Public Works Change Orders

It is very important to not only comply with all of the terms and conditions of a contract, but also any statutory laws in place that may govern the project as well. This is particularly true on public works projects.

In the case of G. Voskanian Construction,inc. v. Alhambra Unified School District, the issue of change orders is once again at question. This particular project involved two separate contracts. The first contract was for improvements on a relocation project and the second contract was for a fire alarm contract on the same jobsite. Voskanian was the general contractor on both projects. Time was of the essence on these contracts because the District wanted the projects done before school resumed in the fall.

Both contracts indicated that modifications or changes could only be made if they were agreed to in writing between the contractor and the Assistant Superintendent or her designee. Because of the rush that the District was in to get the projects completed, the Assistant Superintended indicated that Voskanian should deal with the construction manager to finalize change orders. Rather than wait for the District to approve all of the change orders and hold up the job, the District would "bunch" the change orders together and process them at a later time.

Voskanian discovered that the plans and specifications for the relocation project contained errors which required changes as well as a second contract to cover the work for the fire alarm system. New plans were prepared for the fire alarm system portion of the project and bids were received based on the plans. Voskanian was the lowest bidder and entered into the second contract with the District.

After Voskanian was awarded the bid for the fire alarm system, he realized that the plans were incorrect. The project actually needed more alarm devices, conduit and wiring than the plans had shown. Voskanian submitted change orders for both of the contracts and proceeded to do the work based on oral assent from the construction manager.

The District refused to pay Voskanian and he then filed a claim with the District per Government Code section 910 et seq. The District rejected the claim and litigation ensued. The trial court found in favor of Voskanian. The District appealed and the Appellate Court affirmed the trial court's decision.

The Appellate Court indicated that although it was accurate that change orders for extra work must be in writing, the District did eventually approve the change orders on the first contract long after the work was completed so that was no longer at issue. The change orders were approved and therefore the District needed to pay Voskanian for those change orders in the first contract.

As to the second contract, since Voskanian's initial bid was based on incorrect plans and specifications as supplied by the District, the Appellate Court found that Voskanian was entitled to payment for the extra work. This decision was based on many prior court decisions wherein a rule regarding public works contracts have been set. The rule is that if a public works contractor is mislead by incorrect plans and specifications that are issued by the public authority then that contractor is entitled to recover for the extra work and/or expenses because of the extra work necessary for the misrepresentation in the plans and specifications.

We had previously written about another case, Greg Opinski Construction, Inc. v. City of Oakdale, wherein Opinski did not follow the contract with respect to change order procedures. Opinski ended up owing $65,000 in liquidated damages because of delays even though he did the work on the change orders (which were not accepted). Voskanian was lucky that the District eventually accepted the change orders on the first contract and had incorrect plans on the second contract or Voskanian could have been in the same boat as Opinski.

We cannot reiterate enough how very important it is for all contractors to completely understand what the contract says, to know the statutory laws that affect projects, and to make sure that all change orders are in writing. In the same situation, you may not be as lucky as Voskanian!

Download a PDF copy of PUBLIC WORKS CHANGE ORDERS