DEALING WITH THE CUMULATIVE EFFECTS OF
REQUESTS FOR INFORMATION,
CHANGE ORDER REQUESTS AND CHANGE DIRECTIVES

By:

Buckner Hinkle, Jr.[1]

Michael I. Less[2]

The third tempter in T. S. Eliot’s Murder In The Cathedral fancies himself as “an unexpected visitor.” Not so replies Archbishop Thomas Beckett, for “no purpose brings surprise.”[3] So it is with construction changes. They are not unexpected. This observation is so familiar that one pauses before repeating it for fear of being trite. Yet this paper is about changes and their cumulative impacts, so we begin with the notion that change should come as no surprise regardless of how carefully a project is conceived. Nearly all construction contract documents, whether standard forms or “home grown,” provide that the work can be altered, compensation adjusted and completion extended while other contract obligations remain intact.

But for all the expectations, changes can be quarrelsome things. This paper highlights recent and controversial Ohio appellate court decisions[4] where disputed changes intersected with one of the cornerstones of construction jurisprudence, United States v. Spearin.[5] The Ohio decisions were driven by a “cumulative impact” claim, a concept for delay based compensable changes so relatively new that it remains underdeveloped in case law.[6] The Ohio courts were not impressed with the concept.

We begin by reviewing how contracts are structured to deal with change. These clauses are well known so our review will be quite basic. Emphasis is given to the “Request For Information” (“RFIs”) because RFIs are associated with changes, sometimes in a controversial way. That was indeed the situation in Ohio. Commentaries cited in this paper assert that RFIs are overused, even abused, though the commentators diverge on the causes. Suggestions for improving the RFI process are included.

I. Comparison of AIA A201 – 2007 and AIA A201 – 1997.[7]

Change Orders, Construction Change Directives (“CCD’s”), and RFIs are basic tools used to clarify and change contract documents during construction. These tools are common to construction contract documents published by the American Institute of Architects (“AIA”). Both current and proposed versions of AIA A201 General Conditions of the Contract for Construction employ these tools to modify the contract between the Owner and Contractor. The 2007 edition of A201 contains some differences from prior version in the treatment of Change Orders, CCDs and RFIs. After a brief summary of the 1997 version, changes embodied in the 2007 edition are discussed below.

A. Change Order

Change Orders represent changes to the Work, the Contract Sum, or the Contract Time. The Owner, Architect, and Contractor agree to the change before completion of the Work affected by the Change Order.[8] The Architect bears the responsibility for preparing Change Orders.[9] Change Orders (as well as CCDs and minor changes in the work) “shall be performed under applicable provisions of the Contract Documents” and the Contractor must proceed “promptly” with Change Orders once executed.[10] If a Change Order requires an adjustment to the Contract Sum, Section 7.2.2 provides that the methods used to adjust the Contract Sum are the same for both Change Orders and CCDs.

A201 – 2007 does not substantially alter the Change Order provisions. Section 4.2.8 still authorizes the Architect to prepare the Change Orders and CCDs, and now places responsibility on the Architect to “investigate and make determinations regarding concealed and unknown conditions as provided in section 3.7.4.”[11] The 1997 version stated that the required methods used to adjust the Contract Sum under a Change Order could be used in the context of Construction Change Directives.[12] This provision is deleted in the 2007 edition but the same methods are preserved.[13]

B. Construction Change Directive

The CCD is a change in the Work agreed to by the Owner and Architect, but not necessarily by the Contractor. CCDs first appeared in AIA contract forms in Section 7.3 of AIA A201 – 1987.[14] Previous versions of A201 referred to Change Orders and minor changes in the work.[15]

The CCD provisions were retained in A201 – 1997. CCDs are “used in the absence of total agreement on the terms of a Change Order.”[16] They must fall within the “general scope of the Contract.”[17] Section 7.3.3 provides alternative methods for calculating adjustments if changes to the Work contained in a CCD require adjustment of the Contract Sum.[18] Upon receipt of a CCD, the Contractor must both “promptly proceed with the change in the Work involved and advise the Architect of the Contractor’s agreement or disagreement with the method” of adjusting the Contract Sum or Contract Time.[19] If the Contractor agrees with the CCD and signs it, the CCD becomes effective immediately and is recorded as a Change Order.[20]

Should the Contractor fail to promptly respond to or disagree with the CCD, the Architect determines the adjustment to the Contract Sum based on reasonable expenditures and savings as well as a reasonable allowance for overhead and profit.[21] Furthermore, Section 7.3.8 provides that the Architect will make interim decisions regarding monthly certification of payment for costs associated with the change in the Work. That determination adjusts “the Contract Sum on the same basis as a Change Order,” but does not affect the rights of either party to later submit a claim under Article 4.[22] If the Owner, Architect, and Contractor agree completely on the terms of a CCD, their agreement is documented as a Change Order.[23]

A201 – 2007 makes no changes to the CCD definition and only several minor changes to procedures and party responsibilities. The Architect may adjust the Contract Sum if the Contractor does not promptly respond to the Construction Change Directive or disagrees with the chosen method of adjustment; then the Architect can include an amount for overhead and profit.[24] The 2007 edition places the interim decisions regarding monthly certification of payments within the Architect’s discretion by stating that the Architect will “certify for payment the amount that the Architect determines, in the Architect’s professional judgment, to be reasonably justified.”[25] Finally, when the Owner and Contractor reach agreement on the CCD terms, the Architect prepares the appropriate Change Order, which “may be issued for all or part of a Construction Change Directive.”[26]

C. Minor Changes

In addition to Change Orders and CCDs, the Architect has authority to issue changes by ordering minor changes in the Work. Both the 1997 and 2007 versions of A201 deal with minor changes in the Work.[27] The only differences in the new version are a requirement that the Architect sign the order for a minor change and the removal of a redundant clause stating that the “Contractor shall carry out such written orders promptly.” [28]

D. Request for Information

The RFI process under A201 – 1997 operates within the Contractor’s general duty to review the Contract Documents.[29] The Contractor must “carefully study and compare the various Drawings and other Contract Documents” relating to each portion of the Work “before starting [that] portion of the Work.”[30] Ostensibly, this is done “not for the purpose of discovering errors, omissions, or inconsistencies in the Contract Documents,” but rather to “facilitate construction by the Contractor.”[31] Practically speaking, the process involves comparing drawings, specifications, and surveys provided by the Owner with field measurements and site observations taken by the Contractor to insure consistency and feasibility. The RFI process is the documentation stage for questions raised by the Contractor while reviewing the Contract Documents. Unlike Change Orders and CCDs, RFIs do not authorize changes in the work.[32]

AIA devotes relatively little text to RFIs. The term is barely used in A201 - 1997.[33] Therefore, appreciation of other clauses is helpful to understand the possible significance of RFIs. Under A201 – 1997, the Contractor must promptly report to the Architect “any errors, inconsistencies, or omissions discovered” as a “request for information.”[34] Also, if the Contractor fails to either review the Contract Documents or promptly report any deficiencies, it may be liable for “such costs and damages . . . as would have been avoided if the Contractor had performed such obligations.”[35] Although A201 – 1997 places the initial burden on the Contractor to review the Contract Documents and creates some potential for liability, it ultimately provides the Contractor with two significant protections against errors, inconsistencies, or omissions.

First, A201 – 1997 explicitly states that “the Contractor’s review is made in the Contractor’s capacity as a contractor and not as a licensed design professional unless otherwise specifically provided in the Contract Documents.”[36] Accordingly, the Contractor does not bear professional design responsibility for the Contract Documents, and “the Contractor is not required to ascertain that the Contract Documents are in accordance with applicable laws, statutes, ordinances, building codes . . . .”[37] Second, to the extent that the Contract Documents contain errors, inconsistencies, or omissions, the “Contractor shall not be liable to the Owner or Architect” for resulting damages unless the Contractor recognized a deficiency and “knowingly failed to report it to the Architect.”[38]

A201 - 2007 includes some minor revisions concerning the RFI process. As before, the Contractor must notify the Architect of any errors, omissions, or inconsistencies discovered, but under the 2007 version the same duty extends to deficiencies made known to the Contractor.[39] Also, the Contractor’s liability for deficiencies in the Contract Documents depends on whether the Contractor “performs [its] obligations” under the RFI process, as opposed to the prior language that turned on a knowing failure to report deficiencies to the Architect.[40] Finally, the 2007 edition added “lawful orders of public authorities” to the list of concerns for the Architect, not the Contractor.[41]

The 2007 version also reflects some structural changes from A201 – 1997. Regarding RFIs, prior subparagraph 1.5.2 concerning site observation is now subsection 3.2.1. This clause states that by executing the contract, the Contractor represents that it “has visited the site, become generally familiar with the local conditions . . . and correlated personal observations with requirements of the Contract Documents.”[42]

Additionally, to bring some uniformity to the RFI process, AIA publishes a standard RFI form, G716 – 2004 Request for Information. In March 2006 AIA distributed a “Best Practices” paper, “The RFI’s Role in the Construction Process.” Both documents are appended to this paper. In its “Best Practices” release, AIA offered suggestions for preventing RFIs and for improving the RFI process. AIA’s prevention methods included:

· A discreet coordination phase to “tighten up” design documents;

· A constructability review before the construction budget is set;

· “Tight” scopes of work and a detailed scope review meeting before awarding subcontracts; and

· Better and more frequent use of pre-bid meetings.

AIA’s suggestions for improving the RFI process included:

· Accompanying the RFI with a “lowest cost” solution;

· Requiring references to the drawing and specification number;

· Assigning a priority and/or required response date; and

· Recommending that “the design team should endeavor to provide timely, accurate responses to legitimate RFIs.”

At a minimum, the RFI should convey the drawing, submittal and/or specification number in question,[43] identify the possible impacts to cost, schedule and other drawings and specifications, identify the level of urgency, and propose a solution. The design and construction contract documents should identify who is responsible for leading RFI administration and link RFI administration with submittal administration (including the schedule for submittals).

II. Limitations on Changes

A. Notice Requirements for Additional Compensation or Time.

Notice provisions are common conditions precedent to the recovery of additional compensation or time under both standardized and “home grown” contracts. While notice requirements vary by contract, most notice provisions share two main aspects: (1) the provision governs the method by which notice must be given; and (2) the provision establishes the time frame during which notice must be given. These provisions are a practical necessity for effective administration of a project, leading many courts to strictly enforce such provisions. The requirement of strict compliance with notice requirements furthers public policy by affording the party notified an opportunity to mitigate damages by performing timely remedial work where necessary.[44] It is also noteworthy that, even in the absence of a specific contractual notice requirement, notice may also be useful for Contractors who seek to preserve a right of setoff.[45]

The following is an example of an additional work notice provision from Construction Disputes: Practice Guide with Forms:

If the Contractor asserts that any event has caused a change in or addition to the work that causes an increase in the Contractor’s cost of any part of the work, including work not affected directly by the change, the Contractor shall, within seven (7) days of such event, give the Owner written notice as herein required. Said notice shall include the circumstances that are the basis of the claim and the Contractor’s best estimate of the cost and time involved.[46]

A typical time extension provision might provide:

If the Contractor is delayed at any time in the progress of the work by any act or neglect of the Owner, Architect, or a separate Contractor employed by any of them, or by change orders in the work, by labor disputes, fire, unusual delays and deliveries, unavoidable casualties, or other causes beyond the contractor’s control, or by other causes for which a delay might be justified, then the time for performance will be extended for a period of time equivalent to that required to compensate for the delay. Claims for an extension of time must be made within five (5) days after the occurrence of the event giving rise to such claim. Claims for extensions of time must be by written notice to the Construction Manager and be accompanied by a schedule analysis that details entitlement to the time extension requested. Failure to request an extension of time within the time frame or in the manner set forth in this paragraph shall constitute a waiver of the Contractor’s right to an extension of time.[47]

In evaluating these clauses, it is clear that imposing notice requirements as a condition precedent to claims for additional work and/or time places a heavy burden upon Contractors for vigilance during project performance. Strict adherence to the express terms of the contract and timely responses to occurrences necessitating alterations to the Contractor’s scope of work or performance time are absolute necessities.

General principles of contractual interpretation govern the analysis of notice requirements in a changes clause. Courts will strictly apply explicit and unambiguous changes clauses. In the absence of an explicit changes clause in a contract, at least one court has found, by implication, an obligation to provide notice.[48] Moreover, courts may look to other documents incorporated by reference into a contract in order to determine whether a notice requirement should be read into the contract.[49]

The contract should address questions of to whom, and in what manner, notice must be furnished. For example, a simple letter (sent by regular mail, email or facsimile) or verbal notice may not satisfy a requirement that the notice be provided via certified mail, return receipt requested. Moreover, a requirement that the notice include a statement of the claimed damages or include daily statements of the actual cost of performing disputed work is likely to be held enforceable.[50]

Failure to strictly adhere to explicit contractual notice requirements presents a doubtful course of recovery for the Contractor. Nevertheless, there are situations where failure to comply may not prove fatal to a Contractor’s claims, such as waiver or excuse. The issue of waiver is further explored in the following section.

B. Waiver.

An unambiguous notice requirement in a changes provision will be strictly enforced unless the claimant can demonstrate that a finding of waiver is justified on the facts. Parties should always strive to comply with contractual notice requirements. Under some circumstances, however, failure to comply with a notice requirement may not preclude compensation for the performance of additional work. One such circumstance is where the notice requirement is waived by the party entitled to notice.

The party asserting waiver will frequently bear a difficult burden of proof and waiver issues usually present close questions of law and fact. Indeed, even demonstrating that an Owner has actual knowledge of a Contractor’s claim may not necessarily waive a contractual notice requirement. In Dan Nelson Construction, Inc. v. Nodland & Dickson,[51] the North Dakota Supreme Court rejected a plaintiff’s assertion that the defendant’s actual knowledge of the plaintiff’s claim waived the contractual notice requirements. The court held that actual knowledge of a plaintiff’s claim, in and of itself, does not estop a defendant from raising the untimely filing of a claim as a defense.[52] Notably, the court added that the result may differ if a plaintiff demonstrates that the defendant was partly responsible for the plaintiff’s delay in providing notice by either inducing the delay or misleading the plaintiff as to the need to file a claim.[53]

Further, it appears that an Owner’s mere consideration of a Contractor’s claim, despite the Contractor’s failure to adhere to contractual notice requirements, will not necessarily support a finding of waiver, unless the Owner has relinquished a known right.[54] Nevertheless, waiver may be established by resort to the course of dealing between the parties.[55] In establishing a claim of waiver of the contractual changes requirements, the parties should look to a variety of project documentation, including written correspondence between the parties and minutes from project meetings.

A Contractor’s failure to comply with a change order provision places its claim for additional work or time in peril. Unless the claimant can excuse its failure to comply with the provision by demonstrating the existence of waiver, among other defenses, the claimant may lose any right to recover compensation for the additional work. In fact, without clear indicia of waiver, the claimant risks a determination that it acted as a volunteer.[56] Further, the claimant might be held to have assumed the risk of nonpayment by performing extra work without Owner approval.[57]

C. Differing Site Conditions Clauses.

Contractors frequently encounter site conditions that are either different from the conditions represented in the bid documents or are entirely unexpected given the locale and type of the work performed. Such differing site conditions pose a substantial risk to the parties to the contract. Unforeseen conditions may change the amount of work, time, and/or the expense required to complete a project. They are an unfortunate reality for construction projects. Customarily, the Contractor has borne the risk of overcoming latent and unforeseen site conditions;[58] accordingly, the Contractor’s bid price may account for that risk by including a contingency. Due to the prospective approach of a contingency, however, the price may not reflect the reality of the impacts of site conditions that materially differ from those contemplated at the time of contracting.

