Preserving Cumulative Impact Claims on Construction Projects

Trevor H. Lane Edmonds Lawyer

Commercial and public works construction projects are notorious for delays and change orders.  These projects often occur over several months and years—especially for general contractors and vital subcontractors (e.g., steel erectors).  What may start as a few, reasonable changes and delays near the beginning of a project can often snowball and have ‘ripple effect’ near the end of the project, leaving contractors with incurred costs that are significantly greater than the sum of the individual changes and delay events.  This ripple effect is a well-observed phenomenon in the commercial and public works construction industry and often referred to as “cumulative impact.”  This article will summarize how claims for cumulative impact in the construction industry are considered under Washington law and why it may be necessary to preserve them before they even exist.

Cumulative impact can be imagined as spontaneous effect on unchanged work caused by change orders and delay events that do not have a relationship in time or place to the unchanged work.  Imagine a construction project as a pond, and each change or delay event as an individual ripple on the pond’s surface.  A single ripple will simply make its way to the pond’s edge in a way that can be reasonably observed and measured.  However, numerous ripples may begin to overlap, and, with sufficient overlapping, spontaneously erupt into a turbulence (or additional cost) independent from the individual ripples themselves (or the costs allocable to each individual change).  For example, numerous change and delays often, over the life of a project, decrease overall labor productivity—negatively impacting the unchanged work. 

Because cumulative impact is a synergistic disruption created by many individual changes unrelated at the time the individual changes were encountered, a claim for cumulative impact is often not observable or quantifiable until the conclusion of a project with expert consultation.  This inherent and defining characteristic of cumulative impact can present a serious problem for contractors because contractors typically sign broad waivers necessary to receive monthly payments or to execute change orders—in doing so, contractors may be waiving their future right to claim additional costs attributed to cumulative impact before they realize they have a cumulative impact

In a Washington Supreme Court opinion Lake Hills Invs., LLC v. Rushforth Constr. Co.[1], the Washington Supreme Court cited to Bruner and O’Connor Construction Law (widely recognized to be the authoritative treatise on American construction law) throughout the decision. Bruner & O’Connor state the following regarding cumulative impact claims:

Where there are numerous changes made during construction it is possible that the changed work can affect the sequence and timing of the unchanged portions of the work. These costs are sometimes referred to as impact or cumulative impact costs. Because change orders often contain broad release or waiver language, owners frequently adopt a position that by executing the change order the contractor has waived or released any right to impact costs. Contractors, on the other hand, argue that the change orders should not be construed to cover these costs, as they were unknown at the time the change order was executed . . . . It can be difficult for a contractor, at least with respect to the earlier change orders, to realize or appreciate the impact costs associated with the changed work.[2]

While cumulative impact is a recognized phenomenon, Washington Courts have rendered unfavorable decisions for contractors bringing a cumulative impact claim after signing change orders with broad waiver language.  Therefore, contractors working commercial and public works projects should carefully review the waiver language included in payment submissions and change orders and consider whether the changes and delays they are experiencing in the moment could have the potential to collide with other/future changes, creating cumulative impact costs down the road.  If the possibility exists, preserving the right to bring a cumulative impact claim early may be the contractor’s best—and only—hope.

To learn more about Washington’s Construction Laws, please contact Beresford Booth at info@beresfordlaw.com or by phone at (425) 776-4100

BERESFORD BOOTH has made this content available to the general public for informational purposes only. The information on this site is not intended to convey legal opinions or legal advice.

[1] 198 Wash. 2d 209, 494 P.3d 410 (2021), as amended (Sept. 14, 2021). 
[2] § 7:245. Waiver of impact costs, 2A Bruner & O’Connor Construction Law § 7:245. (citations omitted).