Construction Law: Site Conditions Clause

Dealing with Different Jobsite Conditions

by Trent Cotney, Cotney Construction Law

 

 

 

 

 

 

 

 

(Editor’s Note: Trent Cotney, CEO of Cotney Construction Law, is dedicated to representing the roofing and construction industries. Cotney Construction Law is General Counsel for the Western States Roofing Contractors Association and several other industry associations. For more information, contact the author at (866) 303-5868 or go to www.cotneycl.com.)

 

Ideally, when a roofing contractor enters into an agreement with a homeowner, all the conditions of the contract are clearly outlined and understood. These conditions are generally stated in the various contract documents, including the plans, specifications, general conditions, and supplementary provisions. With the information that is provided, the contractor assumes that the project can be constructed in the manner described. This is based in a large part on the assumption that the conditions at the jobsite are essentially the same as they have been represented.

Unfortunately, the actual conditions at the jobsite are not always as they have been described. When this occurs, the costs of construction can be expected to increase, and the contractor should be entitled to an equitable adjustment in the contract amount. This is one of the reasons why contractors should include a differing site conditions clause in their contracts in order to deal with these unforeseen circumstances and ensure the risk of this occurrence is evenly distributed among the parties.

A differing site condition is an unknown, hidden, concealed, or latent physical condition encountered at a site that differs materially from the reasonably anticipated conditions. An example of dealing with a differing jobsite condition is when a roofing contractor begins work on a project by removing the old roof and notices that the structural integrity of the roof was compromised. The contractor then notifies the property owner that additional work is going to be needed to correct the problem. Once the contractor invoices the owner for the cost to cover the additional work that was completed, the owner then refuses to pay for the change order because the owner believes that this work was within the contractor’s original scope of work and thus does not have to pay anything extra since it was included in the original contract price. This situation happens far too often to roofing contractors and they may be liable for the extra cost if they do not have a differing site conditions clause in the contract or they still might be liable if they do not take certain steps when dealing with differing jobsite conditions.

It is becoming a common practice for most contracts to include a differing site conditions clause, which is meant to allocate the risk of conflicting, inaccurate, or incomplete information furnished by the project owner. Although contractors often have no opportunity to discover concealed conditions before executing a contract, they sometimes unknowingly assume the risks of such hidden conditions and may be held liable for the additional cost depending on the language set forth in the contract. Many owner-drafted contracts require contractors to accept responsibility for unanticipated costs that may result from differing site conditions. Therefore, before signing a contract, it is important to examine it thoroughly for such clauses and changing these clauses, so the duties and obligations of the contractor are limited.

If a contractor finds that the site conditions are different after signing a contract, there are steps that can be taken to decrease the risk of bearing the full cost of any additional work. First, the contractor should stop work and immediately inform the property owner of any differing site conditions that they were not aware of before signing the contract. The owner should then have an opportunity to investigate the condition. Next, if the owner agrees to any additional work to fix or repair the existing jobsite issue, the contractor should get the agreement in writing and have the owner sign it. Once a contractor has incurred extra costs due to a differing site condition, it is critical that they keep a good record of these costs in case a dispute arises later.

No one wants to deal with an unforeseen condition on a project, but sometimes the issue is inevitable. Differing site conditions have the potential to significantly impact the project schedule and budget, making it crucial for a contractor to take cautionary steps before and after signing a contract. Some of these steps include performing a thorough investigation of the jobsite before construction begins, reviewing the contract carefully to determine the contractor’s scope of liability on this issue, notifying the property owner of any differing site conditions, and getting their signed written approval before any extra work is carried out that is not included in the contract. These methods are by no means a guarantee to ensure that a contractor does not bear any extra costs from a differing jobsite condition, but can help reduce liability in case litigation ensues.

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