A differing site condition is “a physical condition that existed at the time the contract was entered into, but was unknown at the time of bidding and typically could not have been discovered by a reasonable site inspection.”[59] Because the impacts of differing site conditions can be grave and the contingency may be an inadequate assurance of protection for either Contractor or Owner, the differing site conditions clause is a widely accepted mechanism for defining and apportioning that risk. By agreeing to such a clause, the Owner assumes the risk of unforeseen conditions under certain circumstances by providing that the Contractor is entitled to an equitable adjustment to the contract price and/or completion time upon the discovery of the unforeseen condition. In theory, the clause benefits both the Contractor and Owner—the Contractor is capable of submitting a more competitive bid with a smaller contingency and the prices for costly pre-bid investigations are not passed on to the Owner.[60]

In the absence of a differing site conditions clause, a Contractor’s ability to recover is likely to be significantly hampered.[61] Nevertheless, under some circumstances, the Contractor may be able to recover under theories such as breach of implied warranty,[62] misrepresentation,[63] duty to disclose,[64] or fraud.

Most differing site conditions clauses contain similar characteristics.[65] The most common similarity is the notice requirement. The notice requirement is not usually stated in terms of a specified time period. Instead, the requirement frequently provides that the Contractor furnish notice prior to disturbing the site conditions.[66] This provision enables the Owner to investigate those conditions and determine whether an adjustment to the contract is warranted. While a notice provision may require written notice,[67] actual or constructive notice may also be adequate.[68]

In addition to the notice requirements, there are several other common characteristics of differing site conditions clauses. For instance, many of these clauses provide an opportunity for investigation, define the risk to each party, establish the acceptable grounds upon which the Contractor may base his expectations, mandate that bidders inspect the site prior to bidding, and permit an adjustment of the contract time and/or amount upon a finding of differing site conditions.[69]

AIA contract forms and federal government contracts generally identify two types of compensable differing site conditions: Type I for site conditions that differ from those indicated in the contract documents; and Type II for unknown conditions that differ from what is normally encountered in the performance of the particular type of work being performed by the Contractor.[70]

In the language of the AIA A201, a Type I changed condition is a condition “at variance with the conditions in the contract documents.”[71] Recovery for Type I changed conditions requires a demonstration that the conditions encountered during construction differed materially from the conditions identified in the contract documents. Generally, this requires the claimant to demonstrate:

(i) the contract documents . . . affirmatively indicated or represented the . . . conditions which form the basis of the plaintiff's claim; (ii) the contractor . . . acted as a reasonably prudent contractor in interpreting the contract documents; (iii) the contractor . . . reasonably relied on the indications of . . . conditions in the contract; (iv) the . . . conditions actually encountered, within the contract site area . . . differed materially from the . . . conditions indicated in the same contract area; (v) the actual . . . conditions encountered must have been reasonably unforeseeable; and (vi) the contractor's claimed excess costs must be shown to be solely attributable to the materially different . . . conditions within the contract site.[72]

These factors are derived from Weeks Dredging & Construction, Inc. v. United States, which were subsequently applied by a variety of courts in Type I cases.[73]

Type II changed conditions differ in that a Contractor may recover for unexpected site conditions involving conditions encountered that are unknown or materially different from those conditions normally encountered in the performance of work similar to that being performed.[74] Unlike the Type I claim, the focus of a Type II claim is not on the representations of site conditions in the contract documents. Rather, the Type II claim more particularly focuses on the reasonable expectations of the Contractor and whether either party was aware of the site conditions at issue. The reasonable expectation of the Contractor is of paramount importance.

Parties seeking recovery for Type II condition claims face an onerous burden in proving their case. Because of the variety of site conditions one can reasonably expect to encounter, the Contractor may encounter difficulties in proving that a particular condition so exceeded the contractual scope as to justify relief. Furthermore, unlike a Type I condition claim, there is no precise contractual language that defines the parties’ site condition expectations.[75] Proving a Type II condition claim is likely similar to proof presented in the Type I context.[76] At least one commentator feels that the factors from Weeks are applicable,[77] listing the modified factors as follows: (1) the solicitation included a representation or indication of subsurface conditions; (2) the claimant acted as a reasonably prudent contractor in interpreting the solicitation; (3) the claimant reasonably relied upon the subsurface representations in the solicitation; (4) the actual subsurface conditions materially differed from those indicated in the solicitation; (5) the actual conditions were reasonably unforeseeable; and (6) the claimant incurred additional costs that were solely attributable to the conditions.[78]

D. No Damage for Delay Clauses.

The general common law rule holds the Contractor responsible for delay costs whether incurred by the Contractor or the Owner. However, the Contractor may avoid liability for delays that are expressly excused by contract, delays caused by circumstances beyond the Contractor’s scope of responsibility, or for delays that were unforeseeable by the parties at the time of execution of the construction contract. Conversely, the Owner may be liable to the Contractor for a delay that was not anticipated in the contract or a delay that was due to some act or omission by the Owner or the Owner’s agents. The Contractor’s damages are generally computed as an amount equal to the extra costs incurred by the Contractor as a result of the delay. Such costs may include extended home office overhead, extended field office overhead, or other expenses resulting from delays to the work.

Notwithstanding the general rules, an Owner may attempt to avoid liability for certain delays, including Owner-caused delays, by use of a “no damages for delay” (“NDFD”) clause. As the name implies, the clause provides that the Owner will not be liable for damages or any increase in costs that the contractor experiences as a result of the delays caused by the Owner or Owner’s agents. For obvious reasons, Contractors abhor these clauses. Owners favor them because they provide significant protection against delay claims.

The NDFD clause often provides that the Contractor’s only remedy for delay will be an extension of time in which to perform the work. A NDFD clause may read as follows:

The Contractor shall have no claim against the Owner for an increase in the contract price or a payment or allowance of any kind based on any damage, loss or additional expense the Contractor may suffer as a result of any delays in prosecuting or completing the work under the contract, whether such delays are caused by the circumstances set forth in the preceding paragraph or by any other circumstances. It is understood that the contractor assumes all risks of delays in prosecuting or completing the work under the contract.

The foregoing clause was enforced, denying a Contractor damages, in Carrabine Construction Company v. Chrysler Realty Corporation.[79]

Most jurisdictions lack any per se rule regarding the enforceability of NDFD clauses.[80] Absent legislation to the contrary, most courts presume that the clause is valid so long as it is clearly drafted.[81] However, due to the exculpatory nature of the clause, most courts view them skeptically and construe them strictly.[82] The fact-intensive nature of the judicial evaluation of these clauses has led to the development of several exceptions to the enforceability of the clause. Not surprisingly, the applicability of these exceptions varies widely from court to court and state to state.

Notwithstanding a NDFD clause, there are situations in which courts have permitted a Contractor to recover damages for Owner-caused delays. Some of these situations include: (1) where the delay was not of the type contemplated by the parties at the time they agreed to the “no damage for delay” clause; (2) where the Owner has, in effect, abandoned the contract, with such abandonment being determined by the magnitude or duration of the Owner-caused delay; (3) where the Owner-caused delay results from bad faith or arbitrary action; and (4) where delay is the result of Owner’s active interference with the Contractor’s progress or other wrongful conduct.[83] Additionally, courts appear more inclined to downplay the import of a NDFD clause if the contract provides that time is of the essence. Arguably, an Owner who, in one clause, is requiring the Contractor to complete a project with all possible speed should not be able to deny liability, in another clause, for the extra cost imposed on the Contractor if that Owner causes delays.

Liquidated damages clauses are a common method utilized to protect project Owners from Contractor-caused delays. When used in conjunction with a NDFD clause, the Owner is equipped with both a sword and shield for claims based upon construction delays. This leaves the Contractor with few remedies for Owner-based delays and substantial risk for project delays.

Many commentators consider NDFD to be inequitable when applied to alleviate Owner liability for Owner caused delays. Due to the potentially grave consequences of the enforcement of NDFD clauses in public projects, many have urged the elimination of these clauses from public contracts.[84] Echoing this prevailing sentiment, and based upon policy concerns regarding the inequity posed by the use of these clauses, some state legislatures have limited the applicability of NDFD clauses by enacting statutes curbing, in varying degrees, the applicability of these clauses, softening their impact, or providing a fairer scheme for permitting delay claims. Examples include Arizona, California, Colorado, Kentucky, Massachusetts, Missouri, New Jersey, North Carolina, Ohio, Rhode Island, Virginia, and Washington.[85] Many of these states invalidate the no damages for delay clauses in public contracts. Washington and Ohio have enacted even further-reaching legislation—the NDFD clause is invalid to the extent that it seeks absolve an Owner from liability for delays attributable to the Owner or its agents.

III. Dugan & Meyers Construction Co., Inc. v. Ohio Dept. of Administrative Services: An Imperfect Storm of RFIs, Cumulative Impact and Contractual Limitations.

A. Introduction[86]

In July of 2003, a referee for the Ohio Court of Claims awarded approximately $1.9 million to Dugan & Meyers Construction Company (“D&M”) in a dispute arising from construction of three buildings on the Ohio State University campus in Columbus. D&M asserted that it suffered compensable injury because of delays and disruptions caused by excessive changes to the construction plans. The referee agreed and, relying on the Spearin Doctrine, found the Owner liable for errors in the contract documents. After establishing liability for construction plan errors, the referee used a cumulative impact analysis to support the judgment. The Ohio Court of Appeals reversed.[87] It held that the under Ohio law the Spearin Doctrine does not make the Owner liable for plan errors. The Court of Appeals did not, however, specifically decide whether Ohio law recognized a cumulative impact claim based on multiple changes. The Ohio Supreme Court affirmed the Court of Appeals but addressed only the extension of the Spearin Doctrine without authoritatively discussing cumulative impact claims.[88] Therefore, this paper poses the question: Did cumulative impact claims survive the Ohio Supreme Court’s opinion in Dugan & Meyers? The paper also considers the health of the Spearin Doctrine in light of Dugan & Meyers.

B. Cumulative Impact Basics

1. What are the Sources of Cumulative Impact Claims?

Fundamentally, cumulative impact is the impact on unchanged work not attributable to any single change.[89] The term is said to refer to “disruption that is caused by multiple changes.”[90]

The concept of cumulative impact is somewhat amorphous and may be best understood in the context of the forces behind it. One force is the inefficiency experienced during construction because of excessive changes to the construction plans. In this context, the term cumulative impact represents the unexpected efforts required to coordinate an overly dynamic construction project. Another force behind a cumulative impact is the inefficiency caused when the project participants spend a disproportionate amount of time negotiating changes instead of coordinating and executing the plans. Simply put, the parties spend too much time changing the plans and not enough time completing the project. Both sources of cumulative impacts are closely related, and may in fact operate together to create an increased detrimental effect on project efficiency. The causes and consequences of cumulative impacts are discussed below.

2. Construction Inefficiency Based Cumulative Impact

Inefficiency caused by cumulative impact flows from the cause and effect of changes to construction documents. Consider every change in construction documents as a cause that inevitably leads to multiple effects.[91] These effects, generally referred to as impacts, come in two basic types. The first type of impact is the local or direct impact.[92] This represents the expected consequence of a change. The parties foresee these consequences and, therefore, can effectively price the change when the change is made.[93] The second type of impact is the indirect impact. An indirect impact represents the unforeseeable or unquantifiable consequences of a change. By definition, these consequences are not expected and, therefore, cannot be accurately estimated or priced at the time of the change and are often difficult to analyze in relation to the changes, either chronologically or sequentially.[94] A cumulative impact results from the combination of multiple indirect impacts. Possibly the greatest challenge in addressing cumulative impact claims lies in understanding how indirect impacts combine to create cumulative impacts.

Cumulative impact has been described in terms of a “synergistic effect” of multiple changes or a “ripple effect.” One court poetically described cumulative impacts as follows:

This phenomenon arises at the point the ripples caused by an indivisible body of two or more changes on the pond of a construction project sufficiently overlap and disturb the surface such that the entitlement to recover additional costs resulting from the turbulence spontaneously erupts.[95]

Meanwhile, the Construction Industry Institute has described the concept thusly:

When there are multiple changes on a project and they act in sequence or concurrently, there is a compounding effect—this is the most damaging consequence for a project and the most difficult to understand and manage. The net effect of the individual changes is much greater than a sum of the individual parts.[96]

Unfortunately, such phrasing does little to help identify a cumulative impact at work. In reality, a cumulative impact is best understood as the unexpected interaction of multiple changes (or multiple indirect impacts) to a project. Cumulative impact results from changes to the construction documents, but in theory cannot be accurately predicted or priced at the time of the change. Though a Contractor may sense that the project is behind schedule or costing too much, the delay, disruption, and expense resulting from a cumulative impact is not readily quantifiable during construction.

One need not fully comprehend at what point in time a cumulative impact claim erupts from the project turbulence to identify the changes that most likely cause such impacts. Because unforeseeability is the baseline for cumulative impact,[97] identifying changes that predictably produce unpredictable results can help identify the source of later, unforeseen consequences.

Three factors stand out as indications that a change may cause unexpected results.[98] These factors include the timing of a change, the scope of a change, and the site conditions existing in the location of the change. As for timing, sooner is better. Since each change can have ripple effects, the ability to efficiently estimate resulting consequences demands sufficient time for communication between all effected parties. Without sufficient time, the probability of creating unintended problems increases. The scope of a change represents the extent to which a single change has an effect on areas of the work surrounding it. As the scope of a change increases, the change affects more areas of a project and it becomes increasingly difficult to predict the consequences of that change in each different area affected. Finally, the conditions subject to change affect the potential for unexpected problems. While it may be impractical or impossible to trace the steps from the change to the problem in a dynamic working environment, experience and common sense tell us that changes to crowded worksites are more likely to cause problems than changes in less crowded areas. In summary, the best changes are early, small, and affect inactive or undisturbed areas of the project. The changes most likely to cause cumulative impacts have the opposite characteristics.

3. Negotiation Based Cumulative Impacts

Negotiation based cumulative impact is easier to understand. The parties (particularly the Contractor) expect some level of change during construction. But, as the number of changes increases and begins to surpass expectations, investigating and negotiating the changes demand time and resources necessary to coordinate and implement those changes. The Contractor ends up spending an unexpected amount of time coping with the changes and not devoting appropriate time to completion of the project. Also, Owners often propose changes and request that the Contractor estimate the costs of such proposals. If the cost is deemed unacceptable, the Owner may abandon the idea yet the process has consumed the Contractor’s time unproductively. The unexpected amount of time required by the change process causes the cumulative impact. The unforeseeable demands on the Contractor’s time, while perhaps relatively modest individually, accumulate to cause substantial inefficiency not attributable to any specific source.

4. The Cost of Cumulative Impacts

The key to appreciating the idea behind a cumulative impact is recognizing the unforeseeable consequences of multiple changes. To understand the costs of a cumulative impact, one must focus on the delays and disruptions that cumulative impacts cause during construction.

