Shore Up Equitable Adjustment Claims With Real Costs Or At Least Real-world Estimates

Sunday, October 04, 2009 06:15 pm

Shore Up Equitable Adjustment Claims With Real Costs — Or At Least Real-world Estimates

Your record-keeping skills will come under scrutiny when you attempt to convince a court that you're due more than the price listed in your contract. Whether delays or extra work added to your expenses, your best bet for recouping your losses via an equitable adjustment claim is to present actual numbers. When those are elusive, tread carefully, as the following case examples dictate.

Actual Cost: Change order should inspire data diligence

Since an equitable adjustment is based on the difference between the cost of actual work and the cost of contract- described work, you'll want to build your claim on actual cost data. In other words: Keep organized records during the project so that you can later present the court with a breakdown of your costs.

This isn't just sound business; it's the contractor's responsibility. When making an equitable adjustment claim, you must supply direct evidence if possible. If you can't substantiate your losses for some reason, you'll need to prove to the court that your inability to do so is justifiable, or your claim will go nowhere.

Example: The contractor in Dawco Constr. Inc. v. United States, 930 F.2d 872, 882 (Fed. Cir. 1991) lost out on $500,000 in equitable adjustment because the court believed the contractor was "in the ideal position to detail all its costs" and yet didn't. The contractor was seeking reimbursement for additional work related to differing site conditions it encountered during landscape work on a San Diego Naval housing project. However, it did not keep organized records of that work and could not supply actual cost figures. The court admonished the contractor, noting that "[t]he issuance of a change order request should signal to the prudent contractor that it must maintain records detailing any additional work, just as should the encountering of differing site conditions." (Emphasis in original). In other words, showing up without hard figures doesn't automatically grant you a right to a rough estimate of you[...]