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Disputes regarding scope of work are often the reason for construction claims. Scope of work is defined as the extent of a contractor's responsibility to perform certain contract work. To determine the scope of work, the contractor may have to look to other contract documents -- specifications, contracts with others -- and to industry standards (building codes, etc.).

Questions regarding scope of work should be resolved in the written contract. Scope of work references should be detailed in contract. If detailed specifications are available, refer to the specifications in designating scope of work.

Changed or extra work contract procedure

The changed work provision is a mechanism to allow the owner to demand changes without requiring negotiated agreement with contractor. Unilateral changes may entitle the contractor to additional money and time to complete. Reasons for changes may be to correct errors and/or omissions in plans and specifications, to satisfy regulatory agencies, to effect minor design changes, to address quantities of materials used, and to extend time for completion of the contract.

The changes clause should address the scope of the changed work, the contract adjustment in price, and the procedure to be followed. Under the typical changed work provision, the owner may direct changes and the contractor must perform changes even if there is no agreement as to price.

Extra work is work not contemplated by contract -- changed work is work contemplated by contract but where the scope of the work has changed.

Preserving claims for failure to pay for extra work

1. Invoicing/waivers

Application for payment includes (a) value of work in place, (b) value of materials stored on site, (c) retainage, (d) amounts previously paid, and (e) amount due for present request. The invoice form should specifically refer to the project, the contract, and the contract sum.

1. Determining value of work in place

A properly and carefully prepared schedule of values, and good record keeping by the contractor, assist the determination of the value of work in place. The contractor should keep meticulous records of payroll, supplies, equipment, materials, and overhead to present in the event of a dispute.

The contractor may be required to submit breakdown of hours, position, and wage rates of employees on project. Overtime hours and the reason for overtime should also be tracked. The contractor should be able to show the cost of labor incurred for each component of work completed.

The cost of supplies should be separately tracked. Supplies are not incorporated in project, as materials are. Equipment rental and/or maintenance should be tracked along with supplies.

Materials used must also be tracked as part of the value of the work in place. Materials are those that have been incorporated into the project.

Overhead and profit should also be part of the value of work in place. Appropriate amount should be added to value.

2.. Determining cost of material stored on site

This component of application for payment is the material stored on site, but not yet incorporated into the project. This allows the contractor to purchase materials before they are needed, so as to allow construction to proceed without delay.

3. Retainage

Usually spelled out in contract. If it is not, retainage is not an automatic right.

2. Schedule of values

A schedule of values is typically required by contract documents. The schedule should be prepared carefully, with specific and accurate values attached to each component of the work. The schedule should be submitted prior to the first application for payment, and should be reviewed carefully by architect to prevent "front end loading" by contractor.

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This site was last updated on November 02, 2006