In the simplest form, liquidated damages represent the most straightforward costs associated with delays caused by cumulative impacts. If nothing else, proof of a cumulative impact should provide an affirmative defense to liquidated damages. Actual costs associated with delays include financing costs, increased overhead, and other costs resulting from an extended presence on the site. Disruption costs include costs associated with altering the schedule of the work. Contractors, who bear scheduling responsibility, should be most familiar with these costs. Specifically, disruption costs result from inefficiency and consist of lost productivity, wasted materials, downtime, increased expenses attributable to mobilization or acceleration, and other scheduling costs.

Pinpointing the actual disruption costs associated with a cumulative impact is often as difficult as recognizing the unexpected consequences causing the cumulative impact. Because of this difficulty, a project may be examined as whole, and cumulative impact costs calculated by deducting reasonable expected costs of construction from actual costs. Costs that can be specifically attributed to non-cumulative impact causes can be excluded, but this approach essentially treats all cost overruns on a project as the result of a cumulative impact. This method is similar to a total cost or modified total cost claim. The simplicity of the approach has some appeal, but it arguably oversimplifies the construction process. One could expect such an approach to encounter the same objections frequently seen to the total cost method.[99]

C. Legal Analysis of Cumulative Impact Claims

Considering the vague character of cumulative impacts, it should come as no surprise that courts have yet to widely articulate or agree upon the essential elements and defenses to cumulative impact claims. The following analysis combines elements from several approaches taken by courts when deciding upon cumulative impact claims.[100]

First, a claim for cumulative impact damages must properly identify the source of the cumulative impact – unexpected consequences of actual or proposed changes to construction plans. The Contractor cannot assert a cumulative impact claim based on foreseeable consequences of changes because the Change Order procedure incorporates those consequences into the change. Claims based on consequences that the Contractor should have foreseen at the time of the change fail because of the accord and satisfaction defense. Bechtel National, Inc. followed this reasoning and stated that “costs that were apparent or should have been apparent from the performance of the changed work cannot be recovered later as ‘cumulative impact’ costs.”[101]

In general, courts seem to be better at finding ways to deny cumulative impact claims than at articulating clear paths for proving them. One way to lose a cumulative impact claim is by not sufficiently assigning liability for the changes that cause the cumulative impact to a specific party. D&M lost because it did not establish that the Owner was liable for the errors in the design documents that led to the excessive number of RFIs and changes that caused the cumulative impact. The Court of Appeals and Supreme Court of Ohio held that the Spearin doctrine should not be extended to place liability for plan changes on the Owner. [102] A cumulative impact analysis begins with changes, and the Contractor must show that the Owner bears responsibility for those changes. Fault underlying the changes makes a stronger case for recovery. If it cannot show fault attributable to the Owner, then the Contractor should at least show that it bore little or no responsibility for the changes.

Second, a Contractor must prove causation.[103] The Contractor must link multiple changes with unforeseen consequences that ultimately caused delays and disruptions. Practically speaking, the Contractor will have to show that some aspect of the changes (the number, timing, scope, etc.) was in fact unforeseeable at the time each individual change was made. This will almost inevitably require proof that the number of changes was excessive, a difficult burden for plaintiffs to meet. Indeed, courts have stated that sheer numbers of changes alone do not entitle a Contractor to recover costs “without some evidence linking the changes to the [costs].”[104] One particular court stated that the “proof may take the form of demonstrating that there are no other reasons for a loss of productivity for which the [Owner] is not responsible.”[105] That being said, a court would probably prefer a reasonable explanation of the cause and effect behind a cumulative impact over a claim predicated on total productivity losses.[106]

When attempting to prove causation the Contractor should link the changes with subsequent delays and disruptions. The Contractor must demonstrate that these consequences of the changes were unforeseeable at the time the changes were made. The Contractor should also show that the delays and disruptions caused by the cumulative impact were not otherwise caused by the Contractor. In this final step, the Contractor may fail if it was the cause of the changes that led to the cumulative impact or if its actions during construction contributed to the delay and disruption caused by the cumulative impact. This final step can prove the most difficult, particularly if the Contractor is required to differentiate the unforeseen consequences of its own actions from the unforeseen consequences of the Owner’s changes.

Perhaps the strongest detriment to a cumulative impact claim lies in the difficulty of apportioning damages of unexpected costs effectively when both parties contribute to the causes of those unexpected costs.[107]

As in Dugan & Meyers, courts have also relied on contract clauses when denying cumulative impact claims. Failure to give notice and to follow claims procedures has proven fatal. In Strand Hunt Construction, Inc. v. Lake Washington School District, No. 414,[108] a $4 million claim was denied because the Contractor failed to provide “a clear description of the claim” within a specified number of days. The Contractor argued that it was impossible to comply when confronted with over 1,500 RFIs. Unpersuaded, the court marveled that $4 million in damages could accrue without the capability of giving notice. No-damage-for-delay clauses are also a defense to cumulative impact claims. If enforced, such a clause will severely limit a Contractor’s ability to recover damages based on delays that result from cumulative impacts. Other important contract clauses are those limiting remedies for changes to extensions in time as well as accord and satisfaction language contained in most change orders stating that the agreement on the change order constitutes the full and final agreement on the subject of the change.[109]

Additionally, as discussed more fully below,[110] some courts have indicated that the number of changes in a project experiencing a cumulative impact should also represent a cardinal change to the original contract. The basic reasoning behind this approach seems to be that as long as the changes fall within the originally contemplated scope of the work, the unforeseen consequences of those changes should either be minimal or the Contractor should assume responsibility for those changes as a matter of policy.

Finally, evidence of damages must be presented. This evidence should follow the theory of causation, and must generally encompass damages typically associated with project delays and disruptions. According to the most fundamental tenets of contract law, recovery under a breach of contract theory requires a claimant to demonstrate a breach of the contract and the causal relationship between the breach and the damage suffered. For cumulative impact claims, the requirement that the claimant demonstrate the causal relationship with precision is difficult to satisfy. A claimant may encounter the nearly impossible task of proving the impact of each and every change. Under these circumstances, some courts have deemed a contract abandoned and permitted recovery on a total cost basis.[111]

The total cost basis for measuring damages is usually disfavored, however, because it conflicts with a core principle of contract law—proof of damages to a reasonable certainty.[112] Nevertheless, the total cost basis for damages analysis is available under some limited circumstances,[113] although, most courts adhere to the view that the total cost method should be limited to only the most “extreme cases where no more satisfactory method is available.”[114] The total cost basis for recovery is only one of several methods of damages calculation and proof for recovery in these complex claims. The Contractor may also rely on the modified total cost method, the specific damages analysis method, the jury verdict method, the measured mile method, and industry studies on cumulative impacts of changes.

D. The Dugan & Meyers Case

1. The Facts: “Hello Delay, Goodbye Columbus”

In August of 1997, the Ohio Department of Administrative Services (“ODAS”) entered into a $20.9 million contract with D&M to provide general trades work and lead contractor services for the construction of three buildings on the Ohio State University (OSU) campus.[115] ODAS was responsible for general supervision of the project. Additionally, Karlsberger & Associates (“Karlsberger”) served as the “associate” architect (not to be confused with the “signature” architect who developed the design concept) and Gilbane Building Company (“Gilbane”) served as the construction manager. Karlsberger was responsible for responding to RFIs and making necessary design changes. Gilbane agreed to negotiate and process change orders.

The contract required D&M to coordinate the work of all contractors on the project as well as develop and continually update a critical path method construction schedule. After an change order necessitated by a shortage of structural steel, the contract set the contract completion dates in June and July of 1999. OSU repeatedly stressed its need to occupy the classrooms in the fall of 1999, and the parties never agreed to additional extension of the completion date.

The first year of construction went mostly according to plan.[116] The project started falling behind schedule as the exterior work on all three projects neared completion and the interior work began. In June of 1998, the contractors began discovering numerous omissions, errors, and inconsistencies in the design documents of all three buildings that required clarification or correction by Karlsberger before the work could continue. Between June and October, the contractors submitted 176 RFIs, 48 of which led to field work orders (FWOs) and 15 of which led to the architect’s supplemental instructions (ASIs).[117] The contractors discovered multiple problems in the design documents such as framing conflicts, inadequate space for plumbing, and conflicts between ceiling heights and mechanical, electrical, and plumbing systems.

Problems continued through the end of the year. By February 1999, D&M’s schedule indicated that the project would not be finished before the completion dates. The parties frequently discussed delays, but never reached agreement about whether the ineffective coordination or design problems were the cause. In April, Gilbane, Karlsberger, and OSU proposed reprioritizing the schedule to complete the classroom buildings first and offered to seek a time extension on the non-classroom space. The contractors committed to finishing the classroom space on time, but the submission and issuance of RFIs, ASIs, and FWOs continued and the project fell further behind schedule. Significantly, D&M never requested an extension of the contract completion date.[118]

In July 1999, OSU removed D&M as general contractor and employed Gilbane to assume scheduling and field coordination responsibilities. OSU argued that D&M had “failed or neglected to prosecute the Work with the necessary diligence so as to complete the work by the … time specified in the contract ….”[119] OSU notified D&M that it would charge D&M for the costs associated with employing Gilbane under the new arrangement. D&M remained on the project as the general trades contractor.

Gilbane directed its efforts to finishing the classroom space, and did so in time for September classes. Gilbane achieved final completion of the non-classroom space in January 2000, six months after the contract completion date. OSU then charged D&M $264,340 for services provided by Gilbane to finish the project and assessed D&M $325,000 in liquidated damages (and other amounts against the other contractors) for the ultimate delay in project completion.[120] D&M and other contractors filed claims to recover their respective contract balances pursuant to the terms of the contract. After all claims were rejected, D&M sued OSU and ODAS alleging breach of contract and, alternatively, unjust enrichment. OSU and ODAS counterclaimed for liquidated damages, costs associated with replacing D&M with Gilbane and for indemnification of amounts OSU and ODAS might be liable to subcontractors (who also sued). A 17-day trial was followed by a 75-page report including findings of fact and recommendations to the Court of Claims of Ohio.

2. The Referee’s Report

a. The Conflict

The referee stated the “fundamental factual question” as “what caused the project to be delayed six months beyond the stipulated contract completion date?”[121] After asking the question, the referee noted that both sides blamed the other for multiple reasons. D&M argued that the delay resulted from errors and omissions in the design documents, an “abdication” by ODAS of statutory authority to administer the contracts, and inexperience on the part of OSU to effectively manage the design changes. D&M also argued that it fulfilled its obligations under the contract and that ODAS breached the contract by replacing it with Gilbane. ODAS denied all responsibility for the delay, and contended that the problem resulted from inexperience and lack of proper coordination on the part of D&M.

RFIs figured predominantly in the delay claims. In response to D&M’s claims regarding responsibility for delay, ODAS argued:

[1] that the number of RFIs, ASIs, and FWOs was not excessive for a project of this size and complexity; [2] each of the design changes was covered by a [change order] specifically excluding any further recovery therefor; [3] the contractors failed to give proper notice of their claims, to timely file their claims, or to make contractually required requests for time extensions; [4] and that, in any event, the contractors’ claims are barred by the “no damage for delay” clause contained in the contract.[122]

Despite ODAS’s arguments, the referee found “that the principle cause of the delay in completion of [the project] was the existence of an excessive number of errors, omissions, and conflicts in the design documents furnished to bidders by the state and incorporated into the plaintiffs’ contracts.” Addressing the issue of foreseeability, the referee observed:

Despite the concerted efforts of the state’s design team and the efforts of the lead contractor … to address those design issues as they arose and to maintain schedule progress, it became impossible in constructing the interiors of the three buildings to overcome the frequent disruptions of the work caused thereby and to perform the required activities with the efficiency and productivity reasonably contemplated in the plaintiffs’ bids and in the approved baseline schedule.[123]

Additionally, the referee attributed some of the project delay to the decision to reprioritize the construction sequence in preparation for fall classes, noting that “[i]f the work had progressed simultaneously in all three buildings as originally planned, final completion might well have been achieved in November or December 1999.” The referee added that Gilbane’s initial proposal estimated completion of all three buildings on October 31, 1999, indicating that the decision to finish the classroom space first kept D&M on the project longer than necessary.

b. Factual Findings and Liability Issues

D&M submitted 732 RFIs during the project. Roughly half of these RFIs required a clarification, ASI, or FWO before the work in question could proceed. Of the 246 FWOs issued, 46 percent were classified as errors or omissions, 30 percent as user agency requests (changes), and 14 percent as field conditions. The referee concluded that “at least 76 percent of all FWOs resulted from matters within OSU’s control, and at least 90 percent thereof resulted from matters outside D&M’s control.”[124]

Aside from the numerical analysis, the referee also heard testimony regarding the number and character of changes. The testimony addressed foreseeability issues and indicated that the project “had more than could ever be anticipated at bid time or even early in the project.”[125] Fact witness testimony characterized the number of changes as abnormally high, and an expert witness characterized the numbers of RFIs, ASIs, FWOs, COs, and drawing revisions as “excessive.” [126]

Regarding causation, the referee’s report cited evidence reflecting the contractors’ recognition of delays due to the changes and the difficulty of precisely pinpointing the source of those delays.[127] D&M’s expert testified concerning his overall assessment of the results of the cumulative impact on the project:

What we saw in analyzing the project is portions of the building would be completed. One room would be completed here. The next room would not be completed. The workers were hopscotching all over the building, floor to floor, room to room, in total disorganization because of certain areas that were placed on hold, certain areas were released to be finished. And like I mentioned earlier, the morale from talking with all the project participants, the morale of the project was very, very bad, and the working conditions were bad.[128]

The referee then addressed ODAS’s assignment of the contract to OSU. After finding the assignment was illegal, the referee held that the contractors waived any right to challenge the assignment by “acknowledging and agreeing to the transfer of administrative responsibility in written COs and proceeding with the work … without objection ….”[129] The referee also determined that OSU breached the contract by replacing D&M with Gilbane and back-charging D&M with associated costs.[130]

The referee found that the liquidated damages assessed against D&M were improper. He noted that the state offered no objective evidence proving that D&M was responsible for the delays. Having found that the state caused the delay, the referee reversed the assessment of liquidated damages because Ohio law disallows liquidated damages then “the delays were caused by the owner or were beyond the control of the contractor.”[131]

c. The Cumulative Impact Claim and Defenses

D&M sought delay damages resulting from the cumulative impact of numerous changes. It argued that ODAS was responsible for errors in the design documents under the Spearin doctrine, and, therefore, ODAS was liable for the damages resulting from the cumulative impact of the numerous changes made to the defective construction plans. The referee agreed, and held that “under the Spearin doctrine the contractor has a contractual right to expect complete, accurate and buildable plans and may recover its damages resulting from the owner’s failure to meet that contractual obligation.”[132] He distinguished between an Owner’s obligation to the Contractor and an Architect’s professional duty to perform design services, and noted that an Owner liable to the Contractor because of deficient contract documents may have a professional negligence claim against the Architect.[133]

In addition to Spearin, the referee looked beyond Ohio law to support the cumulative impact analysis. Relying on a decision from the General Services Administration Board of Contract Appeals, the referee followed the cumulative impact analysis used in David J. Tierney, Jr., Inc.,[134] which allowed a cumulative impact claim. The decision identified key elements of a cumulative impact claim, briefly summarizing the theory as follows:

‘Cumulative impact’ costs are costs associated with impact on distant work, and are not readily foreseeable or, if foreseeable, not as readily computable as direct impact costs. The source of such costs is the sheer number and scope of the changes to the contract. The result is an unanticipated loss of efficiency and productivity which increases the contractor’s performance costs and usually extends his stay on the job.[135]

The referee agreed with this reasoning and, after a brief application of the facts, allowed D&M’s cumulative impact claim.

