Title: Commonwealth v. AMEC Civil
Citation: N/A
Docket Number: 091430
State: Virginia
Issuer: Virginia Supreme Court
Date: September 16, 2010

PRESENT: Koontz, Kinser, Lemons, Goodwyn, and Millette, JJ., 
and Carrico and Russell, S.JJ. 
 
COMMONWEALTH OF VIRGINIA, ET AL. 
 
v. 
Record No. 091430 
 
AMEC CIVIL, LLC  
 
 
 
     OPINION BY 
JUSTICE LEROY F. MILLETTE, JR. 
AMEC CIVIL, LLC 
 
 
     September 16, 2010  
 
v. 
Record No. 091662 
 
COMMONWEALTH OF VIRGINIA, ET AL. 
 
 
FROM THE COURT OF APPEALS OF VIRGINIA 
 
This appeal concerns the performance of a construction 
contract between AMEC Civil, LLC (AMEC)1 and the Commonwealth of 
Virginia, and the Department of Transportation (collectively, 
VDOT).  In addressing AMEC’s twenty-two assignments of error 
and VDOT’s two assignments of error and seven assignments of 
cross-error in the consolidated cases, we narrow the dispute to 
five primary issues:  (1) whether AMEC gave timely notice of 
its claims to VDOT; (2) whether sustained elevated lake water 
levels constitute a differing site condition under the 
contract; (3) whether AMEC established its entitlement to home 
office overhead damages; (4) whether the “Rental Rate Blue 
Book” was properly used to calculate AMEC’s actual costs as a 
basis for its award of damages; and (5) whether AMEC is 
entitled to pre-judgment interest as an element of its damages.  
We do not address those issues rendered moot by our holdings in 
this opinion.  We affirm the judgment of the Court of Appeals 
in part, reverse in part, and remand for the circuit court to 
recalculate damages awarded to AMEC. 
BACKGROUND 
 
In May 2000, VDOT awarded AMEC a $72,479,999.49 contract 
for the construction of the Route 58 Clarksville Bypass in 
Mecklenburg County.2  The central element of the construction 
project was a bridge (Bridge 616) spanning the John H. Kerr 
Reservoir (Kerr Lake), which required work to be performed by 
equipment floating on the water.  The project also included ten 
smaller bridges and several miles of roadway.  The time 
allotted to the project was 41 months, with a projected 
completion date of November 1, 2003.  However, the project was 
not substantially completed until June 2005.  Delays arose 
primarily from difficulties in the construction of concrete-
filled drilled shafts that form the foundation of Bridge 616, 
and sustained elevated water levels in Kerr Lake. 
                                                                                                                                                           
1 Morse Diesel Civil, LLC changed its name to AMEC Civil, 
LLC on or about January 1, 2001, and assigned its interests in 
the contract to AMEC. 
2 In this opinion, we cite VDOT’s Metric Road and Bridge 
Specifications (Jan. 1997) (the Specifications), which are 
incorporated into the contract.  We refer to individual 
sections as “Specification § ___.”  In addition to the 
 
2
In May 2006, AMEC submitted an administrative claim to 
VDOT pursuant to Specification § 105.16, seeking $24,792,823.43 
in additional compensation.3  AMEC’s claim submission outlined 
what it deemed major impacts, consisting of the 2003-04 winter 
period, and differing site conditions, including unanticipated, 
sustained high water levels, and other alleged impacts delaying 
its performance of the contract.  By letter, VDOT denied AMEC’s 
claim. 
AMEC then filed its breach of contract action against VDOT 
in the circuit court, under Code § 33.1-387.  Code § 33.1-387 
provides in part that “[t]he submission of the claim to the 
Department of Transportation within the time and as set out in 
§ 33.1-386 shall be a condition precedent to bringing an action 
under this chapter.”4  The trial was conducted by the circuit 
                                                                                                                                                           
Specifications, special provisions were also included in the 
contract. 
3 According to Specification § 105.16, in pertinent part, 
 
a written statement describing the act of 
omission or commission by the Department or 
its agents that allegedly caused damage to 
the Contractor and the nature of the 
claimed damage shall be submitted to the 
Engineer at the time of occurrence or 
beginning of the work upon which the claim 
and subsequent action are based. 
 
