibly an oversimplification - to consider the resulting cost of change orders that are related to errors, inconsistencies, and omissions in the drawings and specifications prepared by the architect and to compare the change order costs as a percentage of construction cost to those related to other architects’ drawings and specifications on similar projects that are designed and constructed under similar circumstances (i.e., measuring architects against their peers).

Considering the architect’s decisions in response to contractor claims, the American Institute of Architects (AIA) A-201 General Conditions (2007) include the following provision:

§ 4.2.12 Interpretations and decisions of the Architect will be consistent with the intent of, and reasonably inferable from, the Contract Documents and will be in writing or in the form of drawings. When making such interpretations and decisions, the Architect will endeavor to secure faithful performance by both Owner and Contractor, will not show partiality to either and will not be liable for results of interpretations or decisions rendered in good faith.

This requirement for impartiality is also found in AIA standard owner-architect agreements and in various professional regulations and codes of conduct. Yet, given that the architect is typically under contract with the owner and paid by the owner, the architect faces a de facto conflict of interest in evaluating a contractor’s claim for extra cost. Contractor claims are typically related to items of construction that are found to be needed but are not, at least in the contractor’s opinion, apparent on the drawings or in the specifications (“the contract documents”). The challenge for the architect faced with such a claim is to determine whether the needed item is “reasonably inferable” from the contract documents. If the architect determines that the item is required by the contract documents and denies the contractor’s claim, the owner may not have to pay an extra cost for the item, and the owner may be satisfied with the performance of the architect in terms of both the contract documents prepared by the architect and the construction administration services provided by the architect. If, on the other hand, the architect agrees with the contractor’s claim, then the owner may be dissatisfied with the architect on both counts. It takes a different owner attitude to appreciate the integrity that is necessary for the architect to acknowledge an imperfection in the contract documents.

There is no single rule of rightness that applies in every case. Sometimes one party is in the right, and sometimes the other party is in the right, and it is difficult to outline a simple rule for governing these situations beyond the provision of “impartiality” that is established in the General Conditions.

Drawings and specifications may never be perfect, and some would say they never can be perfect. However, drawings and specifications that are complete, consistent, coordinated, and are clear and readable to the extent possible leave less to interpretation; so there is less need for determinations of reasonable inference. With those goals in mind, change orders related strictly to imperfections in drawings and specifications can be minimized.

Another way to consider what is “reasonably inferable” is to ask what a bidder would see (or could reasonably be expected to see) in the contract documents as the basis of a bid (or sub-bid). The question of “inconsistencies” is interesting, because it is not clear that a bidder would actually see inconsistencies in the drawings and specifications that might become apparent to the architect when reviewing a contractor claim. The contractor may have developed a bid based on an interpretation (a complete “picture” of the project, if you will) that considers all of the differing provisions of the drawings and specifications in a consistent way. It is not unusual for the architect to be the one who is befuddled in this responsive review of the drawings and specifications, discovering “inconsistencies” that must now be interpreted in a way that would allow for compliance with a design intent that may not have been clearly conveyed. If it is necessary in the architect’s response to a contractor’s claim to explain numerous contradictions and take exceptions to numerous drawing and specification provisions in order to reach a conclusion that matches the designer’s intent, then the requirement is not reasonably inferable. A less troublesome approach for the architect would be to develop the necessary consistency in the drawings and specifications before they are issued for bidding.

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