The referee then turned to defenses raised by ODAS. First, ODAS asserted that FWOs and signed Change Orders constituted an accord and satisfaction of all claims based on changes to the contract documents. The Change Orders contained the following language:

The compensation or time-extension provided by this Change Order constitutes full and complete satisfaction for all direct and indirect costs, and interest related thereto, which has been or may be incurred in connection with this change in the work.

D&M argued that accord and satisfaction is an affirmative defense under Ohio law and that the state waived the defense by failing to plead it in its answer.[136] The referee agreed. He added that because the evidence failed to establish that the parties considered cumulative impacts when negotiating individual changes, such claims would not be covered by the accord and satisfaction language.

ODAS also argued that it did not have notice of D&M’s claims, and that contract procedures for raising claims were not properly followed. The referee rejected this argument, finding that ODAS had actual notice of D&M’s claims (because ODAS “had actual notice of the facts forming the basis of the contractors’ claims”) and that any non-compliance with technical notice requirements was not prejudicial.[137]

The defense’s last hope was a favorable interpretation of the no damage for delay clause. The contract read:

6.2 If the Contractor is delayed at any time in the progress of the Work by any of the following causes, the Contract time shall be extended for such reasonable time which the Associate [Architect] determines, in consultation with the Department an the Owner, has caused the delay in the Work:

6.2.3 By any unforeseeable cause beyond the control and without fault or negligence of the Contractor.

6.3 Any extension of time granted pursuant to paragraph GC 6.2 shall be the sole remedy which may be provided by the Department. In no event shall the Contractor be entitled to additional compensation or mitigation of Liquidated Damages for any delay listed in paragraph GC 6.2, including, without limitation, costs of acceleration, consequential damages, loss of efficiency, loss of productivity, lost opportunity costs, impact damages, lost profits or other similar remuneration.[138]

Though recognizing that no-damage-for-delay clauses are generally valid, the referee cited an exception that allowed damages when the delay was beyond the contemplation of the parties when they signed the contract. The referee held that “neither Dugan & Meyers nor the state nor the other contractors could have reasonably anticipated the excessive number of changes to the project arising from the incomplete and inaccurate plans and owner-initiated revisions.”[139]

d. Damages

The referee awarded damages for the contract balance, the back charges, and the cumulative impact claim. He concluded that the contract balance was “clearly due” because the job was complete.[140] The award reversing back charges included the $325,000 liquidated damages improperly assessed as well as $264,340 of charges associated with replacing D&M with Gilbane. The referee awarded $803,836 as cumulative impact damages (damages of $730,760 plus 10% profit of $73,076).

In addressing the cumulative impact damages, the referee began by noting that Ohio law does not require mathematical certainty when proving delay damages.[141] From there, without explicitly describing his analysis, he followed the “total cost method” for calculating damages. Under the “total cost method,” the Contractor generally must prove four things: “(1) the impracticability of proving actual losses directly; (2) the reasonableness of its bid; (3) the reasonableness of its actual costs; and (4) lack of responsibility for the added costs …”[142] Addressing the impracticability of proving losses directly, the referee observed that “[g]iven the nature of the impacts D&M experienced due to defective plans, it was impractical or impossible to segregate the cost of undifferentiated changes to the base contract work that resulted therefrom.”[143] He then found that “[t]here was sufficient evidence presented to show that D&M’s bid was reasonable.”[144] Considering the reasonableness of actual costs, the referee concluded that the damages claimed represented a “conservative assessment of the impact on the general conditions item of its project budget” and that “D&M incurred additional cost over and above its adjusted bid item for general conditions in the amount of $730,760.”[145] Finally, the referee held the state responsible for the changes that directly and proximately caused the cumulative impact.

Along with cumulative impact damages, D&M sought recovery of profits stemming from the original bid markup on the project. This claim was denied for failure to prove lost profits with “reasonable certainty.”[146]

3. Problems With the Referee’s Report

The referee combined the Spearin doctrine with a single reported cumulative impact decision[147] to support the legal analysis and direct the factual inquiry. When comparing the referee’s report with other cumulative impact cases, some potential problems stand out.

First, the “fundamental factual question” considered in the report focused on the cause of the delay.[148] Though cumulative impacts can cause delays, they can also cause disruption (which potentially has its own distinct set of damages). By focusing his factual findings on delay, the referee may have seen the cumulative impact analysis as a method of establishing liability and proving causation for delay damages without focusing on the full effect of the cumulative impact. While this approach, if taken, does not necessarily lead to complete reversal, it does raise the question of whether the referee fully explored the nature of the claim being asserted.

Another problem concerns the factual findings and the quantitative analysis of the changes. The referee answered the “fundamental factual question” regarding delay by addressing the “excessive number of errors…”[149] While the referee had ample evidence showing the link between the errors and the delay, his ultimate finding addressed only the “excessive numbers.” The law requires more.[150] For example, though one expert testified that it was the “multitude and magnitude” (numbers and scope) of changes, the referee seemed to focus more on the “excessive” numbers than anything else.[151] The Court of Appeals included this among its reasons for reversal.[152]

Possibly the strongest criticism of the referee’s report is that it may have inconsistently combined the Spearin doctrine with the factual analysis for the cumulative impact claim. The Spearin doctrine places liability for errors in design documents on the Owner. Such errors should result in changes. Numerous changes may cause cumulative impacts that delay and disrupt the project. Therefore, errors can lead to cumulative impacts. This logic is only true if some substantial number of the changes are the result of errors, and not from other causes. One paragraph of the referee’s report noted that of the 246 FWOs (which represented about a third of all RFIs), 46 percent were classified as errors or omissions.[153] The report adds that an additional 30 percent were “user agency requests (changes)” and therefore “76 percent of all FWOs resulted from matters within OSU’s control.” The problem is that Spearin gave relief only for errors, which in Dugan & Meyers constituted less than half of all FWOs according to the referee’s findings. Arguably, this number of errors may very well have been significant enough to cause the cumulative impact. Unfortunately, the rest of the analysis focuses on the total number of changes, of which less than half were errors, so the referee’s specific factual findings do not connect precisely with the legal issue addressed in the analysis.

The second major area of concern in the referee’s report involves contract interpretation. Interpretation of accord and satisfaction language in change orders, the contract notice provisions, and the no damage for delay clause contain some potential problems.

The main question regarding the referee’s interpretation of accord and satisfaction language lies in source of law used in the analysis. The referee held that because cumulative impact claims were not in the contemplation of the parties at the time the change orders were executed, the accord and satisfaction language contained in those change orders did not cover the cumulative impact claims. The referee then used the General Services Administration Board of Contract Appeals decision as the basis for the cumulative impact analysis, though it seems that Ohio law on the subject of contract interpretation would have been more appropriate. ODAS apparently thought so, and offered Ohio cases in support of its position, but the referee distinguished them, indicating that there may not be any Ohio contract law directly on point.

Regarding notice provisions, the referee held that while D&M did not comply with the technical notice requirements in the contract, ODAS had “actual notice” of the claims because it was aware of the facts that constituted the basis of the claim.[154] Ohio law generally agrees. But, even the referee acknowledged that the cumulative impact claim was the first of its kind in Ohio. Logically, it is problematic to expect a party to have constructive notice of a claim never before recognized simply because the party is aware of the facts constituting the basis of the claim.

Finally, the referee addressed, but ultimately disregarded, the no damage for delay clause. The referee recognized that such clauses were in fact enforceable, but generally to be construed strictly. The referee noted an exception, recognized in Ohio, that a no damage for delay clause is not enforceable when “delay complained of was beyond the contemplation of the parties at the time they signed the contract.”[155] He reasoned that if the parties do not contemplate delays caused by cumulative impacts when they agree to the no damage for delay clause, the clause will not cover delays caused by cumulative impacts. This reasoning leaves something to be desired. Cumulative impacts result from the unforeseeable consequences of multiple changes to a project. Changes generally are foreseeable, in fact they are usually expected, but the unforeseeability comes with the unpredictable interaction those changes will have on a dynamic construction process. In one sense, a cumulative impact can be analogized to an act of God, in that the parties do not foresee the actual cause of the increased time and costs. But, in another sense, an act of God is different in that the parties can acknowledge an act of God and not be responsible for causing it, though they may allocate the risks associated with it. In that sense, a cumulative impact claim might be better understood as an “act of Owner,” or rather an “unforeseeable consequence of the Owner’s unreasonable exercise of contractual rights.” In any event, one can reasonably question the utility of treating cumulative impact as a foreseen unforeseeable event in the hope that the parties will expect the unexpected.

Another consideration concerning the referee’s contract construction relates to the ways courts are generally inclined to interpret contracts. The referee narrowly applied the accord and satisfaction and no damage for delay clauses. Ohio now prohibits no damage for delay clauses as a matter of public policy and other states have similar policies. Therefore, courts may refuse to enforce or narrowly interpret such clauses. Accord and satisfaction clauses may be different. Because accord and satisfaction clauses may represent the parties’ attempts to settle disputes themselves, conduct which courts generally prefer, courts may actually be inclined to construe such clauses broadly. By not doing so, the referee may have set the stage for a reversal.

Finally, the referee’s damages analysis raises some questions. First, the referee awarded D&M over $600,000 as the balance of the contract, because it was “clearly due,” as the project was “complete.”[156] The referee never addressed the fact that D&M was removed as lead contractor six months before project completion and that Gilbane finished the job.

Regarding the damages resulting from the cumulative impact claim, it appears that the referee followed the total cost method without explicitly stating so. He mentioned the reasonableness of the original bid, the impossibility of calculating damages, the allocation of fault to the state because of the faulty design documents, and the reasonable costs associated with the delays. The referee did not discuss whether Ohio contract law recognizes recovery based on the total cost method.

4. The Court of Appeals Decision [157]

ODAS appealed the Court of Claims decision and raised ten assignments of error. The Court of Appeals focused most of its attention on the Assignment of Error No. 1:

The trial court erred as a matter of law because the $730,760 award to Dugan & Meyers for cumulative impact damages has no basis in Ohio law and is contrary to the express provisions of the contract.[158]

The court went on to phrase the state’s argument slightly differently, stating that:

“[A]ppellants argue that Ohio law does not recognize claims for so-called cumulative impact damages (also called “delay damages”) and that, to the extent such a claim would be recognized in this state, such recognition is not warranted by the facts of this case.[159]

The difference between these statements prompts the question surviving this case, namely, whether Ohio law recognizes cumulative impact damages at all or whether the facts of this particular case did not warrant the award of cumulative impact damages. Neither the Court of Appeals nor the Supreme Court adequately answered this question. However, because both courts focused on the cumulative impact analysis and never hinted that cumulative impact damages are not recoverable under Ohio law, a reasonable inference is that such claims are possible.[160]

The Court of Appeals began its analysis by discussing the referee’s application of the Spearin doctrine. Following some discussion about Spearin, the court decided that the doctrine “is not appropriately invoked in [this] case.”[161] The following analysis points to errors in the referee’s report and some misunderstanding on the significance and application of the Spearin doctrine.

First, the Court of Appeals focused on the significant omission in the referee’s decision. The referee did not clearly distinguish between changes caused by errors and omissions in the design documents and other changes. He found liability for changes resulting from errors and omissions, but broadly applied that rule to changes not proven to be the result of errors and omissions in the design documents. The Court of Appeals held that the Spearin doctrine does not place liability on an Owner for delays resulting from “agreed changes in the work necessitated by some force not within the complete control of the contractor” but the Court failed to specifically identify the source of changes for which the doctrine was applied, namely, errors and omissions in design documents. The Court of Appeals addressed the application of the Spearin doctrine, but the doctrine was applied in a manner inconsistent with its stated purpose. The referee applied Spearin to make ODAS liable for errors in design documents and also applied Spearin to damages based on changes necessitated by errors and by other forces not within D&M’s control. The Court of Appeals held that Spearin does not apply when changes are generally necessitated by forces not within the Contractor’s control; therefore, the question of whether the doctrine applies to cases in which changes leading to damages are caused by design document errors was not fully answered.[162] In summary, the referee stated, but then incorrectly applied, a rule of law. The Court of Appeals reversed the incorrect application without directly addressing the rule articulated by the referee.

The Court of Appeals next addressed the focus on the numbers of changes. Though the referee’s report did include some causation evidence that went beyond the “sheer numerosity of the RFIs,” the referee’s conclusions were stated in terms of numbers. The Court of Appeals noted that “the record fails to demonstrate that the substantive concerns addressed in any one RFI or group of RFIs rendered the plans unbuildable or otherwise wholly inadequate to accomplish the purpose of the contract.”[163] This observation led into the discussion concerning how the Spearin doctrine should be interpreted.

The Court of Appeals declined to apply Spearin because there was “no evidence of one identifiable defect or set of defects in the plans and specifications that proved to be so unassailable that the contractor’s mere performance of the contract served to undermine the basic purpose thereof.”[164] This analysis seems to place more emphasis on Spearin’s facts than the stated legal principle. The Court looked for conditions at OSU similar to the conditions in Spearin rather than recognizing that Spearin stands for the principle that the Owner bears the responsibility for errors in contract documents relating to site conditions. The Court of Appeals interpreted Spearin as a performance based decision rather than a risk allocation decision.

In concluding its cumulative impact analysis, the Court of Appeals simply sustained the appellants’ first assignment of error without addressing whether cumulative impact claims have any basis under Ohio law. By basing its decision so heavily on the first assignment, the Court of Appeals also did not reach the accord and satisfaction issue. The Court reversed on the liquidated damages claim, holding that liquidated damages were enforceable because D&M failed to request more time. The Court also reversed the award of D&M’s contract balance.

5. The Ohio Supreme Court Opinion

The Ohio Supreme Court, following the same basic reasoning as the Court of Appeals, affirmed.[165] When discussing the lower court’s position, the Supreme Court stated that “[t]he Court of Appeals held that (1) an award for cumulative-impact damages has no basis in Ohio law and is contrary to the express provisions of the contract ….” Literally speaking, the Court of Appeals’ opinion does not go that far. Whether the Court of Appeals actually meant to say that cumulative impact damages are not allowed under Ohio law is unclear, though the Supreme Court seemed to think the issue was resolved.

As for Spearin, the Supreme Court summarized the case by saying that “Spearin involved the existence of a site condition that precluded completion of the construction project.”[166] This may be the same logic employed by the Court of Appeals, as the focus is on the ability (or inability) of the Contractor to perform under the contract as a result of an error in the design documents. More precisely, Spearin addresses risk allocation for an error in design documents preventing the parties from performing as originally expected. In any event, the Supreme Court expressly stated that it would not extend the Spearin doctrine to cover changes in the design documents that ultimately cause delays.[167] Unfortunately, the Supreme Court neither distinguished between “changes” to design documents from “errors” in design documents nor directly addressed the referee’s conclusion that errors leading to changes cause compensable cumulative impacts.

