Cumulative Impact Claims
In construction, not every problem hits like a sledgehammer. Some show up like a slow drip. One change order isn’t usually a big deal. A delay here and there is often manageable. But when the jobsite becomes death by a thousand change orders, you may be looking at a cumulative impact claim.
What is a Cumulative Impact Claim?
It’s the claim a contractor makes when many small changes, taken together, create a much larger disruption than expected. Think of it like this: the contractor priced and planned the job based on a certain rhythm and workflow. But after a stack of changes, delays, and disruptions—each of which seemed minor on its own—the rhythm is gone, the crew is out of sequence, productivity tanks, and overhead costs go up. That “death by a thousand cuts” becomes a real financial wound.
How Do They Arise?
They often show up late in on a project or after completion. A contractor may have been processing change orders or delay notices as they arose. But toward the end of the project, they notice the constant changes triggered ripple effects—stacked trades, out-of-sequence work, rework, idle time—that the individual change orders didn’t fully compensate for. The contractor then raises a cumulative impact claim: they want to be compensated for the cumulative impact of all of the constant changes.
How Do Contracts Deal With This?
Many owners and contractors try to address cumulative impacts before the first shovel hits the dirt. Contracts may include:
Waiver Language: Some contracts say that by accepting a change order, the contractor waives any other claims related to that change order.
Notice Requirements: Many contracts require prompt written notice of any delay or impact—or the claim is waived.
Liquidated Damages: A recent article by S. Scott Gaille and Tanner Harris, published in the Energy Law Journal, explores the idea of using liquidated damages clauses specifically tailored to address the loss of productivity. Traditionally, liquidated damages in construction contracts are used to predefine the compensation owed to owners for delays in project completion. However, Gaille and Harris suggest extending this concept to cover productivity losses by establishing a predetermined amount payable in the event of certain thresholds of change orders (e.g., by number and/or costs of changes). This strategy can help owners and contractors avoid complex and contentions calculations after-the-fact.
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If you’re in the middle of a project that’s starting to feel heavier than it should, don’t wait for the final punch list to start asking questions. And if you need help spotting, managing, or averting a potential cumulative impact claim, let’s grab coffee and talk strategy.
