COVID-19 has increased the costs of construction at every level of the industry. Supply chain delays, worker shortages, increased PPE requirements, project suspension, and the impacts of demobilization and remobilization have all conspired to create additional expense that was unanticipated at the contracting stage. Although a force majeure clause may create schedule relief or an avenue for avoiding liquidated damages, many contracts lack a corresponding cost recovery mechanism. As a result, some contractors are seeking recovery under theories of cardinal change or constructive change. However, a recent decision by the Civilian Board of Contract Appeals demonstrates how difficult it may be to successfully assert such claims and that recovery, if any, remains largely a function of contractual risk allocation.
Read more about the difference between a cardinal and constructive change and how it may affect your projects.