After the Spearin analysis, the Supreme Court turned to the no damage for delay clause. The Court used this clause as the instrument to attack the cumulative impact claim. The Court first held that the clause was valid and enforceable, though such clauses were generally construed strictly.[168] Then, the Court reasoned that because the clause set forth a procedure regarding changes, D&M could not assert a claim for delays based on changes if it did not follow the contractual provisions relating to changes. Because D&M failed to follow such procedures, the Court held that it could not recover delay damages. Ultimately, the Court bypassed Spearin and held that express contract provisions barred the cumulative impact claim.[169] In doing so, the Court stated:

In order to hold in favor of Dugan & Meyers, we would need, first, to find that the state had implicitly warranted that its plans were buildable, accurate, and complete, and second, to hold that the implied warranty prevails over express contractual provisions [the no damage for delay clause].[170]

The Supreme Court addressed the lower court’s performance-based inquiry into the facts as follows:

Moreover, the court of appeal correctly observed that ‘the record fails to demonstrate that [the problems with the plans] rendered the owner-furnished plans unbuildable or otherwise wholly inadequate to accomplish the purpose of the contract.’ On the contrary, the Fisher College buildings were completed upon substitution of a new lead contractor.[171]

Unfortunately, both Ohio appellate courts second guessed the referee’s findings of fact and failed to acknowledge that the project was completed only after the parties made substantial changes to the original design. Perhaps they may have been searching for evidence indicating what the buildings would have been like had they been constructed according to the original plans.

The wording of the Supreme Court’s opinion appears to indicate that cumulative impact claims are not recognized under Ohio law. Even so, for the reasons explained above, there is reason for uncertainty.

E. Cumulative Impact and A201

Clearly, contract language played a significant role in the ultimate failure of D&M’s cumulative impact claim. Considering the importance of contract language with regard to cumulative impact claims, we now consider the relationship between a potential cumulative impact claim and AIA A201.

D&M failed to overcome two main hurdles in their cumulative impact claim. First, they were unable to extend the Spearin doctrine to place liability on an Owner for errors and omissions in design documents. Under A201 – 2007, the Owner does not expressly guarantee the constructability, accuracy, or completeness of the design documents. The document anticipates there may be mistakes and obligates the Contractor to give notice if the mistakes are discovered. While the Architect is generally under a professional and contractual duty to provide the Owner with a buildable, accurate, and complete set of design documents, that duty does not extend contractually to the Contractor. As noted subsequently in this paper, the Contractor could claim negligent misrepresentation against the Architect based on errors in the design documents. Some states permit recovery of economic losses in negligent misrepresentation claims despite the economic loss rule.[172]

Though A201 – 2007 does not require the Owner to expressly guarantee sufficiency of the design documents, Section 3.1.2 requires the Contractor to “perform the Work in accordance with the Contract Documents.” This implies that it is possible to perform the Work in accordance with the Contract Documents, and it would seem to be the primary performance demanded of the Contractor in that the Contractor can only perform its obligations by following the Contract Documents. If those documents represent something other than what the Owner would desire (because of numerous errors, for example), then logically the Owner would be required to change the Contract Documents so that the Contractor can perform in accordance with the Owner’s expectations.

Under A201 – 2007 the Contractor has a duty to “carefully study and compare the various Contract Documents relative to that portion of the Work” that the Contractor is about to begin.[173] In addition to this duty, the Contractor must report any “errors, omissions, or inconsistencies discovered by or made known to the Contractor …”[174] If the Contractor fulfills this obligation, then under Section 3.2.4 “the Contractor shall not be liable to the Owner or Architect for damages resulting from errors, inconsistencies, or omissions in the Contract Documents …” While this clause may not serve to establish a claim against the Owner or Architect, it should clearly serve as an affirmative defense to delays resulting from changes caused by errors, omissions, or inconsistencies in the design documents. Relying on this clause, a Contractor can use cumulative impact as a defense to liquidated damages if it can show that the cause of the delay was errors, omissions, and inconsistencies in the Contract Documents and that the Contractor had properly reviewed the documents before construction.

Neither A201 – 2007 nor its predecessors contain a no damage for delay clause. Section 8.3 addresses delays and extensions of time. Section 8.3.1 states that “[i]f the Contractor is delayed at any time in the commencement or progress of the Work by an act or neglect of the Owner or Architect … or by changes ordered in the Work … the Contract Time shall be extended by Change Order for such reasonable time as the Architect may determine.” In that case, the Contractor must file claims in accordance with applicable contract provisions, including the 21-day notice requirement.[175] Addressing delay-based damage claims, Section 8.3.3 specifically states that “Section 8.3 does not preclude recovery of damages for delay by either party under other provisions of the Contract Documents.” Combining these provisions, and without considering the wording of signed Change Orders, a Contractor may make a credible argument that A201 does not prohibit a delay based cumulative impact claim provided that appropriate notice provisions are followed.

F. Cardinal Change

“Cardinal change” is a change that occurs outside the general scope of the contract; “thus it is not governed by the ‘changes clause,’ and cannot be remediated under the contract.”[176] The change is so pervasive that the contract is deemed to have been breached by abandonment. Cumulative impact is sometimes associated with cardinal change.[177] Problems such as numerous RFIs and changes (the so-called “death by a thousand cuts”) are fertile ground for both theories.[178] Both theories are based on Owner changes.[179] Defective specifications may be grounds for claims under either theory.[180] And work performed pursuant to contract modifications may doom claims under both theories.[181]

The cardinal change doctrine is well established in federal procurement law.[182] Within this body of law, there are two tests for cardinal changes. The “scope of contract test” examines whether the work is altered so drastically that the Contractor is required to perform work materially different from what the Contractor bargained to perform.[183] Under the “scope of the competition test,” which applies to the competitively bid projects, cardinal change occurs when the contract is modified so as to materially change the competitive field.[184]

Not all states recognize cardinal change claims.[185] Court decisions reveal two mutually exclusive lines of thought. The first is that a Contractor must show that the number and scope of the changes rose to such a level that the contract was abandoned and that the effect of those changes was unforeseeable. Simply put, if the Contractor is going to argue that the changes caused an unforeseeable delay, then the number and scope of those changes should be such that they were not contemplated by the contract and the parties must have abandoned original expectations to accommodate all the changes.

Some courts using this approach view cardinal change as a material breach and abandonment of the contract that is incompatible with further performance under the contract.[186] A Contractor’s cumulative impact claim is based on evidence that the Contractor continued to perform under the contract as it made the changes that ultimately resulted in delays. Continuing performance contradicts the underlying cardinal change concept that the parties have abandoned the contract. Therefore, the cumulative impact claim must be made without raising the cardinal change doctrine.

The other cardinal change analysis focuses on the plans more than the project. Numerous changes to the plans may represent a cardinal change though the ultimate product of construction is nearly identical to that originally envisioned.[187] In contrast, the changes might simply represent inconsistencies in the plans that must be addressed for the project to be completed but that do not change actual expectations concerning the final project.

The courts continue to address the cardinal change doctrine. In Amelco Electric v. City of Thousand Oaks,[188] incomplete plans resulted in hundreds of clarifications and numerous changes. The case eventually made its way to the California Supreme Court, which distinguished between abandonment and cardinal change. Under the former, the contractor may recover its total cost (less payments) for work before and after the contract is abandoned. Under cardinal change, the contractor may recover only breach of contract damages for additional work. This distinction appears to be unique to California.[189] In Pellerin Construction Inc. v. Witco Corp. and Fluor Enterprises, Inc., a federal district court held that Louisiana law does not recognize the cardinal change doctrine.[190] The Nevada Supreme Court took the opposite approach and allowed a cardinal change analysis to be used in litigation between private parties, even though the doctrine developed in the context of government contracts.[191]

It is tempting to blend cumulative impact and cardinal change because the cases appear factually similar. It may even be necessary for he Contractor damaged by cumulative impact to demonstrate cardinal change in order to avoid the accord and satisfaction defense based on executed change orders.[192] The theories are not the same, however. Cumulative impact may exist without abandonment of the contract or changes beyond the scope of the contract. Cardinal change jurisprudence may be useful by analogy but it is distinguishable from cumulative impact.

IV. Practice Pointers.

A. Contract Drafting Considerations for Controlling the RFI Process

As seen in Dugan & Meyers, an overwhelming number of RFIs can prove debilitating to the progress and performance of project participants. To minimize such impacts, implementation and utilization of a contractual process to control RFIs during project performance is encouraged. During construction, the Contractor’s need for prompt design interpretation and clarification to ensure the Contractor’s compliance with the Architect’s design intent is an overriding concern. Under the design-bid-build and construction management project delivery methods, however, the Contractor and Architect are not in privity. Nevertheless, they frequently communicate directly. RFIs and submittals are important examples. This sort of direct communication is as it should be because routing them through the Owner would be an inefficient method of communication that can exacerbate the cumulative impacts of changes, especially on large or complex projects.

RFIs are a tool for documenting Contractor-Architect communication when the Contractor perceives the need to obtain clarifications of ambiguous, incomplete, or uncoordinated design documents.[193] Once processed, RFIs can have significant impact on the Contractor’s scope of work by leading to the issuance of Change Orders or CCDs. RFIs have the potential to cure deficiencies in the design documents but may also be the product of inexperience, carelessness or abuse on the part of the Contractor.[194] An effective RFI process will account for these issues with a pragmatic and streamlined approach to resolving conflicts and ambiguities. Yet, contract documents should be written with the recognition that even the most comprehensive and streamlined RFI process will likely fail to account for all project contingencies. Common pitfalls and abuses of the RFI process can be alleviated by contract drafting.

“Conventional wisdom” is based on the acceptance of widely familiar ideas.[195] With respect to RFIs, conventional wisdom accepts that numerous RFIs are a sign of a troubled project. The reasoning for this conventional wisdom varies. One commentator argues that “contractors pursuing a claims strategy use the RFI process for all sorts of project communications,” including the assertion of claims that the project “was not fully designed at the time of bid.[196] Yet there are also perspectives that design documents are never perfect and that conscientious Contractors do in fact uncover situations where the documents are not clear[197] and that proper RFI usage can save costs.[198] RFIs may be particularly beneficial for fast track projects. Other nuggets of conventional wisdom are:

· Owners want high quality design, which prevents disputes.[199]

· Perceiving that design documents have declined in quality, Owners believe that Architects should be “held more responsible for completing a quality design that can be built without numerous change orders or RFIs.”[200]

· The RFI process must be improved and Owners should do more to see that the process does improve.[201]

Timeliness in the RFI process should be of paramount importance, given the adverse impact of untimely RFI responses on the progress of the entire project. Ambiguous, incomplete, or uncoordinated design complicates, and can delay, performance. In some cases, the delays impact performance for the duration of the project. Such impacts cause ripple effects among multiple trades waiting for resolution of a design discrepancy. Additional costs such as acceleration costs, increased overhead, tear-out and rework consequently follow. Clearly, a prompt and efficient RFI process that minimizes the time that RFIs remain outstanding and simultaneously provides an effective and timely dispute resolution process is in the interest of all parties involved. Among many of the most basic choices available to the parties are whether to require responses to RFIs within a specified time frame or utilize more fluid language.

Contracts frequently require the design professional to “timely respond to RFIs so as not to unreasonably delay the project.” Such general language is ambiguous and can lead to claims of Architect negligence in answering the RFIs. Indeed, this language loosely tracks the standard of care imposed on Architects in the performance of their professional duties. A more specific provision can be equally problematic for the Owner if the Architect does not meet the specified time period. This might allow the Contractor to request a time extension or delay damages even if the delay did not cause a delay to the substantial completion date or cause the Contractor to incur increased general conditions costs. These two alternatives are the polar extremes, and the ultimate decision must be made based upon factors such as the number, identity and capabilities of the parties performing on the project, and the willingness of the Owner to devote its resources to managing or monitoring the process.

As a general rule, the parties should consider using contract language requiring the Architect to timely respond to RFIs so as to not unreasonably delay the project. The provision may strike a balance between the two approaches as follows:

RFI Response Time. The Architect shall resolve all RFIs and questions and issue instructions to the Contractor within a reasonable time frame so as not to delay the project. In most instances, RFIs will be responded to within fifteen (15) days. If, in the Architect’s opinion, more than fifteen (15) days is required to prepare a response to an RFI, the Contractor and Owner will be promptly notified in writing.

While this provision invokes the often-ambiguous considerations of reasonableness, a static time frame for responding to RFIs often proves untenable for large projects with numerous parties. The parties should also consider a provision that prohibits unnecessary or duplicative RFIs.

Next, the parties to a contract should consider the structure of the RFI process and the chain of communication. For instance, the parties might consider establishing a structure that permits the Contractor to submit RFIs directly to the Architect and its design consultants, copying the Owner on all such communications. This provision alleviates the routing difficulties and delays associated with the chain of communication on a large project.

The parties might also consider establishing a streamlined RFI dispute resolution procedure. This provision allows the parties to monitor the process and assist in the resolution of disputes in a timely and direct manner without resort to more traditional and costly dispute resolution procedures, such as arbitration or litigation.

In addition to the suggested contractual provisions listed above, the parties should also consider establishing clear requirements for the maintenance of a master RFI log. A master RFI log has many practical advantages for monitoring and managing the RFI process as well as resolving disputes arising out of the RFI process. The first (and most obvious) issue is who will bear the responsibility for maintaining the master RFI log. If the Owner will be responsible for routing all RFIs to the Architect and then back to the Contractor, then the Owner may be the most logical party to vest with the responsibility for maintaining the RFI log. If the Contractor is permitted to submit RFIs directly to the Architect and its consultants, then the Architect is the most logical party to maintain the log. On many projects, all parties maintain their own RFI log. In some cases, this leads to disputes about the timing of submissions and responses. A master log has the potential to resolve these disputes early in the process.

The next issue that should be addressed with regard to the RFI log is what information the log should contain. The RFI log should contain the following information: document/RFI number; title of the RFI; party who requested the RFI; recipient of the RFI; date RFI was submitted; date a response is required; date a response to the RFI was submitted; date a complete response was received; number of days the RFI was open or outstanding; and the status of the RFI (answered/unanswered).[202] An effective process for tracking RFIs will document, among other things, those RFIs that remain open or outstanding. Routing RFIs through one party may minimize disputes and improve project management.

B. Lessons from Ohio: The Future of Spearin and Cumulative Impact

The many bases that might support a cumulative impact claim are frequently implicated in litigation based upon the common law Spearin doctrine. In United States v. Spearin the United States Supreme Court held that a contractor, who is “bound to build according to plans and specifications prepared by the owner, … will not be responsible for the consequences of defects in the plans and specifications.”[203] Since 1918, Spearin has become the widely accepted authority for an implied warranty of design adequacy.[204] The federal boards on contract appeals and the United States Court of Claims have recognized this implied warranty.[205]

Dugan & Meyers examined claims for delay damages for changes arising out of a substantial number of RFIs. Unlike Spearin, D&M’s claims were unrelated to site conditions. D&M urged that the Spearin doctrine was applicable and that ODAS was liable for breaching its implied warranty that the plans were constructible as drawn. The Ohio Supreme Court rejected D&M’s argument and expressly declined to extend the Spearin doctrine “from job-site-conditions cases to cases involving delay due to plan changes.”[206] As a consequence, the question remains: Does Dugan & Meyers sound the death knell for delay claims based upon the Spearin doctrine?

