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Contractor Wins Full Price For Overruns Thanks To Owner's 'hurry, Get It Done' Attitude

Thursday, December 04, 2008 04:36 pm

Contractor Wins Full Price For Overruns Thanks To Owner's 'hurry, Get It Done' Attitude

An owner argued that equitable adjustment was the proper method for calculating payment to a contractor whose work exceeded contract estimates. The contractor, however, made a solid case for demanding full payment since the estimate errors were not its own.

While performing excavation-related tasks on a University of Nebraska (the University) construction project, Pavers, Inc. (Pavers) encountered quantities of soil and seepage water that greatly exceeded contract estimates and led to cost overruns. The University, aware of the overruns, directed Pavers not to submit a change order and to continue the work. Upon project completion, the University paid Pavers $397,337, an amount it considered "reasonable"but which was significantly less than the contractor's claim for additional work costs. A state supreme court awarded Pavers the full amount of the contract, more than $1.7 million.

Owner can't limit price if contract doesn't

The original contract price was based on Pavers' unit prices for each required task multiplied by the University's estimated quantity of work for each task. However, three of the task quantity estimates were way [...]

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