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Are there any articles or links on what contingency covers and what it does not cover ?

California

City Inspector requested for main house panel upgrade (100 amps plus 60 for ADU) as it was not stated in the original contract that we had worked on the ADU. Is this considered as a contingency or an extra change work order ?

1 reply

Mar 11, 2022

Generally speaking, significant changes to the scope of work or materials shouldn't be considered mere contingencies. In fact, if the change is quite significant, it may even rise to the level of a cardinal change that fundamentally changes the agreement. More on that here: Cardinal Change Doctrine | When Excessive Changes Are Requested or Demanded.

With that said, if the overall cost of the change and the additional required work is minimal, then it might not make sense to require the customer to go through a formal change order process. That'd be especially true if it neatly fit into the contingency budget. For further discussion on what should be considered contingency: What is Construction Contingency? | Construction Accounting.

Finally, note that if the change requested was obviously necessary based on the prior scope of work and/or what's required to be up to code - then it might not be reasonable to go back and request additional payment for that, whether it be under contingency or change order.

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