On one hand, Dugan & Meyers appears to gut the Spearin doctrine by significantly limiting the ruling in Spearin to site conditions. On the other hand, a valid argument may be made that Dugan & Meyers causes little harm to Spearin, in that Dugan & Meyers was decided on facts unrelated to the applicability of the Spearin doctrine and, therefore, the short shrift the Court gave to its analysis of Spearin is little more than dicta.

Initially, Dugan & Meyers critically misread Spearin when declining “the opportunity to extend the Spearin Doctrine from job-site-conditions cases to cases involving delay due to plan changes.”[207] The Ohio Supreme Court’s ruling was, therefore, premised on an extremely narrow view of Spearin, interpreting Spearin as a performance-based decision and not as a risk allocation decision.

Dugan & Meyers must be limited to the facts of that case. The contract at issue in Dugan & Meyers—described by the Ohio appellate courts as a “plain and unambiguous” contract—expressly addressed D&M’s remedy for changes to the plans. The Ohio Supreme Court determined that the changes clauses were predominant. Thus, the Court concluded that any implied warranty provided by ODAS to D&M was subordinate to the express contractual provisions governing changes to the plans. By acknowledging the axiomatic rule that “the Spearin Doctrine does not invalidate an express contractual provision,”[208] the Ohio Supreme Court removed Dugan & Meyers from the ambit of the Spearin Doctrine and caused little prejudice to Spearin invocations in subsequent cases—at least, cases outside of Ohio.

For these reasons, it is reasonable to conclude that Dugan & Meyers will not cause irreparable damage to the Spearin doctrine outside of Ohio. Express contractual provisions will continue to enjoy preeminence over implied warranties[209]—including those based upon the Spearin doctrine. In cases lacking clear contractual language addressing the Contractor’s remedies for changes, Dugan & Meyers will be distinguishable and have dubious applicability, potentially leaving Spearin as a valid basis, or controlling precedent, for allocating the risk for deficient plans and designs to the Owner.

For the Contractor unable to rely upon an implied warranty or Spearin theory for recovery against the Owner, a variety of jurisdictions have alternate avenues that may permit the recovery of delay damages based upon deficient designs. One such option permits the Contractor to assert a valid cause of action directly against the Architect, despite a lack of privity, to recover cumulative impact damages under section 552 of the Restatement (Second) of Torts (1976). Several jurisdictions have expressly adopted the Restatement section 552 cause of action, permitting recovery for delay damages based upon a negligent misrepresentation theory.[210] Essentially, the section 552 cause of action alleges that the design professional commits a compensable error by furnishing misleading or incorrect design information, in the course of their profession, to other parties for their use and reliance during the performance of a construction project.

In pertinent part, section 552 of the Restatement (Second) of Torts provides:

(1) One who, in the course of his business, profession or employment, or in any other transaction in which he has a pecuniary interest, supplies false information for the guidance of others in their business transactions, is subject to liability for pecuniary loss caused to them by their justifiable reliance on the information, if he fails to exercise reasonable care or competence in obtaining or communicating the information.

(2) Except as stated in subsection (3), the liability stated in subsection (1) is limited to loss suffered

(a) by the person or one of a limited group of persons for whose benefit and guidance he intends to supply the information or knows that the recipient intends to supply it; and

(b) through reliance upon it in a transaction that he intends to influence or knows that the recipient so intends or in a substantially similar transaction.[211]

Official comment a is instructive as to the scope of this cause of action:

[I]t does not follow that every user of commercial information may hold every maker to a duty of care. Unlike the duty of honesty, the duty of care to be observed in supplying information for use in commercial transactions implies an undertaking to observe a relative standard, which may be defined only in terms of the use to which the information will be put, weighed against the magnitude and probability of loss that might attend that use if the information proves to be incorrect. A user of commercial information cannot reasonably expect its maker to have undertaken to satisfy this obligation unless the terms of the obligation were known to him. Rather, one who relies upon information in connection with a commercial transaction may reasonably expect to hold the maker to a duty of care only in circumstances in which the maker was manifestly aware of the use to which the information was to be put and intended to supply it for that purpose.[212]

In light of the foregoing, it is apparent that an Architect has a duty to care for the economic interests of those foreseeable Contractors for whose benefit and guidance the Architect submits designs and specifications for the construction of a project.

In Hewett-Kier Construction, Incorporated v. Lemuel Ramos and Associates, Incorporated, the Fourth District Court of Appeal of Florida explained that the economic loss rule would not preclude a negligence action against a professional, despite a lack of contractual privity and the fact that the action sought purely economic damages, “where a special relationship, under section 552 of the Restatement (Second) of Torts (1976), exists between the professional and the third party who is affected by the professional’s negligent acts.”[213] Reviewing a motion to dismiss, the Hewett-Kier court held that allegations in a complaint that an Architect prepared erroneous design documents with the knowledge that the Owner would provide them to a successful bidder, and that a successful bidder would be injured if those designs were inadequate, were sufficient to establish a special relationship between the Contractor and the Architect for section 552 purposes.[214] Clearly, the more attenuated the relationship between the supplier of information and the recipient, the less likely the supplier is to be held liable for negligently supplying that information. Where the nexus between the supplier and the recipient is tighter, the supplier of information is more likely to be held liable for negligently supplying information that causes the recipient damage.

While the Restatement (Second) of Torts section 552 cause of action does not replace the Spearin Doctrine for the benefit of Contractors who suffer delay damages in reliance on representations by the Owner or Architect, the section 552 cause of action does provide an alternate theory for the recovery of compensable damages. Ultimately, however, the Contractor’s right to recover under either theory will continue to hinge on the existence or absence of express contractual provisions (1) disclaiming any representations as to the design documents or site conditions and/or (2) establishing a procedure for changes.

CONCLUSION

In rejecting D&M’s cumulative impact claim, the Ohio appellate courts took a narrow view of Spearin by limiting Spearin’s application to site conditions.[215] This narrow reading is clearly not within the mainstream of U.S. construction law.[216] Courts have applied the Spearin Doctrine to a broad range of subjects including site availability, soil characteristics, structural defects, fire damage, dredging difficulties, highway concrete, sewer design/water infiltration, roof leaks, survey errors, concrete mix design, sealant and excavation quantities.[217] For this reason alone, Dugan & Meyers is an anomaly.

The Ohio appellate courts gave little or no weight to the referee’s findings of fact. Based upon evidence that 732 RFIs resulted in 264 Field Work Orders, of which 46% were caused by plan errors, the referee found the errors were excessive. The Court of Appeals ignored these findings.[218] As to issues of law, the Court of Appeals dodged most of the appellant’s assignments of error. After reversing the referee on the question of whether Ohio law recognized a claim for cumulative impact, the Court found it unnecessary to address other assignments of error. Unfortunately, the Court of Appeals muddled its response to the cumulative impact issue. The first assignment was phrased: “The trial court erred as a matter of law because the . . . award . . . for cumulative impact damages has no basis in Ohio law and is contrary to the express provisions of the contract.”[219] The Court of Appeals’ opinion addresses the issue solely in the context of its narrow Spearin analysis. The Court of Appeals reversed the award for cumulative impact but did not expressly hold that there is no cause of action in Ohio for cumulative impact. This omission did not stop the Ohio Supreme Court from flatly stating that the Court of Appeals held that “an award for cumulative impact damages has no basis in Ohio law.”[220] This discrepancy casts doubt on the depth of the Supreme Court’s reasoning.

The long term significance of Dugan & Meyers is questionable even in Ohio because one of the decisions’ underpinnings has been removed. The two appellate courts relied heavily on the NDFD clause. Subsequent legislation voided NDFD clauses in Ohio.[221]

In short, Dugan & Meyers is no threat to the Spearin doctrine. While the result in Dugan & Meyers is not helpful to cumulative impact advocates, the facts of the case and flaws in the decisions leave room for reasoned differentiation.

In any event, Dugan & Meyers provides a learning opportunity. D&M, to be sure, put its cumulative impact claim in jeopardy. D&M failed to ask for a time extension.[222] It also failed to comply with notice of claim provisions.[223] D&M also signed Change Orders that could have been construed as an accord and satisfaction.[224] Avoidance of these mistakes are obvious “lessons learned.” Other considerations are:

· What does a Contractor do when requested to sign off on RFI responses, FWOs, or Change Order with which the Contractor disagrees? Although Dugan & Meyers is no authority for accord and satisfaction, the case demonstrates the potential adverse consequences this affirmative defense poses for the Contractor. Therefore, the Contractor should be sensitive to cumulative impacts when pricing Change Orders. If an agreement on Change Order pricing is not achieved, the Contractor may have to choose between signing off and getting paid for an underpriced Change Order or refusing to sign off and not getting paid while performing the change and preserving its broader remedies. CCDs may be helpful to a Contractor confronted by this choice.

· Cumulative impact is not necessarily, but can become, a cardinal change. How does the Contractor proceed in that situation? As the L. K. Comstock decision illustrates, continued observation of “contractual niceties” may be adversely prejudicial to the Contractor.[225]

· Experience supports the conventional wisdom about RFIs. Numerous RFIs can be a sign of a troubled project. Who is the troublemaker is another question. RFIs may proliferate due to incomplete plans or inadequate contractor preparations, even on the same project. Owners, Architects and Contractors have an interest in policing the use of RFIs and discouraging abuse. Reasonable expectations and transparency will promote those interests. The contract documents should clearly indicate that RFIs are anticipated, (especially when aspects of the design or level of design completion will encourage RFIs), describe responsibilities for handling RFIs in a timely fashion, and address the costs associated with the process.

[1] Mr. Hinkle thanks Mr. Jonathan E. Harris, University of Kentucky College of Law ’08, and Elizabeth L. Smith, M.L.S., Stites & Harbison, Lexington, Kentucky, for their significant contributions to this paper. He also thanks Peter D. Welin, Esq., Thompson Hine, LLP, Columbus, Ohio, for his insights into the Dugan & Meyers litigation.

[2] Mr. Less thanks Mr. Albert L. Chollet III, Associate, Less, Getz & Lipman PLC, and Mr. Jason Ridenour, Associate, Less Getz & Lipman PLC, for their significant contributions to this paper.

[3] T. S. Eliot, Murder In The Cathedral, Part I, p. 31 (Harcort, Brace & World, Inc. 1935).

[4] Dugan & Meyers Constr. Co. v. Ohio Dept. of Admin. Servs., 864 N.E.2d 68 (Ohio 2007); Dugan & Meyers Constr. Co. v. Ohio Dept. of Admin. Svcs., 834 N.E.2d 1 (Ohio Ct. App. 2005).

[5] United States v. Spearin, 248 U.S. 132 (1918).

[6] Papers on cumulative impact were presented at the 2001 annual meeting of the American Bar Association Forum on the Construction Industry. See Leland E. Backus, “Cumulative Impact or Disruption Claims: What Does It Take To Prove,” Stadiums, Arenas, Malls and More: The Community Impact Project (American Bar Association Forum on the Construction Industry Program, New Orleans, La., 2001); Michael F. D’Onofrio, “The Cumulative Impact of Changes,” Stadiums, Arenas, Malls and More: The Community Impact Project (American Bar Association Forum on the Construction Industry Program, New Orleans, La., 2001).

[7] This paper addresses the proposed draft of AIA A201 – 2007, which was not generally available when the paper was written.

[8] A201 – 1997, Sections 7.1 and 7.2.

[9] A201 – 1997, Section 4.2.8.

[10] A201 – 1997, Section 7.1.3.

[11] A201 – 2007, Section 4.2.8.

[12] A201 – 1997, Section 7.2.2.

[13] A201 – 2007, Sections 7.2 and 7.3.3.

[14] “A Construction Change Directive is a written order prepared by the Architect and signed by the Owner and Architect directing a change in the Work and stating a proposed basis for adjustment, if any, in the Contract Sum, or Contract Time, or both . . . .” AIA A201 – 1987. Later versions contain similar (but not identical) definitions.

[15] See, e.g., AIA A201/CM – 1980, Article 12.

[16] A201 – 1997, Section 7.3.2.

[17] A201 – 1997, Section 7.3.1.

[18] Contract Sum adjustment methods are (1) mutual acceptance of a lump sum, (2) unit prices, (3) costs and a fixed percentage on fee, all as agreed to, or (4) force account.

[19] A201 – 1997, Section 7.3.4. (emphasis added).

[20] A201 – 1997, Section 7.3.5.

[21] A201 – 1997, Section 7.3.6.

[22] A201 – 1997, Section 7.3.8

[23] A201 – 1997, Section 7.3.9.

[24] A201 – 2007, Section 7.3.7.

[25] A201 – 2007, Section 7.3.9. (emphasis added).

[26] A201 – 2007, Section 7.3.10.

[27] A201 – 1997, Section 7.4; A201 – 2007, Section 7.4.

[28] A201 – 2007, Section 7.4.1. Section 7.1.3 requires the Contractor to “proceed promptly, unless otherwise provided in the . . . order for a minor change in the Work.”

[29] A201 – 1997, Section 3.2.

[30] A201 – 1997, Section 3.2.1.

[31] Id. Skeptical observers may contend that the sole purpose of the RFI process is to identify errors, omissions, or inconsistencies that cause confusion and delays.

[32] A201 – 1997, Sections 1.1.1 and 7.1.1.

[33] A201 – 1997, Section 3.2.3. RFIs are mentioned a bit more in the Owner-Architect agreement, B141 - 1997. Sections 2.6.1.5 through 2.6.1.7, which are part of the Architect’s scope of administrative services, provide that the Architect will review “properly prepared, timely” requests and shall respond “if deemed appropriate by the Architect” by supplemental drawings, specifications or interpretations of the Contract Documents. Comparable construction contract documents published by the Associated General Contractors of America and EJCDC do not use the RFI terminology. Article 3 of EJCDC C-700 Standard General Conditions of the Construction Contract – 2002 includes a process for resolving discrepancies through Field Orders and written interpretations by the Engineer.

[34] A201 – 1997, Section 3.2.1.

[35] A201 – 1997, Section 3.2.3.

[36] A201 – 1997, Section 3.2.2.

[37] Id.

[38] A201 – 1997, Section 3.2.3 (emphasis added).

[39] A201 – 2007, Section 3.2.2 (emphasis added).

[40] A201 – 2007, Section 3.2.4.

[41] A201 – 2007, Section 3.2.3.

[42] A201 – 2007, Section 3.2.1. This clause is typically referred to as a site investigation clause. The amount of risk shifted to the Contractor by such a clause is debatable.

[43] The American Institute of Steel Construction (“AISC”) addresses the RFI process in its Code of Standard Practice for Steel Buildings and Bridges. Section 4.6 recommends that, in addition to references to the drawing and specification, the RFI also reference the specific detail in question. AISC also provides that unless otherwise noted the fabricator/erector can assume that a response to an RFI constitutes a release for construction. The Owner must be promptly informed if the response results in an increase in cost or a delay.

[44] See United States ex rel. Perosi Elec. Corp. v. Manshul Constr. Corp., 940 F. Supp. 492, 499 (E.D.N.Y. 1996) (rejecting a prime contractor’s attempt to backcharge a subcontractor for corrective work because the prime contractor failed to provide adequate notice to the subcontractor to permit the subcontractor to perform the necessary remedial work.).

[45] 1 Thomas Kelleher et al., Construction Disputes: Practice Guide With Forms § 1.07 (2d ed. Aspen 2002).

[46] Id.

