Case Study 5-1 — Twenty-One Days: How Curtis Boone Lost a Good Claim on a Calendar
All people, companies, and projects in this case study are illustrative composites, not real entities. Every legal detail below is jurisdiction-specific: notice periods, differing-site-conditions clauses, and the treatment of late notice vary by state and by contract. Nothing here is legal advice.
Setup
The project. Rivermont Elementary School #12. $22,400,000, hard-bid design-bid-build lump sum, owned by the Rivermont Unified School District. Prevailing wage. 100% payment and performance bonds. Liquidated damages of $2,500 per calendar day. Contract time 610 calendar days, with a hard occupancy date driven by the August school-year start.
The people. Curtis Boone is Kestrel's project manager. He is genuinely good at parts of this job — he is fast, he is liked, principals and superintendents take his calls, and he has never once lost a job on price. He runs a lean staff, he manages by relationship, and he believes, sincerely, that paperwork is what you do when you have failed to build trust.
Terrence Bell is the field engineer. Twenty-three, second job, writes his daily reports at 4:30 and means every word of them.
The clause. Article 8 of the district's general conditions requires that when the contractor encounters subsurface or latent physical conditions differing materially from those indicated in the contract documents, it must give written notice to the Owner, with a copy to the Architect, within 21 calendar days of discovery, delivered by certified mail or by hand. The article closes with the sentence that matters: no claim for additional cost or time arising from such conditions shall be allowed unless notice has been given as required.
Curtis had read Article 8 once, in March, during buyout. He remembered it as "there's a notice thing."
What happens
The timeline, day by day
| Day | What happened | What was written down |
|---|---|---|
| 1 (Tue, week 9) | Excavation reaches design bearing elevation at footing F-12. The material is saturated silty clay, not the dense sandy gravel the geotechnical report indicated. Crew stops. | Terrence's daily report: "Unsuitable material at F-12. Wet, will not compact. Holding for direction." |
| 2 | The district's geotechnical special inspector walks it and verbally agrees the material is unsuitable. Curtis phones the district's project coordinator, who says "sounds like you should keep going, we'll sort it out." | Nothing in writing from anyone |
| 3–4 | Curtis directs over-excavation to keep the crew and the schedule moving. Same condition found at F-13 through F-31 — twenty footings. | Daily reports note "over-ex continuing" |
| 9 | Monthly OAC (owner–architect–contractor) meeting. Curtis raises it. | Architect's minutes: "Contractor noted soft soils at some footings; geotech coordinating." |
| 14 | The geotechnical engineer issues a letter recommending over-excavation to elevation 408.5 and replacement with compacted structural fill. | A real, dated, technical document — but it is a recommendation, not a notice of claim, and it goes from the geotech to the district |
| 19 | Lorena Vasquez's month-end cost report shows $38,000 posted to cost code 02300 with no corresponding budget or change order. She emails Curtis: "02300 is running hot — is there a CO coming?" Curtis replies: "Yes, working it." | An email that identifies the money and does not give notice |
| 21 | The notice deadline passes. Nobody on the project knows a deadline existed. | Nothing |
| 34 | Over-excavation and structural fill complete. Direct cost incurred: $214,000. Schedule impact: 16 calendar days. | T&M tickets exist for days 12 onward; days 1–11 were tracked as ordinary production |
| 41 | Curtis submits a change order request: $214,000 and 16 calendar days. | A well-written request, seven weeks late |
| 55 | The district's counsel denies the claim in full. One paragraph, citing Article 8: no timely written notice, claim waived. | |
| 88 | Negotiation. The district offers $61,000 as a commercial accommodation — roughly the portion corroborated by the geotech letter and the special inspector's field reports — and zero days. Kestrel accepts. |
The arithmetic
| Line | Amount |
|---|---|
| Direct cost incurred | $214,000 |
| Recovered in settlement | −$61,000 |
| Unrecovered cost | $153,000 |
| Time impact claimed | 16 CD |
| Time extension granted | 0 CD |
And then the second bill arrived. The 16 days came out of float. The job had carried 20 calendar days of float into that footing sequence; afterward it had 4. Eleven months later, a curtain of ordinary problems — a late gym-floor delivery, two weeks of rain, a fire-alarm inspection failure — pushed substantial completion 6 calendar days past the contract date.
6 CD × $2,500/CD = $15,000 in liquidated damages.
Total damage: $168,000 on a job whose fee was $784,000. Curtis gave back 21% of the project's fee, and the district was never even unreasonable about it.
Analysis
Curtis was right on the merits and lost anyway
Nobody disputed the facts. The soils were unsuitable. The geotechnical report did not indicate them. The over-excavation was necessary and reasonably performed. The cost was real. In a world where being right is what matters, Kestrel recovers $214,000 and 16 days.
