The Multimillion-Dollar Blame Game
When Project Costs Spiral, Who Gets Crushed by the Bills?
Expert Analysis from Cope C. Thomas, Attorney
$100M+ GE Energy Deals • 25+ Years Cost Dispute Resolution
Having negotiated $100M+ energy infrastructure deals at General Electric, I’ve witnessed the devastating battles that erupt when project costs spiral beyond control.
The scenario plays out like clockwork: Project scope shifts. Unexpected challenges emerge. Costs surge beyond the original budget. And suddenly, everyone’s pointing fingers.
Hidden deep in the contract is a seemingly innocent clause called “cost relief,” “equitable adjustment,” or “price escalation.” What looks like protection becomes the epicenter of multimillion-dollar warfare.
💰 The Battlefield: The seller screams “Not my fault—you pay!” The buyer counters “Not my budget—you eat it!” As tensions mount and deadlines slip, the entire project teeters on the edge of cancellation.
I’ve seen billion-dollar projects grind to a halt while legal teams battle over who absorbs the cost overruns. The economic viability gets questioned. Stakeholders lose confidence. And what started as a routine project becomes a company-threatening disaster.
That’s why Fortune 500 companies never leave cost relief to chance—they engineer bulletproof clauses that prevent the blame game before it starts.
An “equitable adjustment”, “price escalation” or “cost relief” clause is a contractual provision within the contract’s change section that allows the parties to increase the contract price for unexpected changes. Most disagreements in the contract’s change process are due to costs, because changes significantly increase the contract price, and jeopardize the economic viability of the project which can result in project cancellation. Arguments ensue regarding who is at fault for the additional costs. The seller may argue that the increase is not due to its fault so the buyer should pay, while the buyer has the final say on spending. Conversely, the buyer argues the additional work is due to something the seller missed or is reasonably inferable from the scope of work, so the seller should pay. The payment process is often left to lengthy negotiations or dispute resolution.
🚨 Legal Catastrophe: When Bureaucracy Destroys Valid Claims
The Project: Historic Building Stabilization for the City
A general contractor was hired to stabilize a historic building. Mid-project, additional structural needs were discovered. The contractor performed the extra work and submitted two change orders to recover the additional costs.
The Fatal Mistake: The second change order was acted upon before being fully signed by all required city officials, including the city manager—whose approval was mandated by law.
💥 The City’s Response: Unhappy with the contractor’s work, the City terminated the contract without paying for the extra work.
The Contractor’s Nightmare: Sued for breach of contract but was denied due to missing signatures—even though the work was performed and benefited the City.
The crushing verdict? While the court allowed a quantum meruit claim (recognizing the contractor’s right to be paid for benefits conferred), they reduced the amount to zero due to allegedly subpar performance. Full work, zero payment.
💡 Expert Analysis: “I’ve seen this exact pattern destroy contractors repeatedly in my 25+ years handling cost disputes. The tragic irony? Proper cost relief language and procedural compliance would have protected both the work authorization and payment rights. When bureaucracy meets contract law, precision isn’t optional—it’s survival.”
Stop the Blame Game Before It Destroys Your Project
Buried in most contracts is a “cost relief” clause—designed to protect parties from financial fallout.
But in reality, it triggers some of the fiercest contract battles you’ll ever see: finger-pointing, stalled payments, and even project shutdowns. When costs spiral, someone has to pay—and without proper clause architecture, it could be you.
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