HOW TO MAKE CONSTRUCTION-RELATED DOCUMENTS ACCEPTABLE

IN COURT AND ARBITRATION PROCEEDINGS

CHANGES IN PROJECT IMPLEMENTATION
The changes in project implementation give rise to a lot of collection problems in money claims.
Usually, it is the contractor on whose shoulders lies the burden of providing the validity of his
claims. The claims for change order and extra work order are covered by the following:
Change Clause.
Changed Condition Clause.
Excusable delay clause, including the legal or procedural requirements to validate the claims.
The proper documentation of events or activities in the construction of a project that will meet
the standards of documents acceptable to judges or arbitrators, and thereby put the contractor on
equal terms with the owner if they engage in legal battles will be taken into account.
DEFINITIONS
1. Change Order is substitution, addition or deletion in the work within the scope of the
contract. A proposed change can be considered within the scope of the contract if it is a
change in the work that would be regarded as fairly and reasonably within the
contemplation of the parties when they entered into the contract.
Under the change clause, the contractor is required to notify in writing the owner
regarding the particular items, which he considers to be a change order. Normally, the
owner orders the performance of a change and the contractor does it.
2. Extra Work Order is an addition to the contract involving work, which had not been
included in the original contract. A contractor could decline the order of the owner to do
an extra if he could prove it is outside of his contract. To give an example of the
difference between a change order and an extra work: an order to relocate a window
would be a change order while an order for an additional window would be an extra work
order.
As to extra work, the owner is usually empowered to order an extra work, which the
contractor does after he had notified in writing the owner.

3. Changed Condition Order is a subsurface or latent condition, which is unusually and

materially different from the conditions specified in the contract. The contractor is held to
know only what a reasonable site inspection would reveal to a reasonably experienced
contractor. For example, if the excavator found rock instead of soil as represented in the
contract, it is a changed condition order.

Under the change condition clause, two requirement that the contractor must not forget
are: to notify in writing the owner about his discovery or encounter with subsurface
conditions materially different from those indicated in the plans and specifications, and
not to disturb said new conditions until he had already sent a written notice to the owner.
While oral notice may be considered sufficient where the owner has not been prejudiced,
the best way for the contractor to protect his claims is to comply with the written notice
required by the contract. Failure of the contractor to comply in the written notice
requirement may be construed as having waived his right to obtain compensation for the
additional costs incurred by him. The reason behind this rigid compliance with this
written notice requirement is to enable the owner the chance to see for himself the
changed conditions as it originally existed. For instance, if the contractor unexpectedly
hit rock instead of soil in his excavation and did not notify in writing the owner about it,
the owner could no longer verify he quantity of rock removed by the contractor.
4. Excusable Delay Order is a delay neither due to the fault of the owner nor of the
contractor but is something caused by forces beyond human control such as force
majeure of the owner. It is not compensable. However, delay caused by the owner is
compensable.
Under the excusable delay clause, the contractor would be compensated for excusable
delays if the owner received from him a written notice within a specified time limitations
of any actual delay incurred or delay to be potentially incurred by the contractor.
However if the owner actually knew the delay but kept silent about it, it would render the
notice requirement unnecessary. Likewise, if the owner was not adversely affected by the
absence of a written notice from the contractor, the owner may be deemed to have waived
the notice requirement.
When an event falls within the definition of an excusable delay, if the contractor would
like to be paid for his claim, he must not only prove that the event actually happened but
also that the event caused an actual delay in his performance.
SITUATIONS
Situation 1: In a project site where the owner rarely appears because of his full trust in the
capability of his project manager (PM) to do good job of it, the PM may likely succeed in
getting the contractor to do a change or addition. If the contractor did so because of his belief
that the PM has been authorized by the owner to order changes or extras, the contractor
should have first verified if the PM really has authority to act for and in behalf of the owner.
For if the owner had not authorized the PM to order changes or extras, the contractor may be
barred from claiming payment for extra compensation.
Situation 2: The contractor received a letter from the architect containing his written
instructions about his redesign of portion of the work. The contractor simply assumed that the
architects written instruction constitute a change order. Accordingly, he filed a claim for
payment of a change order. Some courts consider revised plans from an architect as
constituting a sufficient writing to satisfy the requirement of a written change order. The

