P.J Dick V. Dept of Affairs
Facts and Procedural History
Overview: P.J Dick (PJD) went into business with the Department of Veterans Affairs (DVA). In particular, P.J Dick entered into a fixed-cost contract with this department to build a Department of Veterans Affairs Medical Center in Ann Arbor, Michigan. According to the Contract (PJD) was to ensure it finishes the work by January 12, 1998. At the time of the contract, the government gave more than four-hundred orders changing the initial orders; this led to a delay to various aspects of the project. These adjustments augmented the price of the contract by more than 5% causing the department of Veteran affairs to grant one-hundred and seven days of extra contract performance time (Mastin et al., 2019). By allowing the extra days to finish the contract, PJD was acting to reserve its right to seek extra effect and suspension expenses. In this regard, PJD finished the contract on Sept 29, 1998, two-hundred and sixty days after the initial contract finish date and one-hundred and fifty-three days after the modified date. As a consequence of the delays, PJD filed an allegation stating that the company was on standby and thus had the right to be compensated for unabsorbed overhead charges (Thomas, Kelleher,& Smith, 2009).
Claims for Unabsorbed Overheads Damages
My client, PJD entered into a contract with DVA for the construction of Department of Veterans Affairs Medical Center in Ann Arbor, Michigan. During the performance of the contract, the VA gave more than 400 change orders, which led to a rise in the price of the contract by over 5% and extension times totaled up to 107 days. My client and the DVA agreed to a condition that, to the degree it (PJD) could prove delay entitlement under the suspension of work clause, my client’s recovery for home office and field overhead would be computed at stated day to day rates, without the requirement for future proof of costs or damages. For this reason, PJD seeks to recover unabsorbed field and home office overhead for delays to the performance of the contract that the government has caused based on the Eichleay formula. And as such, we will prove that:
• The government caused the delay to the performance of the contract
• The initial performance time of the contract was prolonged and,
• PJD was needed to remain on standby during the delay
We strongly believe that PJD was automatically put on standby by the virtue of the DVA caused delay of uncertain duration that extended the contract’s performance and at the end of which PJD was required to instantly recommence work. By relying on the standby rule, we, therefore, are going to prove the following:
• The delay caused by the government was considerable and was of an indefinite period
• During the delay, PJD was required to be ready to recommence work on the contract instantly and at full speed (Bramble, & Callahan, 2019)
• Effective suspension of much of the work of the contract
We also seek entitlement to the claim under the SOW clause. Based on this clause, we will try to prove that:
• There was a delay of unreasonable period extending the completion time of the contract
• The delay was proximately cased by the DVA’s action or inaction
• The delay led to some injury and,
• There was no delay parallel with the suspension that is PJD’s fault
It is my client’s claim that the SOW took place in the period between 30th October, 1995 and 21st December, 1995, when the DVA gave the FCO-1T giving directions that the cut-off wall be substituted with spread footings. We, therefore, request a final decision on a certified claim of $362,384 for prolonged field and home office overhead.
Quantum
My client’s (PJD) monetary SOW allegations, as described in the complaints, sum up to an estimated 6.3 million dollars. Nonetheless, this amount originates from the number of days of delays to which my client claims entitlement every individual delaying event. PJD further accepts that there are concurrencies in the delays alleged for these events and that the net SOW allegation will be less compared to the total amounts in its complaints. Utilizing the parties’ specified amounts for home office and field overhead, for the number of days the contract was delayed, I accept here, the aggregate of my client, real SOW monetary claim totals up to $2,859,658. In establishing any amounts that are owed to my client, the numbers will be rounded off to the nearest dollar.
Conclusion
PJD has diligently fulfilled its part of the contract it entered into with DVA by completing the construction of the Medical Center. However, there were delays in the completion time due to the many change orders that the DVA made. For this reason, PJD demanded to be awarded unabsorbed overheads damages. Therefore, it is mandatory that the court directs more investigations on the delay issues needed to determine the quantum, and in accordance with the stipulations of the two parties, compute the amount of home office overhead entitled to PJD for delays caused by the government compensable under the SOW clause and thereby, award this amount to my client.
References
Bramble, B. B., & Callahan, M. T. (2019). Construction Delay Claims. Aspen Publishers.
Mastin, J. M., Nelson, E. L., Robey, R. G., & Smith, C. (2019). Smith, Currie & Hancock’s Common Sense Construction Law: A Practical Guide for the Construction Professional. John Wiley & Sons.
Thomas J., Kelleher, J., & Smith, C. (2009). Smith, Currie & Hancock’s Common Sense Construction Law: A Practical Guide for the Construction Professional. John Wiley & Sons.
