Change Order and Delay Claims

Two claims account for most of the money in dispute on New York construction projects: work that was performed without a signed change order, and time that was lost because of someone else. Both are winnable. Both are usually lost for the same reason, which is that the contractor did the work and sent the paperwork afterward.

The Law Offices of Albert Goodwin handles extra work and delay claims for contractors, subcontractors, and owners in New York City.

Extra Work Without a Signed Change Order

The contract says no extra work will be paid for unless authorized in writing in advance. The project manager tells you to proceed and says the paperwork will follow. You proceed, because refusing to work while the trade behind you waits is not a real option. The paperwork does not follow, and at closeout the owner points to the contract.

New York courts do enforce written change order requirements, but they recognize circumstances in which the requirement does not defeat the claim:

• Waiver by conduct. Where the owner has a practice of accepting and paying for extra work performed on verbal direction, it may be held to have waived strict compliance for the balance of the project. Prior paid change orders that were never signed in advance are the evidence for this.
• Oral modification despite a no-oral-modification clause, where there is partial performance unequivocally referable to the modification, or where the other party's conduct induced reliance.
• Authority of the person who directed the work, whether actual or apparent. A project manager or construction manager who has directed and approved changes throughout the project presents differently from a field employee with no authority.
• Cardinal change, where the cumulative changes are so extensive that the work performed is fundamentally different from what was bid, potentially taking the claim outside the contract's change mechanism entirely.
• Constructive change, where the owner or its design professional directed performance beyond the contract requirements without labeling it a change, commonly through responses to requests for information or rejected submittals.

The evidence that wins these claims is contemporaneous and unglamorous: the request for information and the answer that changed the scope, the marked-up drawings, the daily reports showing the crews and hours on the extra work, the emails confirming the verbal direction, the photographs. A contractor who sends a same-day email saying "as directed today by you, we are proceeding with X, which we consider extra work, and we will submit our pricing" has converted an unwinnable claim into a strong one, at a cost of five minutes.

Notice Requirements

Nearly every construction contract requires written notice of a claim within a stated period, often as short as a few days from the event. These provisions are enforced in New York, and failure to comply is the most common reason legitimate claims fail.

What to do about it in practice: identify the notice provisions before the project starts, treat notice as a routine administrative task rather than an escalation, send notice for every event that might mature into a claim even when you expect it to resolve informally, use the form and the addressee the contract specifies, and preserve proof of transmittal. Notice given generously costs nothing. Notice given late costs the claim.

Where notice was missed, arguments remain: actual notice through project correspondence and meetings, waiver where the owner engaged with the claim on the merits without objecting to timeliness, and the absence of prejudice, though the strength of that last argument varies with the language.

Delay Claims and the No-Damage-for-Delay Clause

New York enforces clauses providing that the contractor's sole remedy for delay is an extension of time, with no monetary compensation. They appear in most public contracts and many private ones, and they are a genuine obstacle.

They are not absolute. New York's Court of Appeals has recognized exceptions under which a contractor may recover delay damages notwithstanding such a clause, where the delays were:

1. Caused by the contractee's bad faith or willful, malicious, or grossly negligent conduct;
2. Uncontemplated, meaning of a kind the parties did not contemplate when contracting;
3. So unreasonable in duration that they constitute an intentional abandonment of the contract by the contractee; or
4. The result of the contractee's breach of a fundamental obligation of the contract.

The second and fourth exceptions do most of the work in practice. Delays caused by a design that had to be substantially reworked, by an owner's failure to provide access or to coordinate other prime contractors, or by permitting failures that were the owner's obligation, are the fact patterns that succeed. Ordinary delays of a type common on construction projects generally do not qualify, since the entire premise of the clause is that such delays were contemplated.

Proving a Delay Claim

Delay claims are proved with schedules, not with narratives. What matters:

• A baseline schedule that was actually submitted and accepted, against which impact can be measured.
• Schedule updates maintained during the project, showing progress and the evolving critical path.
• Critical path analysis demonstrating that the delaying event affected activities on the critical path rather than consuming float.
• Concurrency. Where both parties contributed to the delay during the same period, recovery of delay damages is generally limited or barred, and apportioning concurrent delay is where most of these disputes are actually fought.
• Daily reports recording manpower, weather, deliveries, interference, and instructions, kept contemporaneously.

The categories of recoverable damage typically include extended field overhead, escalated labor and material costs, extended equipment and general conditions, additional supervision, and unabsorbed home office overhead, which requires a recognized methodology and is scrutinized closely. Acceleration claims, where the contractor was required to recover time caused by others, are proved through the cost of overtime, additional crews, and lost productivity.

Lost productivity is the hardest element. Measured mile analysis, comparing productivity during an unimpacted period with the impacted period on the same project, is the most credible method available and is far stronger than an industry study applied generically. It requires production tracking during the project, which is another reason daily reporting discipline pays for itself.

Total Cost Claims

A total cost claim, asserting that the difference between the bid and the actual cost is the measure of damages, is disfavored and permitted only where the nature of the losses makes it impossible to determine them directly, the bid was realistic, the actual costs were reasonable, and the contractor was not responsible for the added expense. A modified total cost approach, adjusting for the contractor's own bid errors and inefficiencies, is more credible. Where the records permit a claim to be built from discrete cost items, that approach should be used, because a total cost presentation invites the defense that the contractor simply bid the job too low.

Defending These Claims

For owners and general contractors on the receiving end, the defenses that work are the mirror image: the notice provision was not complied with; the change was within the original scope, correctly read; the person who gave the direction had no authority to bind; the schedule impact was concurrent with the claimant's own delays or consumed float rather than affecting the critical path; the costs claimed are not supported by job cost records; and the claim was released by an unconditional waiver signed with a progress payment. See lien waivers and payment disputes.

Resolution

Many construction contracts require mediation, then arbitration, and the dispute resolution provision should be read early because it determines the forum, the timeline, and the cost. Arbitration before a panel with construction experience is often better suited to a complex delay claim than a jury, though it limits appeal rights. Where claims are large and documents voluminous, an early neutral evaluation or a mediation with schedule experts present frequently resolves matters that would otherwise take years. See arbitration and mediation.

You can contact us by phone at 212-233-1233 or by email at [email protected].