i-law

International Construction Law Review

CORRECT SCOPING OF EMPLOYER'S REQUIREMENTS: THE PREVENTION OF CHANGE ORDERS?

Eric Eggink

Director, Technip Ships (Netherlands) B.V.
Whenever the discussion in the engineering contracting business, or the heavy civil engineering business, turns to the cause of the most frequent and contentious disputes in a project, the standard reaction is “change orders”. Change orders are, by far, the most frequent subject of disputes in projects. However, what causes these change orders?
Construction contracts are becoming increasingly complex, even where the scope of work is “construct-only”. This is where the work to be performed by the contractor is to build on the basis of, and in accordance with, the specifications as supplied by the client (or commonly referred to as the “employer”). Even then, the scope of work is complicated because the details of what is to be performed by the contractor are so extensive and complex that one might ask, at the moment the parties to the contract entered into an agreement after usually convoluted negotiations, if there was indeed a mutual intent to be bound by the full extent and every detail of the employer’s own specifications.
Things only get more problematic when the parties choose to engage in a form of contract whereby the contractor also performs the design and the procurement, as well as the construction. This complexity increases further when the agreement also entails that the contractor is to perform his contractual obligations of “design & construct” for a fixed price and within a fixed time. The increased complexity finds its origin in the fact that the contractor has to translate the employer’s basic functional requirements into a completed design and then execute that design in such a way that, on completion, he delivers what the employer envisaged. This begs the question: Who is liable if the contractor’s interpretation of what he is to deliver differs from that perceived by the employer? Many will say, “the contractor is responsible for his own interpretation of the employer’s requirements”, but I beg to differ; he is not always responsible for his own interpretation, particularly if his reasonable perception is based on what later transpires to be ambiguous descriptions.
Indeed, is there even a mutual intent to be bound when there is such a difference in perception, and consequently, is there an enforceable contract?
If the employer wishes to detail his requirements to avoid both change orders and disputes, he needs to formulate exactly what he expects to

Pt 1] Correct Scoping of Employer’s Requirements

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