[47] Id.

[48] 71 Constr. v. Wesco Elec., Inc., 924 P.2d 991, 992–93 (Wyo. 1996).

[49] See Kelleher, supra note 45, § 1.07.

[50] A.H.A. Gen. Constr., Inc. v. New York City Housing Auth., 699 N.E.2d 368 (N.Y. 1998); Sutton Corp. v. Metro. Dist. Comm’n, 667 N.E.2d 838 (Mass. 1996). See Kelleher, supra note 45, § 1.07 for a detailed discussion of similar requirements, including practical advice for counsel in handling claims in light of such notice requirements.

[51] 608 N.W.2d 267, 276 (N.D. 2000).

[52] Id. at 276 (citing Cranston v. Weston Cty. Weed & Pest Bd., 826 P.2d 251, 256-57 (Wyo. 1992)).

[53] Id.

[54] Galin Corp. v. MCI Telecomm. Corp., 12 F.3d 465, 470 (5th Cir. 1994).

[55] Miller Elev. Co. v. United States, 30 Fed. Cl. 662 (Fed. Ct. Cl. 1994); County of Brevard v. Miorelli Eng’g, Inc., 703 So. 2d 1049 (Fla. 1998); T.D. Indus., Inc. v. Lakes Project Inv., 883 S.W.2d 44 (Mo. Ct. App. 1994); Cardinal Dev. Co. v. Stanley Constr. Co., 497 S.E.2d 847 (Va. 1998).

[56] See, Appeal of JGB Enters., Inc., ASBCA No. 49493, 96-2 BCA (CCH) ¶ 28,948 (Aug. 20, 1996). But see Appeal of Service Eng’g Co., ASBCA No.42146, 96-2 BCA (CCH) ¶28,376 (May 28, 1996) (ruling that the government bears the burden of overcoming a presumption that the contractor does not perform extra work voluntarily).

[57] See Appeal of Landscape Pavers, Ltd., ASBCA No. 47773, 96-2 BCA (CCH) ¶ 28,441 (July 19, 1996).

[58] See, e.g., Brown Bros., Inc. v. Metro Gov’t of Nashville and Davidson Cty., 877 S.W.2d 745 (Tenn. Ct. App. 1993).

[59] Kelleher, supra note 45, § 2.04.

[60] Barry Bramble et & Michael Callahan, Construction Delay Claims § 2.12 (3d ed., Aspen 2000).

[61] Buckner Hinkle, Jr., “Singing In A Different Key: The Contractor’s Claim For Differing Site Conditions Without The Site Conditions Clause,” Ethical Considerations For Construction Lawyers in the 90’s: A Minefield For Lawyers (American Bar Association Forum on the Construction Industry Program, Chicago, IL, April 1991).

[62] See, e.g., United States v. Spearin, note 5.

[63] See, e.g., Warner Constr. Corp. v. City of L.A., 466 P.2d 996, 1001 (Cal. 1970); Metro. Sewerage Comm’n v. R.W. Constr., Inc., 241 N.W.2d 371 (Wis. 1976). See also Hewett-Kier Constr., Inc. v. Lemuel Ramos & Assoc., 775 So.2d 373 (Fla. 4th DCA 2000) (cause of action against architects based upon a misrepresentation theory under the Restatement (Second) of Torts §552 (1976) permitted); IT Corp. v. Ecology and Envtl. Eng’g, P.C., 713 N.Y.S.2d 633 (N.Y. App. Div. 2000) (recognizing an ability to recover under misrepresentation theory, but denying relief due to lack of privity).

[64] See, e.g., Bradley Constr. Inc. v. United States, 30 Fed. Cl. 507, 510 (1994); Pinkerton & Laws Co. v. Roadway Express, Inc., 650 F. Supp. 1138 (N.D. Ga. 1986); Berkel & Co. Contractors, Inc. v. Providence Hosp., 454 So. 2d 496, 505–06 (Ala. 1984).

[65] Bramble, supra note 60, § 2.12.

[66] See id.

[67] Id.

^{^[68]}See, e.g., Brechan Enters., Inc. v. U.S., 12 Cl. Ct. 545, 549 (1987); Neal & Co., Inc. v. City of Dillingham, 923 P.2d 89, 92 (Alaska 1996); Ronald Adams Contractor, Inc. v. Miss. Transp. Com'n, 777 So.2d 649, 654 (Miss. 2000). For practical considerations for owners and contractors in dealing with the notice requirements of differing site conditions clauses, see Stuart Weinstein, Construction in Puerto Rico: Navigating the Legal Quagmire, 71 Rev. Jur. U.P.R. 29, 57-59 (2002).

[69] Bramble, supra note 60, § 2.12.

[70] Id.; Kelleher, supra note 45, § 6.02.

[71] A201-1997, Section 4.3.4.

[72] Weeks Dredging & Contracting, Inc. v. U.S., 13 Cl. Ct. 193, 218 (1987) (emphasis in original).

[73] See Renda Marine, Inc. v. U.S., 66 Fed. Cl. 639, 651 (2005); Kiewit Const. Co. v. U.S., 56 Fed. Cl. 414, 423 (2003); Rice Lake Contracting Corp. v. Rust Env’t and Infrastructure, Inc., 616 N.W.2d 288, 293 (Minn. Ct. App. 2000); Fruin-Colnon Corp., Traylor Bros., Inc. and Onyx Const. & Equip., Inc. v. Niagara Frontier Transp. Auth., 585 N.Y.S.2d 248, 251–52 (N.Y. App. Div. 1992); Sherman R. Smoot Co. v. Ohio Dept. of Admin. Serv., 736 N.E.2d 69, 75 (Ohio Ct. App. 2000).

[74] See Kelleher, supra note 45, § 6.02.

[75] See Charles T. Parker Constr. Co. v. U.S., 433 F.2d 771, 778 (Ct. Cl. 1970).

[76] See Kelleher, supra note 45, § 6.02. (noting similar tests for proving both Type I and Type II condition claims). See also Parker Constr, 433 F.2d at 778 (stating that considerations involved in proving a Type II conditions claim involve (1) what are the usual worksite conditions, (2) what conditions are actually encountered, (3) did those conditions differ from the known and usual, and (4) if so did they increase the cost of performance.)

[77] See Kelleher, supra note 45, § 6.02.

[78] Id. (discussing a Department of Energy Board of Contract Appeals case, and its use of those factors).

[79] 495 N.E.2d 952 (Ohio 1986).

[80] Carl Beattie, Apportioning the Risk of Delay in Construction Projects: A Proposed Alternative to the Inadequate “No Damages for Delay” Clause, 46 Wm. & Mary L. Rev. 1857, 1860 (2005).

[81] Id.

[82] Id. at 1860–61 (explaining that many courts will avoid applying a no damages for delay clause where it would be unreasonably or inequitable to do so).

[83] See Peter Kiewit Sons’ Co. v. Iowa S. Utilities Co., 355 F. Supp. 376, 397 (S.D. Iowa 1973).

[84] See, e.g., Beattie, supra note 80, at 1859; Alain Lecusay, The Collapsing “No Damages for Delay” Clause in Florida Public Construction Contracts: A Call for Legislative Change, 15 St. Thomas L. Rev. 425 (2002) (referring to the no damages for delay clause as “an anomaly in the construction arena,” deserving of elimination “because it does not benefit the contracting parties, does not protect the public or the disbursement of public funds, and is not supported by public policy.”).

[85] See Ariz. Rev. Stat. § 41-2617 (2006); Cal. Pub. Cont. Code § 7102 (2006); Colo. Rev. Stat. § 24-91-103.5 (2006); Ky. Rev. Stat. § 371.405(2)(c) (2007); Mass. Gen. Laws. ch. 30, § 39O (2006); Mo. Rev. Stat. § 34.058 (2002); N.J. Stat. Ann. § 2A:58B-3 (2006); N.C. Gen. Stat. § 143-134.3 (2006); Ohio Rev. Code Ann. § 4113.62 (2006); R.I. Gen. Laws § 37-2-42 (2006); Va. Code Ann. § 2.2-4335 (2006); Wash. Rev. Code § 4.24.360 (2006). See also Lecusay, supra note 84, at 456–69 for a more detailed analysis of the legislation enacted in the foregoing states.

[86] The factual background for this paper derives mostly from the referee’s report, published by the Court of Claims at Dugan & Meyers Constr. Co. v. State of Ohio Dept. of Admin. Servs., No. 2001-7084 (Ohio Ct. Cl., June 27, 2003).

[87] Dugan & Meyers, 834 N.E.2d 1 (Ohio Ct. App. 2005).

[88] Dugan & Meyers, 864 N.E.2d 68 (Ohio 2007).

[89] Aetna Casualty and Surety Company v. The George Hyman Construction Company, 1998 U.S. Dist. LEXIS 22627 (E.D. Pa. 1998).

[90] D’Onofrio, supra note 6, at 3.

[91] Cumulative impacts are not limited to approved change orders. See Amelco Elec. v. City of Thousand Oaks, 98 Cal. Rptr. 2d 159 (Cal. Ct. App. 2000). The concept itself refers to the synergistic effect of an undifferentiated group of changes. Accordingly, cumulative impact claims should account and seek compensation for all manner of changes including, without limitation, multiple change orders, RFIs, differing site conditions, suspensions of work, and other project interruptions. Richard Long, Cumulative Impact Claims § 2 (Long International 2005) (citing Geoffrey Keating & Thomas Burke, Cumulative Impact Claims: Can They Still Succeed?, 20 APR Construction Law 30 (2000)).

[92] D’Onofrio, supra note 6 at 5.

[93] Long, supra note 91, § 2.

[94] Id.

[95] Centex Bateson Construction Co., 99-1 B.C.A. (CCH) ¶ 30, 153, 266 (V.A. B.C.A. 1998).

[96] Long, supra note 91, § 2 (citing John Hester, et al., Construction Changes and Change Orders: Their Magnitude and Impact, CII Source Document 66 at 35 (October 1991)).

[97] Unforeseeability has to be the hallmark of cumulative impacts, because the change process generally demands that all foreseeable adjustments to the contract time and price be included in the change order.

[98] D’Onofrio, supra note 6.

[99] See infra Part III.C.

[100] Most of the legal analysis comes from decisions by Boards of Contract Appeals.

[101] Bechtel Nat’l, Inc., 90-1 B.C.A. (CCH) P22,549, at 122 (NASA B.C.A. 1989).

[102] Dugan & Meyers, 864 N.E.2d 73 (Ohio 2007); 834 N.E.2d 9 (Ohio Ct. App. 2005).

[103] D’Onofrio, supra note 6, at 19. Some courts have allowed cumulative impact claims where causation was not clearly shown. David J. Tierney, Jr., Inc., 88-2 B.C.A. (CCH) P20,806 at 4 (G.S.B.C.A. 1988).

[104] Centex Bateson, 99-1 B.C.A. (CCH) at 269. This was another issue identified by the Ohio Court of Appeals in Dugan & Meyers. Dugan & Meyers, 834 N.E.2d 9 (Ohio Ct. App. 2005).

[105] Centex Bateson, 99-1 B.C.A. (CCH) at 269.

[106] A total productivity loss claim basically assumes that all cost overruns are the fault of the owner. This type of argument should be fairly easy to defeat in all but the most unusual circumstances.

[107] Pittman Constr. Co., Inc. v. U.S., 2 Cl. Ct. 211 (Cl. Ct. 1983).

[108] Strand Hunt Constr., Inc. v. Lake Washington Sch. Dist., No. 414, 2006 Wash. App. LEXIS 1931 (Wa. App. 2006).

[109] Strand Hunt Constr., Inc. v. Lake Wash. Sch. Dist., No. 56910-4-1 (Ohio Ct. App. Sept. 5, 2006).

[110] See infra Part III.F.

[111] Jean Boylan, The Total Cost Method: A Creative Approach to Calculating Damages in Complex Construction Cases, 25 Whittier L. Rev. 769, 770 (2004).

[112] Id.

[113] Id. (citing Bernhard Aaen, The Total Cost Method of Calculating Damages in Construction Cases, 22 P. L.J. 1185, 1186 (1991)); Anne E. Gorham, The Total Cost Method of Calculating Damages, Construction Briefings, No. 97-5 (Federal Publications 1997).

[114] Long, supra note 91, § 5.2 (discussing the various standards enacted by many courts in evaluating whether to permit the use of the total cost method). See Chicago Coll. of Osteopathic Med. v. George A. Fuller Co., 719 F.2d 1335 (7th Cir. 1983); John Harkins Co., Inc. v. Sch. Dist. of Philadelphia, 460 A.2d 260 (Pa. Super. 1983).

[115] Dugan & Meyers, No. 2001-7084 (Ohio Ct. Cl. June 27, 2003). The Court of Claims opinion provides the factual background for this section.

[116] During that first year, in an effort to save money, ODAS assigned its responsibilities under the contract to OSU. OSU did not make any project personnel changes following the assignment. Id. at 4–5.

[117] The RFI process went as follows: The contractors would submit RFIs as needed. RFIs that did not require a change to the contract were returned to the issuing contractor with the response written directly on them. ASIs were issued for changes to the plans or specifications that did not require a change to the contract time or price. FWOs were issued for changes that did require adjustment to the contract time or price, and were followed by written change orders. A contractor could not proceed with changed work until an ASI or FWO authorizing the change was issued. The architect had three days after receipt to respond to RFIs. Id. at 6.

[118] D&M argued on appeal that it did not request an extension of time as required by the contract because it felt such a request would have been useless in light of the continual demands for completion according to the contract dates. Dugan & Meyers, 834 N.E.2d 1 (Ohio Ct. App. 2005).

[119] Dugan & Meyers, No. 2001-7084 at 8.

[120] OSU assessed Liquidated damages in smaller amounts against the other contractors. Id. at 9.

[121] Id. at 10.

[122] Id. at 11.

[123] Id. at 12.

[124] Id. at 13.

[125] Id. The report contained the following dialogue with D&M’s project executive and addressed the unexpected and abnormal character of the changes:

Q. Okay. Have you had occasion in your experience to have that kind of effect on other projects that you just described?

A. Well, certainly every project’s going to have something of this nature, but this project, by far, had more than could ever be anticipated at bid time or even early in the project.

Q. More than you’ve ever seen in your experience?

A. I – I’d have to say as far as change documents – not – not scope increases, not where an owner wants to paint a room a different color, wants to make a little bigger addition to the building, I mean, those things happen, but as far as actual document changes, I’ve never seen it like this. (emphasis added in referee’s report).

[126] Id. at 14. “There were just a great deal of changes. I mean, there were a large number of changes that we made at Fisher College that normally we wouldn’t have to deal with, that were dealt with on other projects.” [sic]. Additionally, an expert, Mr. Reed, characterized the numbers of changes as “excessive.” Id. at 18.

[127] Dugan & Meyers’ scheduler and project engineer testified as follows:

Every time you end up with a delay [due to an RFI] in an area, then you have to decide on exactly how you’re going to maintain a schedule for that area. So an area gets delayed and then it drags out, and then when you go to reflect that in the schedule, you know, you’re – it’s almost like you’ve got contractors that are in the area, but they’re – they’re only working in part areas instead of full areas, and then they’re mobilizing other areas. So it – the more you try to schedule and schedule and reschedule, then the more difficult it gets.