safest move for the contractor is to require the architect concerned to produce a written
change order aside from the revised plans.
A JUDICIAL CASE: NON-PAYMENT OF FINAL BILLING
Here is a case wherein the person appeared in court or arbitration board as a technical consultant
or expert witness of the contractor in a legal action he brought against the owner for nonpayment of his final billing. When the consultant asked the contractor to provide him all the
available records of his complaint, the contractor submitted volumes of documents with his
assurance that everything needed would be there. To the dismay of the consultant, many of he
documents were useless because they lacked the data that mattered most. Worse, the events that
could shed light on what really happened in the field went unrecorded. They were the events that
could have cleared up the gray areas of the issues. This made a big difference in the final
outcome of the case.
This case is not isolated but one that reflects the sad state of documentation among our small
contractors. However, whether a dispute is settled amicably or judicially, the parties should not
be at the losing end.. In a litigation between the contractor and the owner, either one of them may
lose the case not because it is legally untenable but because it is factually indefensible. Hence,
the importance of proper documentation cannot be ignored.
It is to be noted that proper documentation goes hand in hand with proper organization of
paperwork. If a change order claim is to be properly documented, facts or data supporting said
claims are not only complete but also accurate. A complete and accurate document tells the
whole history of a project or a specific item. In short, a project or an item has its own history.
Thus, the documentation of a claim makes up its history.
DOCUMENTS NEEDED
For the purpose of discussion, it is not necessary to name all the documents that are used in
project implementation but the important documents to keep are the following:
1. Complete set of invoices for labor and materials, purchase orders and receipts, which are
the best evidences of expenses.
2. Extra work orders, additional work orders and change orders, which are all properly
authorized.
3. Jobsite Log Book where all significant happenings of the day are recorded, especially
field orders for changes. What does not appear in this book is not presumed as not having
occurred.
4. Photographs showing the nature and location of changed work. A picture can speak more
than a thousand words.
5. Weather chart, which is the basis for claiming compensation for delay and extension, if
applicable.
6. Minutes of Management / Technical meetings which is the clearing house of operational
problems and a forum for exchange of ideas.

7. All correspondence of owner, owners representative, architects, contractors,

subcontractors, etc., be filed in their respective subject files.
8. Verbal orders, decisions, agreements and instructions should be confirmed by those
concerned, use the logbook of contractors and PM and the minutes of the meeting.
9. Plans and Specifications:
a. Bid Plans and Specifications
b. Construction Plans and Specifications
c. As-Built Plans and Specifications
At this point, it is relevant to ask what are some of the visible manifestations that the contractors
system of documentation and paperwork. It might not help the organization in providing a
history for each project and in pursuing successfully its construction claims. The contractors
system documentation is defective if he finds much difficulty in ascertaining the status of a
particular change order and if he cannot locate a memo for specified date. If he could not
produce the necessary documents to back up and defend his claims, the consultant cannot
support his claims and make them acceptable in court and arbitration proceedings.
STRATEGIES
An authority in documenting a claim states that
the contractor should protect himself by keeping accurate and complete records of
all expenses related to the contrast and should segregate all items relating to a particular
change. In addition, all other details of the contractual relationship should be preserved so that
the contractor can later prove that his version of the facts is accurate in all respects. Such
details are needed to prove the existence of the claim as well as to show the nature and amount
of the appropriate remedy.
All invoices for materials for materials and services should be filed, and records or memoranda
should be retained on all telephone calls, trips, conferences, and letters relating to specific
matters which the contractor might later recognize as changes. When any difficulties in
performances are encountered, the contractor should obtain expert reports, samples, and
photographs concerning the conditions.
Notes or memoranda should be kept of telephone or oral conversations. The content of each
contact with representatives of the owner or other contractors should be noted. Then, as soon as
possible, these notes, memoranda, or letters have the dual purpose of implying agreement by the
other party if he remains silent after the receipt of a confirming letter, and also of preserving a
written record.
In addition to this reports, photographs showing the nature and location of the changed work
should also be made a part of the file. Photographs can be the ultimate help in documenting the
exact factual situation and may even furnish details previously unnoticed or not noted elsewhere.
These procedures are helpful when done as a routine, even in the absence of unusual
circumstances, because they document the progress of the work and may help in spotting change

