Most construction contracts include a provision for contractors to give the owner written notice within a certain time period after a potential change is known, and to follow it up with more detailed documentation of potential costs within another specified period of time.
Court Case: In Washington State, in 2003, the State Supreme Court issued a decision in the Mike M. Johnson v. County of Spokane case, in which the court held that the contractor, Mike M. Johnson, was bound to the strict notice and documentation requirements of the contract, and that by failing to follow those procedures, they essentially forfeited their right to relief for change order work.
Prejudice Standard: The court ruling has been very controversial with contractors and there have been unsuccessful attempts to have state legislation passed that would institute a prejudice standard for filing of notice and documentation. In other words, if the owner was not prejudiced or damaged by the failure of the contractor to meet the strict time constraints of the contract, the claims could nevertheless be considered.
Resources: Seattle construction attorney, John P. Ahlers, has written and argued extensively on this subject. For an excellent, three part, in-depth review of the issues surrounding providing written notice provision and the prejudice standard, I recommend you read John's recent blog entries on the subject:
Mike Purdy's Public Contracting Blog© 2011 by Michael E. Purdy Associates, LLChttp://PublicContracting.blogspot.com
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