Dealing with Discrepencies Between a Contracted Price and the Final Payment Application
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Welcome to the On Site channel’s Construction Administration Column. What should you do when there is a discrepancy between the amount on a payment application and the amount that was contracted? Here David A. Todd, P.E., CPESC, gives his opinion.
Columnist David A. Todd, P.E., CPESC, has 37 years of experience in the architecture, engineering, and construction (AEC) industry and has performed much construction administration during that time. He will answer questions from our readers or from his own practice and will provide answers based on his understanding of the construction process and administration of the construction contract. The focus will be on the customary duties of the owner, contractor, and design professional as typically described in the contract documents.
On our small street reconstruction/widening project, the contractor submitted a pay application that included three times the quantity of earthwork that the contract allows. Although this is a unit price contract, the specifications said earthwork would be paid based on plan quantity, unless either the contractor or owner submitted evidence that the earthwork quantity was incorrect. The contractor has presented no evidence. I feel like this part of his pay application should be denied.
You may have one of several things going on here. First, the contractor's claim could be legitimate. The design engineer's calculation of the earthwork quantity might be wrong. Second, the contractor might not understand what is included in "earthwork." Since you say this is a road widening project, I assume the work included, outside the existing roadway, undercutting from the surface by removal of topsoil and excess or unsuitable earth. Perhaps the contractor is thinking the topsoil removal is part of earthwork when it is actually part of another pay item.
Or, third, perhaps the contractor has the wrong idea of how the earthwork quantity was to be calculated. Maybe he's giving you truck yards, and the quantity was to be in place yards before removal. However, this discrepancy shouldn't account for a difference of three times the quantity, nor should the topsoil. Last, I suppose it's possible that the contractor has inflated the earthwork quantity, hoping you won't notice, or is trying to make up for losing money on another item.
Let's assume that the first situation is the case, and the earthwork quantity in the contract was simply wrong. Maybe the survey was wrong. Maybe the assumed depth of topsoil was wrong. Maybe the calculation of the quantity was wrong. If that's the case, then the contractor really did the amount of work he has stated: three times the plan quantity.
However, how can that be proven once the work is done? The only way to prove it would be with additional survey shots after the topsoil was removed and doing another calculation. I'm sure that the General Conditions of the construction contract say something about these sorts of changes being brought to the design professional's attention before the work is done. The contractor didn't do that in this case, and I'm afraid the claim for the extra earthwork will have to be denied, even if the work was done.
So what should have the contractor have done to avoid this situation? After all, a unit price contract is supposed to be fair to the contractor so that he gets paid for the actual work done. Payment based on plan quantity is sort of a lazy way out, to avoid measuring in the field. It puts extra risk on the contractor.
In this case, he should have been tracking earthwork as the job went along. Somewhere between 10% and 25% complete, he should have noticed that the plan quantity was incorrect. That would have given plenty of time to take on-site measurements and confirm the actual amount of earthwork to be completed. The contractor would have had his full amount.
The best you can do is check the original calculations of the earthwork quantity and look for a mistake. If there isn't one, look for any evidence at the site to suggest the extra work was the amount claimed. If you can find such evidence, pay the amount, or as much of it as you can justify. If you can't find any, deny the amount. Hopefully that contractor will never have this happen again.
David A. Todd
A senior engineer and corporate trainer of engineering for CEI Engineering Associates, Inc. David has 36 years of experience as a consulting civil engineer. His experience includes water, wastewater, stormwater, roads, and solid waste infrastructure. For much of the last 20 years he has been involved with stormwater issues. Specifications and construction administration have been a specialty of his within civil consulting engineering . He has BS and MS degrees in Civil Engineering, is a registered engineer in four states, and a Certified Professional in Erosion and Sediment Control.