not noticed at the time. In addition, the contractor may find that it is useful or necessary to
compare a situation as it existed before the claim arouse with the status after the facts
constituting the claim occurred The only ay to be able to make this comparison is to make
documentation a routine.
Depending on the magnitude and complexity of the claim for extra work, experts may be needed
to present expert opinions, analyses, and reports on the subject matter of he claim. An expert can
serve the dual purpose of supporting the claim and advising the contractor on the specifics of the
claim. The contractor should not formulate his claim and then hire an expert at the last moment
before presenting a claim. Rather, calling an expert should be among the first steps when it
becomes clear that a substantial claim for extras may exist.
Also important in presenting a claim is evidence of customs and practices of the trade of the
particular contracting field. These customs or trade practices amplify plans and specification
and are implicitly incorporated into a contract provided they are not contrary to express
provisions of the contract. In addition to fleshing out the terms and of the plans and
specifications, proof of customs and trade practices may be an absolute necessity when questions
arise about the standards of workmanship.
It is important that the contractor be specific in establishing that the cause of the added expenses
was a particular change. For example, if the contractor is claiming a delay to an unusually large
rainfall, it is not enough that he state the average rainfall for that month is x inches, while the
rainfall actually experienced was an average of y inches. He should state that it rained a
particular amount of each day, compare it to the average rainfall for that season, detail the
effect of the rain on performance that day, and total the number of days lost due to rain. The
availabilities of detailed cost data makes the proof procedure easier and convincing and also
puts the contractor in a better position to negotiate the claim with the contracting officer (or
owner) and avoid the expense and delay of adversary proceedings. Inability to substantiate the
amount of claim will likely lead to its disallowance.
In addition to documenting the time and money expended on a contract change, a contractor
should preserve a record of the scope of the change and the authority of the person ordering the
change. These facts are needed to prove that the government (or owner) is obligated to pay for
the contractors efforts. All written communications concerning the claim should be preserved
because they may be useful in showing that the change was within the scope of the contractor
that the government agent (or owners representative) had the proper authority.
All oral communications be put in writing. The contractor should insist upon receiving from the
contracting officer (or owner) a written confirmation of all oral orders and suggestions and a
written statement of authority for all persons dealing with the contractor as the contracting
officers (or owner) authorized representatives. If the contracting officer (or owner) fails to
provide such written documents, the contractor should take it upon himself to send the
contracting officer (or owner) a letter restating the order of authority. If the contracting officer
(or owner) fails to object to the contractors written statement, his silence operates as a
confirmation. If the orders being confirmed originated from an agent of whose authority the
contractor is unsure, the contracting officers (or owner) silence is a ratification of those orders

and is as effective as if the contracting officer (or owner) himself had issued them. Even if the
oral communication does not involve an order or a question of authority, it is a good idea to
make a memo of it or, even better, to write a letter to the other party summarizing the
communication. Such records are very helpful in later reconstructing the facts which support the
claim.
The afore-described documentation system, particularly the procedural steps to follow, ensures
the production of a well-documented claim based on complete and accurate facts and legal
authority. It also ensures the production of a well-prepared claim in case the owner denies it and
the contractor decides to appeal it to the proper court. If a claims attorney is hired to handle the
litigation, said attorney would have plenty of lead-time to study, analyze and plan the legal
strategy for the coming legal battles because the documents or supporting papers he needs are
there for him to take, completely and accurately recorded, systematically organized and easily
retrievable.
Unfortunately, many contractors seem to take documentation for granted, and if they do have
one, it is not working as it was intended to be, and not doing what is intended to do. However,
the problem is more than the lack of proper documentation. Rather, it is more of the lack of
education and training of the personnel involved in the documentation work. Documentation in
construction work is a little more complicated than in other industries. Perhaps this is due to
constructions unique, volatile and unpredictable nature and the many changes that the project
undergoes in its life. It is time-based with items of work ranging from several hundreds to several
thousands depending upon the type and size of the project.
Records and documentation section personnel should acquire and be trained in proper
documentation to positively contribute to the effective management of the project. They should
know from management what to expect from it and what is expected of hem. In documenting
events or activities, especially changes or extras, they should be made to realize the paramount
importance of timely compliance with the procedural requirements. Better yet, if they could be
taught how to read which orders or actions may later constitute a claim.
To achieve these goals, the personnel concerned should systematically do on-the-job
documentation of changes or extras including unforeseen conditions and costs until the desired
skills have become part of them. For once they have developed the proper documentation skills,
it will mutually benefit the company as well as themselves. It will help the effective management
of the project. On the part of the personnel concerned, it will make it easier for future retrieval of
documents they had filed, the history of the project, which they chronicled will serve as basis for
future planning of similar projects and the properly documented changes will be a help in
resolving future claims and disputes.
After seeing what proper documentation means to the growth and progress of the company,
particularly in pursuing and fighting for the equitable resolution of claim or disputes. The
existence of proper record keeping, proper organization of paperwork and proper documentation
of events or activities in project implementation can make the contractor feel confident of having
a better average in facing up to litigation or arbitration regarding claims or disputes. Ultimately, a
legal battle is reduced to battle of documents if the positions of each party to the dispute are both

legally tenable. The most solid evidences to support a position are complete and accurate on a
properly documented case.