That is not the world. Entitlement, causation, and damages are three separate proofs, and a notice provision is a gate in front of all three. Curtis never reached the gate.
The three moments this was saveable
Save point 1 — Day 1, in Terrence's daily report. The words "unsuitable material" and "holding for direction" were sitting in the project record on the day it happened. Nobody read them as a trigger, because nobody had told anybody they were a trigger.
The fix, which costs nothing: a standing rule that any daily report containing unsuitable, unforeseen, differing, unknown, holding for direction, or stopped goes to the project manager the same afternoon, flagged. Terrence did his job perfectly. The system around him didn't exist.
Save point 2 — Day 9, at the OAC meeting. Curtis told the owner. The owner heard him. The architect wrote it in the minutes. In some jurisdictions that "actual knowledge" argument might have carried the day — and in others it would have been swept aside, because the contract required written notice from the contractor, to the Owner, copy to the Architect, certified or hand-delivered, and none of those four elements was satisfied by somebody else's meeting minutes.
The fix: a one-paragraph letter that afternoon. Ten minutes. It could have read: "Consistent with Article 8, we are giving notice of a subsurface condition at footings F-12 through F-31 differing materially from the geotechnical information in the contract documents. We are proceeding to protect the schedule and will provide cost and time detail as it develops." Nothing adversarial. Nothing that damages a relationship. Everything that preserves $214,000.
Save point 3 — Day 19, in the cost report. Lorena found unbudgeted money before the deadline expired. Two days remained. She asked exactly the right question and got an answer that sounded reassuring and did nothing.
The fix: treat an unbudgeted cost code as a notice trigger, not an accounting question. Money moving without a change order means one of two things — a claim you have not perfected, or a loss you have not recognized. Both require action that week. This is the discipline built in Chapter 28.
Why Curtis's model produced this outcome
Curtis is not lazy and he is not dishonest. His model is relationship substitutes for record. On most jobs, most of the time, that model works, which is exactly why it is dangerous — it is reinforced constantly and fails rarely and catastrophically.
Two things it cannot survive. First, people change. The district's project coordinator who said "keep going, we'll sort it out" was reassigned in month seven and had no authority to bind the district anyway. Second, counsel reads the contract, not the relationship. When a claim reaches a lawyer's desk, the warm history between two project people is not evidence of anything.
The deeper point is that notice is not an adversarial act. Curtis avoided sending the letter because he thought it would signal distrust. But a notice letter is how a professional says "something changed, here is the flag, let's deal with it in the open." Owners who work with contractors regularly expect notices and are suspicious of contractors who never send any — because the claim always arrives eventually, and it arrives as a surprise.
What it would have cost to do it right
| Preventive measure | Cost |
|---|---|
| Reading Article 8 during buyout and building a one-page notice sheet | 45 minutes |
| Standing daily-report keyword rule | One paragraph in the project procedures |
| The Day 9 notice letter | 10 minutes + certified mail |
| Total | Under two hours |
| What was lost instead | $168,000 and 16 days of float |
Discussion questions
- The district's project coordinator said "keep going, we'll sort it out." Curtis relied on that. Identify three separate reasons that reliance was unreasonable, and say what Curtis should have done within 24 hours of that call.
- The architect's Day 9 minutes recorded the discussion. Build the strongest argument you can that Kestrel gave adequate notice — then build the argument against it. Which is stronger, and what fact would you most want to change?
- Save point 3 depends on the project accountant treating a cost variance as a legal trigger. What has to be true about the relationship between the accounting function and the project team for that to actually happen?
- Curtis's model wins work and loses claims. Estimate what his approach is worth on a job where nothing goes wrong, and compare it to the $168,000 on this one. Under what conditions is his model rational?
- The chapter argues that notice is cheap and claims are expensive. Some contractors give notice on nearly everything. What is the cost of over-noticing, and where is the line between diligence and a "claim mentality"?
Your turn
Write the Day 9 notice letter Curtis should have sent. Constraints:
- Under 200 words.
- Addressed to the Owner, copy to the Architect, delivery method stated.
- Identifies the condition, the location, the contract article, and the fact that you are proceeding to protect the schedule.
- Reserves rights on both cost and time — remember that in most contracts these run on different clocks.
- Contains nothing accusatory, nothing speculative about dollars you cannot yet support, and nothing you would be uncomfortable having read aloud in a hearing three years later.
Then, in three bullets, describe the standing procedure you would put in your own project's operations manual so that a Day 1 daily report reaches you on Day 1. Carry both artifacts into your Willow Street notebook — they belong with the one-page notice-and-claim sheet from this chapter's Project Checkpoint.