Kevin Long Authors State Bar of Wisconsin Article on Total Cost Method in Construction
Kevin Long, Quarles & Brady Milwaukee office co-managing partner and partner in the Litigation & Dispute Resolution Practice Group, wrote an article for the State Bar of Wisconsin on the Total Cost Method and how it can be used in complex construction disputes. He explains that the method compares the expected cost of a project to the actual cost and may allow contractors to recover damages when traditional pricing rules are not practical.
An excerpt:
A key to determining the applicability of the Total Cost Method or modified Total Cost Method, is whether either: (a) the contract provides for it (unlikely); or (b) there has been such a significant breach of the contract or change in circumstances that either an abandonment of the contract or a cardinal change is found to have occurred.
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A measure of damages set forth in the verbiage of the changes clause may differ from the measure of damages awarded based on a contractual breach (either for failing to pay amounts due or failing to agree to requested change orders). Since the early 20th century virtually all construction contracts contain provisions allowing the owner the flexibility to unilaterally make or approve additive or deductive changes in the work and adjustments in contract time or price.