Chapter 17 - § 17.9 • CHANGE ORDERS

• Jurisdiction: Colorado

§ 17.9 • CHANGE ORDERS

§ 17.9.1-Importance of Notice Provisions Concerning Change Orders

Randall & Blake, Inc. v. Metro Wastewater Reclamation District⁶⁷ provides an interesting discussion of the nature and purpose of contractual provisions regarding change orders. Randall & Blake Inc. (RBI) brought suit against defendant owner Metro Wastewater to recover $101,384 that Metro withheld under the contract's change order provision. The large project included construction of a reaeration structure called "RS3," which required Class II bedding with various additional layers of rock, rip-rap, and boulders. Though the entire project was bid as a combination unit price and lump sum, the RS3 portion was bid as lump sum. The lump-sum bid included all labor and materials required to construct RS3.

Metro's engineer, Camp Dresser & McKee, found that the native material satisfied the Class II bedding specification, thereby relieving RBI from the obligation to procure Class II bedding. As a result, Metro withheld $101,384, which was the anticipated cost of the Class II material (Metro did not withhold labor costs for re-working the native material). The contract required that "[s]uitable excavated material . . . shall be used for fill embankments or backfill on the different parts of the work as required and as acceptable to the Engineer." RBI sought to recover the $101,384 under grounds that the RS3 contract was lump sum and that any cost savings belonged to RBI, not Metro.

The court of appeals held that Metro received exactly what it bargained for and ordered it to pay RBI for the cost of the Class II bedding. The contract did not contain a provision requiring RBI to import Class II material; therefore, there was no deletion of work. Further, the contract required that all change orders must be made in writing during construction:

Any claim for an adjustment in the Contract Price shall be based on written notice delivered by the party making the claim to the other party and to ENGINEER promptly (but in no event later than thirty days) after the start of the occurrence or event giving rise to the claim and stating the general nature of the claim. Notice of the amount of the claim with supporting data shall be delivered . . . and shall be accompanied by claimant's written statement that the adjustment claimed covers all known amounts to which the claimant is entitled as a result of said occurrence or event. All claims for adjustment in the Contract Price shall be

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