A contractor discovers unexpected rock conditions requiring additional excavation costs of $45,000. The work was completed 15 days ago, and the contractor just realized the full cost impact today. Under typical contract terms, what should the contractor do first?
Correct Answer
C) Submit a change order request immediately
The contractor should submit a change order request immediately upon recognizing the cost impact. Most contracts have strict time limits for submitting change requests, and delays can result in waiver of the claim.
Why This Is the Correct Answer
Under standard contract terms (AIA, ConsensusDocs, FAR), a contractor must submit a change order request promptly upon recognizing a compensable event. Most contracts impose strict notice and submission deadlines — often 7 to 21 days from the time the contractor knew or should have known of the cost impact. Submitting immediately, even if potentially late, is the first and most critical step to preserve the right to compensation.
Why the Other Options Are Wrong
Option A: File a claim with the surety company
Filing a claim with the surety company is not the appropriate first step for a differing site conditions issue. The surety handles bond claims related to contractor default, not cost overruns from changed conditions. This is a contract administration matter between the contractor and owner.
Option B: Include the costs in the final payment application
Including the costs in the final payment application without a supporting change order is improper and will likely be rejected. Payment applications cover contract-value work; additional costs from changed conditions require a formal change order or claim — not a line item in a payment app.
Option D: Wait until the next progress meeting to discuss
Waiting until the next progress meeting risks missing the contract's notice deadline entirely. Many contracts contain 'time is of the essence' provisions for change order submissions, and a missed deadline can permanently waive the right to additional compensation.
Memory Technique
Change conditions = Change order NOW. Every day of delay risks waiving your rights. Think of the deadline as a train leaving the station — submit the change order request before the train leaves.
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