{"id":902178,"date":"2024-01-25T15:31:45","date_gmt":"2024-01-25T22:31:45","guid":{"rendered":"https:\/\/www.myconstructionexpert.com\/blog\/?p=902178"},"modified":"2024-01-25T15:31:49","modified_gmt":"2024-01-25T22:31:49","slug":"modified-total-cost-method-calculating-construction-damages","status":"publish","type":"post","link":"https:\/\/www.myconstructionexpert.com\/blog\/modified-total-cost-method-calculating-construction-damages\/","title":{"rendered":"The Modified Total Cost Method to Calculating Construction Damages"},"content":{"rendered":"\n<p>John Mark Goodman | <a href=\"https:\/\/www.buildsmartbradley.com\/2024\/01\/the-modified-total-cost-method-to-calculating-construction-damages\/?utm_source=Bradley+Arant+Boult+Cummings+LLP+-+BuildSmart&amp;utm_campaign=c6997b89aa-RSS_EMAIL_CAMPAIGN&amp;utm_medium=email&amp;utm_term=0_b504caf31b-c6997b89aa-78863422\" target=\"_blank\" rel=\"noreferrer noopener nofollow\">BuildSmart<\/a><\/p>\n\n\n\n<p>A Colorado federal court will allow a contractor to prove up more than $250 million in damages using the <a href=\"https:\/\/www.myconstructionexpert.com\/blog\/actual-costs-damages-in-construction-claims\/\">modified total cost method<\/a> (see\u00a0<em><a href=\"https:\/\/www.buildsmartbradley.com\/wp-content\/uploads\/sites\/34\/2024\/01\/039111053486.pdf\" target=\"_blank\" rel=\"noreferrer noopener nofollow\">AECOM Technical Services v. Flatiron AECOM, LLC<\/a><\/em>, Case No. 19-CV-2811, 2024 WL 22640 (D. Co. Jan. 2, 2024)).\u00a0The\u00a0<em>AECOM v. Flatiron<\/em>\u00a0case involves a Colorado DOT\u00a0<a href=\"https:\/\/www.codot.gov\/projects\/archived-project-sites\/C470ExpressLanes\" target=\"_blank\" rel=\"noreferrer noopener\">project<\/a>\u00a0to add express lanes to Highway C-470 just south of Denver. The contractor, Flatiron, agreed to complete the project for $204 million.\u00a0While change orders increased the contract price to $237 million, Flatiron\u2019s expenditures were over $502 million, more than double the contract amount.\u00a0Flatiron sued the designer AECOM to recover $263 million in cost overruns.\u00a0In support of its damage claim, Flatiron plans to present <a href=\"http:\/\/www.adviseandconsult.net\/experts.php\">expert testimony<\/a> that uses the modified total cost method to calculate damages.<\/p>\n\n\n\n<p>As the name implies, the&nbsp;<em>modified<\/em>&nbsp;total cost method is a variant of the total cost method.&nbsp;Under the total cost method, a contractor\u2019s damages are assumed to be the difference between the total costs incurred by the contractor to complete a project and its bid amount.&nbsp;Many courts disfavor the total cost method because it assumes that all cost increases above the bid amount were caused by the defendant.&nbsp;The&nbsp;<em>modified<\/em>&nbsp;total cost method attempts to address this concern by subtracting&nbsp;such things as bid errors, unreasonable costs, and others costs that are not the defendant\u2019s&nbsp;responsibility from the damages indicated by the total cost method, as explained by a leading treatise on construction law:<\/p>\n\n\n\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p>The modified total cost measure, a compromise between the total cost and segregated damage measures, deducts from the contractor\u2019s total cost any losses incurred on segregated work activities for which the contractor, not the owner, was responsible. The modification of the contractor\u2019s total cost claim thus enhances assurance that the necessary \u201csafeguards\u201d of the total cost measure are adhered to and that the contractor has taken into account its own failings in bidding or performing the contract. Use of the modified total cost measure, like the total cost measure itself, requires the contractor to prove that costs incurred in performing the original work and the extra work had become so co-mingled and \u201cinextricably intertwined\u201d that use of the segregated damage measure is impracticable. 6 Bruner &amp; O\u2019Connor Construction Law \u00a7 19:118 (\u201cModified total cost\u201d)<\/p>\n<\/blockquote>\n\n\n\n<p>In\u00a0<em>AECOM v. Flatiron<\/em>, AECOM moved to exclude testimony from Flatiron\u2019s damages expert because the expert allegedly used the total cost method, which AECOM argued is so disfavored by Colorado courts that it must be rejected entirely. The federal district court acknowledged that the total cost method is disfavored by Colorado courts and may someday be rejected, however it refused to exclude Flatiron\u2019s expert because it found that he did not in fact use the total cost method. Rather, he used the\u00a0<em>modified<\/em>\u00a0total cost method, which did not wholesale attribute damages to AECOM but factored in costs that were other parties\u2019 responsibility.\u00a0The court further noted that the modified total cost method had been accepted by several other courts and found that any challenges to the expert\u2019s methodology are best suited to cross-examination during trial.\u00a0A jury trial is set to commence later this month.<\/p>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n\n<p><strong>When one of your cases is in need of a construction expert, estimates, insurance appraisal or umpire services in defect or insurance disputes &#8211; please call Advise &amp; Consult, Inc. at 888.684.8305, or email <a href=\"mailto:experts@adviseandconsult.net\">experts@adviseandconsult.net<\/a>.<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"<p>John Mark Goodman | BuildSmart A Colorado federal court will allow a contractor to prove up more than $250 million in damages using the modified total cost method (see\u00a0AECOM Technical Services v. Flatiron AECOM, LLC, Case No. 19-CV-2811, 2024 WL 22640 (D. Co. Jan. 2, 2024)).\u00a0The\u00a0AECOM v. Flatiron\u00a0case involves a Colorado DOT\u00a0project\u00a0to add express lanes&hellip; <a class=\"more-link\" href=\"https:\/\/www.myconstructionexpert.com\/blog\/modified-total-cost-method-calculating-construction-damages\/\">Continue reading <span class=\"screen-reader-text\">The Modified Total Cost Method to Calculating Construction Damages<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","enabled":false},"version":2}},"categories":[7,9721],"tags":[9895,99,11995,56],"class_list":["post-902178","post","type-post","status-publish","format-standard","hentry","category-expert-witness","category-property-damage","tag-advise-consult","tag-expert-testimony","tag-modified-total-cost-method","tag-property-damage","entry"],"jetpack_publicize_connections":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v25.0 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>The Modified Total Cost Method to Calculating Construction Damages - Advise &amp; 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