Also, one of the subcontractors testified concerning the working conditions and the change process as follows:

We were in there with drywallers, painters, every particular – every type of finish trade you can imagine were stacked up on top of each other, and every – all the materials for each one of those trades were crammed in the building and everyone was trying to get done, you know – doing six months of work in two months.

[128] Id. at 19.

[129] Id. at 20.

[130] Id. at 20-21.

[131] Id. at 26. The referee applied the following rule:

“… [w]here an owner and a contractor are each responsible for a certain amount of unreasonable delay in completing the work, the owner is barred from assessing the contractor with liquidated damages for whatever delay might have occurred in the completion of the work.”

Lee Turzillo Contracting Co. v. Frank Messer & Sons, Inc., 261 N.E.2d 675 (Ohio Ct. App. 1969). This holding indicates (at least at the time) that Ohio law followed a contributory fault analysis when allocating responsibility between parties with shared culpability.

[132] Id. at 28.

[133] Additionally, D & M might have asserted a claim against the design team directly under an exception to the economic loss rule recognized in Corporex Dev. & Constr. Mgmt. v. Shook, Inc., 835 N.E.2d 701 (Ohio 2005).

[134] David J. Tierney, Jr., Inc., 88-2 B.C.A. P20,806 (1988).

[135] Dugan & Meyers, No. 2001-7084, 29–30 (Ohio Ct. Cl., June 27, 2003) (quoting Tierney, 88-2 B.C.A. (CCH) P20,806 at 206-207).

[136] Id. at 31 ( citing State ex rel. Tubbs Jones v. Suster, 701 N.E.2d 1002 (Ohio 1998)).

[137] Id. at 33.

[138] Id. at 35 (emphasis added). Subsequent to the Dugan & Meyers’ contract, the Ohio legislature mandated that no-damage-for-delay clauses are void as against public policy. See Ohio Rev. Code Ann. 4113.62(C)(1), effective September 30, 1998. The statute does not apply to contracts entered before its effective date.

[139] Id. at 37.

[140] Id. at 66.

[141] Id. (citing Conti Corp. v. Ohio Dept. of Admin. Svcs. 629 N.E.2d 1073, 1077 (Ohio Ct. App. 1993).

[142] Southwest Marine, Inc. 95-1 B.C.A. (CCH) P27,601 at 42 (A.S.B.C.A. 1995).

[143] Dugan & Meyers, No. 2001-7084 at 67.

[144] Id.

[145] Id.

[146] Id. (citing City of Gahanna v. Eastgate Props., Inc., 521 N.E.2d 814 (Ohio 1988)).

[147] David J. Tierney, Jr., Inc., 88-2 B.C.A. P20,806 (1988).

[148] Dugan & Meyers, No. 2001-7084, at 10.

[149] Dugan & Meyers, No. 2001-7084, at 12.

[150] Appeal of Freeman-Darling, Inc., 89-2 B.C.A. (CCH) P21, 882; 1989 GSBCA LEXIS 191.

[151] Dugan & Meyers. No. 2001-7084 at 18.

[152] Dugan & Meyers, 834 N.E.2d 1, 9 (Ohio Ct. App. 2005).

[153] Dugan & Meyers, No. 2001-7084, at 13.

[154] Id. at 33–34.

[155] Id. at 36 (citing Carrabine Constr. Co. v. Chrysler Realty Corp., 495 N.E.2d 952 (Ohio 1986)).

[156] Id. at 66.

[157] Dugan & Meyers Constr. Co. v. State of Ohio Dept. of Admin. Servs., 834 N.E.2d 1 (Ohio Ct. App. 2005).

[158] Id. at 499.

[159] Id.

[160] Dissenting judges in both cases voted to uphold the Court of Claims’ judgment. Dugan & Meyers, 834 N.E.2d at14 (Ohio App. 2005); Dugan & Meyers, 864 N.E.2d 68, 76-79 (Ohio 2007).

[161] Dugan & Meyers, 834 N.E.2d at 9.

[162] Id. The court held: “Spearin does not stand for the proposition that owners, by virtue of having furnished the plans and specifications for the job, will indemnify and hold contractors harmless for all delays occasioned by agreed changes in the work necessitated by forces not within the complete control of the contractor.”

[163] Id.

[164] Id.

[165] Dugan & Meyers, 864 N.E.2d 68 (Ohio 2007).

[166] Id. at 73.

[167] Id.

[168] See Ohio Rev. Code Ann. 4113.62(C)(1), effective September 30, 1998.

[169] Dugan & Meyers, 864 N.E.2d at 73-75.

[170] Id. at 75.

[171] Id. at 76.

[172] See Presnell Const. Managers, Inc. v. EH Const., LLC, 134 S.W.3d 575 (Ky. 2004).

[173] AIA A201 – 2007, Section 3.2.2.

[174] Id.

[175] AIA A201 – 2007, Section 8.3.2 (referencing Article 15).

[176] Philip L. Brunner and Patrick J. O’Connor, Jr., 1 Construction Law, § 4.13 (West 2002).

[177] Atlantic Dry Dock Corporation v. U.S., 773 F. Supp. 335, 340 n. 1 (M.D. Fl. 1991) (opining that cumulative and cardinal change claims cumulative in nature in that both depend upon cumulative effect of all of the modifications taken together). See generally, Brunner and O’Connor, supra note 176, § 4.14.

[178] L. K. Comstock & Co. v. Beacon Constr. Co., 932 F. Supp. 906 (E.D. Ky. 1993) (claims arose from 504 RFIs and 450 major change orders).

[179] Id. at 939.

[180] Id. at 940 (citing Edward R. Marden Corp. v. U.S., 442 F.2d 364, 369 (Ct. Cl. 1971)).

[181] Id. at 942 (citing In re Boston Shipyard, 886 F.2d 451 (1st Cir. 1989)).

[182] Wunderlick Contracting Co. v. U.S., 351 F.2d 956 (Ct. Cl. 1971); Edward R. Marden Corporation v. U.S., 442 F.2d 364 (Ct. Cl. 1971).

[183] Philip L. Bruner, Patrick J. O’Connor, Jr. & James J. Hartmett, IV, The Surety’s Analysis of Investigative Results: “To Perform Or Not To Perform – That Is The Question, Bond Default Manual 98 (Duncan L. Close ed., American Bar Association 2d ed. 1995).

[184] Id.

[185] See Leland E. Backus, supra note 6 at 12. See also Atlantic Dry Dock Corp. v. U.S., supra note 177.

[186] L. K. Comstock & Co. v. Beacon Constr. Co., 932 F. Supp. 906 (E.D. Ky. 1993) (citing Fuller Co. v. Brown Minneapolis Tank & Fabricating Co., 678 F. Supp. 506 (E.D. Pa. 1987)).

[187] Edward R. Marden Corporation v. U.S., 442 F.2d 364 (Ct. Cl. 1971).

[188] Amelco Elec. v. City of Thousand Oaks, 38 P.3d 1120 (Cal. 2002).

[189] Aaron P. Silberman, Abandonment and Cardinal Change Claims on Projects From Hell, 25 Construction Lawyer 18, 19 (Fall 2005).

[190] Pellerin Constr. Inc. v. Witco Corp. and Fluor Enterprises, Inc., 169 F. Supp. 2d 568 (E.D. La. 2001).

[191] J.A. Jones Constr. Co. v. Lehrer McGovern Bovis, Inc., 89 P.3d 1009 (Nev. 2004).

[192]Backus, supra note 6 at 17.

[193] Michael C. Loulakis, et al., Construction Management § 11.20 (Wiley Law Publications 1995).

[194] Werner Sabo, Legal Guide To AIA Documents, § 2.30 (Aspen 4th ed. 1998). Mr. Sabo notes that too many RFIs ask trivial questions and suggests that in such instances the Contractor should be charged for Architect’s time spent in responding.

[195] John Kenneth Galbraith, The Affluent Society, pp. 6–9 (Houghton Mifflin Co., 1998).

[196] James G. Zack, Jr., Requests for Information – Use, Abuse and Control, 41 Cost Engineering, 9, 35 (Sept. 1999).

[197] The Architects Handbook of Professional Practice, § 3.92 (David Haviland ed., American Institute of Architects Press, 1994).

[198] Len Holm, Jr., Construction Project Management Get-To’s, 2002 AACE International Transactions, PM. 20.2 (2002).

[199] James G. Zack, Jr., Practical Dispute Management, 37 Cost Engineering 12 at 55 (Dec. 1995).

[200] Robert Cassidy, What Owners Want From CMs, Building Design & Construction, at 3 (October 2004).

[201] Zack, supra note 194 at 36.

[202] Construction Business Handbook § 2.05[G] (Robert F. Cushman ed., 2004).

[203] United States v. Spearin, 248 U.S. 132, 136 (1918).

[204] See, e.g., Federal Mogul Corp. v. Universal Constr. Co., 376 So. 2d 716 (Ala. Civ. App. 1979); State v. Transamerica Premier Ins. Co., 856 P.2d 766 (Alaska 1993); Chaney Bldg. Co. v. City of Tucson, 716 P.2d 28 (1986); Tonkin Constr. Co. v. County of Humboldt, 188 Cal. App.3d 828 (1987); E. Tunneling Corp. v. Southgate Sanitation Dist., 487 F. Supp. 109 (D.Colo. 1980); Gilbane Bldg. Co. v. Stamford Towers Ltd. P’ship, No. CV910118788S, 1996 WL 680077 (Conn. Super. Ct. 1996); Ridley Investment Co. v. Croll, 192 A.2d 925 (Del. 1963); Dist. of Columbia v. Savoy Constr. Co., 515 A.2d 698, 702 (D.C. 1986); Phillip & Jordan, Inc. v. State, 602 So. 2d 1310 (Fla. Dist. Ct. App. 1992); State Hwy. Dept. v. Hewitt Contracting Co.,146 S.E. 2d 632 (1966); Bates & Rogers Constr. Corp. v. North Shore Sanitary Dist., 414 N.E.2d 1274 (Ill. 1980); Allied Structural Steel Co. v. State, 265 N.E.2d 49 (Ind. App. 1971); Midwest Dredging Co. v. McAnich Corp., 424 N.W.2d 216 (Iowa 1988); Kansas Turnpike Auth. v. Abramson, 275 F.2d 711, 713 (10th Cir. 1960); McGovney & McKee, Inc. v. City of Berea, Ky., 448 F. Supp. 1049, 1056 (E.D. Ky. 1978); Keller Construction Corporation v. George W. McCoy, 119 So.2d 450 (La. 1960); Yonkers Contracting Co. v. Maine Turnpike Auth., 208 F. Supp. 517 (D. Me. 1962); Dewey Jordan, Inc. v. Maryland National-Capital Park and Planning Comm’n, 265 A.2d 892 (Md. 1970); Alpert v. Commonwealth, 258 N.E.2d 755, 763 (1970); Valentini v. Adrian, 79 N.W.2d 885 (1956); Zontelli Sons, Inc. v. City of Nashwauk, 373 N.W.2d 744 (Minn. 1985); Havard v. Bd. of Supervisors, Humphrey County, 70 So. 2d 875 (1954); Sandy Hites Co. v. State Highway Comm’n, 149 S.W.2d 828, 833 (Mo. 1941); Sornsin Construction Co. v. State, 590 P.2d 125 (Mont. 1978); Lindsay Mfg. Co. v. Universal Surety Co., 519 N.W.2d 530, 539-40 (Neb. 1994); Home Furniture, Inc. v. Brunzell Constr. Co., 440 P.2d 393 (Nev. 1968); R. Zoppo Co., Inc. v. City of Manchester, 453 A.3d 1311, 1313 (N.H. 1982); Sasso Contracting Co., Inc. v. N.J. State, 414 A.2d 603 (N.J. App. Div. 1980); W. States Mechanical v. Sandia, 798 P.2d 1062 (N.M. Ct. App. 1990); Slattery Contracting Co. v. State, 288 N.Y.S. 2d 126 (Ct. Cl. 1968); Gilbert Engineering Co. v. City of Asheville, 328 S.E.2d 849 (N.C. Ct. App. 1985); Umpleby v. State, 347 N.W. 2d 156 (N.D. 1984); Oklahoma City v. Derr, 109 Okla. 192 (1925); A.H. Barbour & Son v. State Hwy. Comm., 433 P.2d 817 (Org. 1976), rev. den., 277 Or. 1 (1977); Commonwealth Dept. of Transp. v. W.P. Dickerson & Son, Inc., 400 A.2d 930, 932 (Pa. Commw. Ct. 1979); Rhode Island Turnpike and Bridge Auth. v. Bethlehem Steel Corp., 379 A.2d 344 (R.I. 1977); APAC Carolina, Inc. v. Town of Allendale, 868 F. Supp. 815 (D.S.C. 1993), aff’d 41 F.3d 157 (4th Cir. 1994); Mooney’s Inc. v. South Dakota Dep’t of Transp., 482 N.W.2d 43 (S.D. 1994); R.L. Tolley Co. v. Marr, 12 Tenn. App. 505 (1931); Jack B. Parson Constr. Co. v. Utah Dept. of Transp., 725 P.2d 614 (Utah 1986); Alexander v. Gerald E. Morrissey, Inc., 399 A.2d 503, 506 (Vt. 1979); Worley Bros. Co. v. Marus Marble & Tile Co., 161 S.E.2d 796 (Va. 1968); Prier v. Refrigeration Engr. Co., 442 P.2d 621 (Wash. 1968); Bailey v. S. J. Groves & Sons Co., 230 S.E.3d 267 (W. Va. 1976); Metro Sewerage Comm. v. R.W. Const., Inc., 255 N.W.2d 293 (Wis. 1977); Reiman Const. Co. v. Jerry Hiller Co., 709 P.2d 1271 (Wyo. 1985).

[205] See, e.g. Southland Enterprises, Inc. v. United States, 24 Cl. Ct. 596 (Ct. Cl. 1991); Chaney & James Constr. Co. v. United States, 421 F.2d 728, 190 Ct. Cl. 699 (Ct. Cl. 1970); Anthony P. Miller, Inc. v. U.S., 422 F.2d 1344, 191 Ct. Cl. 292 (Ct. Cl. 1970); John McShain, Inc. v. U.S., 412 F.2d 1281, 188 Ct. Cl. 830 (Ct. Cl. 1969); Luria Bros. & Co. v. U.S., 369 F.2d 701, 177 Ct. Cl. 676 (Ct. Cl. 1966); J.D. Hedin Const. Co. v. U.S., 347 F.2d 235, 171 Ct. Cl. 70 (Ct. Cl. 1965), overruled on other grounds sub. nom; Laburnum Const. Corp. v. U.S., 325 F.2d 451, 163 Ct. Cl. 339 (Ct. Cl. 1963); Corner Constr. Co., ASBCA 20156, 75-1 BCA 11,326; R.C. Hedreen Co., ASBCA 20599, 77-1 BCA 12,328; Monmouth Fund, Inc., ASBCA 20158, 77-1 BCA 12,305.

[206] Dugan & Meyers, 864 N.E.2d at 73.

[207] Id. at 73.

[208] Dugan & Meyers Constr., 864 N.E.2d 68 (Ohio 2007) (citing S&M Contractors, Inc. v. Columbus, 434 N.E.2d 1349 (Ohio 1982)).

^{^[209]} See, e.g., Heman Const. Co. v. Mason, 212 P. 1089, 1092–93 (Kan. 1923);