Differing Site Condition, Verbal Additions, and Liquidated Damages
A landscape contractor has a fixed-price contract of $186,000 for a 0.7 ha commercial renovation, with 90 calendar days and liquidated damages of $1,000 per day for late completion. The contract requires written notice within 7 days of a differing site condition and a change order before proceeding with extra work. At day 32, excavation for a retaining wall and irrigation main hits 45 m3 of unexpected rock, roughly 25% more excavation than the bid assumed. The owner also verbally asks for 40 additional irrigated shrubs and 12 bollard lights. Nine days of rain have already delayed paving, and the paving subcontractor is now booked for three weeks. The project manager has photos, daily logs, and the original geotechnical report, which showed no rock. No written notices have been sent. The owner says the additions are minor and wants the crew to keep moving.
1. What contractual actions should the contractor take now for the rock, the owner's additions, and the weather delay? Explain the order and reasoning.
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Send written notice immediately, even though the 7-day clause may have passed; late notice may limit recovery but silence is worse. For the rock, request a joint measurement of the 45 m3, compare it with the geotechnical report and bid assumptions, and price it under the contract's differing-site-condition or unit-price clause. For the 40 shrubs and 12 bollard lights, do not rely on the verbal request: issue a written change order with scope, price, and schedule impact, and get signature before ordering or installing. For the nine rain days, submit a time-extension request with daily logs and weather records. Update the schedule to show the paving subcontractor's three-week booking. Keep photos and daily logs.
2. How should the contractor price and document the rock and added work while protecting the schedule and the relationship?
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Price the rock on measured quantities, not a lump guess: equipment hours, labor, disposal, and any added backfill or concrete. Use unit rates if the contract has them; otherwise use a documented force-account with receipts and payroll records. Separate the rock, the added shrubs, and the lights into distinct change orders so the owner can see cause and effect. Include the schedule impact, especially the paving re-sequence. Have the owner or representative sign the quantity sheet before work proceeds. Avoid bundling disputed work into the next progress payment without written approval. A clear, itemized change order protects the relationship and the claim.
3. What schedule and liquidated-damages risks remain, and how can the contractor mitigate them?
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Liquidated damages remain a risk because the contract is fixed-price and the 90 days are running. The contractor should identify the critical path, show how rock and owner changes affected it, and request a time extension before the completion date. Mitigate by re-sequencing paving, confirming the subcontractor's date in writing, and adding resources only where the cost is recoverable. Do not promise a completion date that assumes an unapproved extension. Keep a daily delay log. If the owner refuses, reserve rights in writing and continue work to avoid a total stop. The key is contemporaneous notice and records, not a claim assembled after the fact.