4 Code § 33.1-386 provides that upon the completion of any 
contract for the construction of any state highway project 
awarded by the Commonwealth Transportation Board or by the 
Commonwealth Transportation Commissioner, a contractor may 
submit a claim for payment under the contract of costs and 
 
3
court without a jury.  During litigation of the case, the 
circuit court issued two letter opinions. 
The first letter opinion was issued before trial 
commenced, and addressed VDOT’s argument that AMEC failed to 
satisfy the mandatory requirement for timely written notice, at 
the time of the occurrence or beginning of the work, of an 
intent to file claims under Code § 33.1-386 and Specification 
§ 105.16.  The circuit court held that “any writing that 
memorializes the fact the VDOT had actual notice of a claim 
could be sufficient” to satisfy the notice requirement of 
Specification § 105.16. 
The circuit court also held that “strict compliance with 
legal form,” through the requirement in Code § 33.1-386 that 
AMEC provide VDOT with written notice of its intention to bring 
claims when such claims first arise, “must yield to achievement 
of the law’s primary purpose” of giving VDOT the opportunity to 
investigate such claims.  The court determined that “AMEC’s 
claim should not be dismissed since the public policy function 
of the written notice provision was achieved through actual 
notice” and, furthermore, that VDOT suffered no prejudice from 
                                                                                                                                                           
expenses caused by VDOT’s acts or omissions.  Code § 33.1-386 
states, in part, that “[t]he claim shall set forth the facts 
upon which the claim is based, provided that written notice of 
the contractor’s intention to file such claim shall have been 
given to [VDOT] at the time of the occurrence or beginning of 
the work upon which the claim and subsequent action is based.” 
 
4
AMEC’s failure to abide by the statute’s written notice 
provision. 
After the trial concluded, the circuit court issued its 
second letter opinion.  The circuit court rendered a “general 
verdict” and awarded AMEC $21,181,941.00, without interest or 
attorney’s fees.  The circuit court revisited the issue of 
notice, finding that VDOT had written notice through minutes of 
meetings and memoranda addressing the issues, exchanged between 
the parties, and concluded that every factual assumption made 
in its first letter opinion was established by the evidence at 
trial.  VDOT and AMEC each appealed the circuit court’s 
judgment to the Court of Appeals, which reversed in part, 
affirmed in part, and remanded the case for further 
proceedings.  Commonwealth v. AMEC Civil, LLC, 54 Va. App. 240, 
246, 677 S.E.2d 633, 636 (2009).  We awarded these appeals. 
ANALYSIS 
Although AMEC’s amended complaint segregated its claim 
into 12 separate allegations of damages, the Court of Appeals 
grouped the dispute into four principal issues, which we 
analyze as we address the issues presented in this appeal. 
I.  Notice 
The Court of Appeals determined that the following claims 
were barred due to AMEC’s failure to fulfill the notice 
requirement of Code § 33.1-386(A):  drilled shaft work; defects 
 
5
in the drilled shaft concrete specification; concrete formwork 
for foundation caps, piers, and columns; pier 17 foundation cap 
repair; and work authorized by work orders 4, 6, 7, and 16.  
AMEC Civil, LLC, 54 Va. App. at 257-60, 677 S.E.2d at 642-43.  
The Court of Appeals held that, with respect to these claims, 
the circuit court erred as a matter of law by concluding that 
AMEC gave timely written notice of its intention to file a 
claim, because the court dispensed with the statutory 
requirement of written notice.  Id. at 262-63, 677 S.E.2d at 
644.  The Court of Appeals also held that the circuit court’s 
alternate ruling that written notice had been given from 
minutes of meetings and memoranda exchanged between the parties 
is unsupported by the evidence.  Id. 
AMEC also made a claim for acceleration damages because on 
some aspects of the contract, AMEC accelerated its efforts to 
keep on track with expected timelines and claimed damages for 
its acceleration efforts.  The Court of Appeals held that the 
notice given to VDOT was untimely as to AMEC’s claim for 
acceleration damages incurred before April 2004, but was timely 
as to acceleration damages incurred after April 2004.  Id. at 
260-62, 677 S.E.2d at 643-44. 
Included in AMEC’s complaint was a claim for damages due 
to a delay over two winter periods.  In addressing AMEC’s claim 
of damages, the Court of Appeals concluded that AMEC’s notice 
 
6
as to the first winter period was timely.  Id. at 261-62, 677 
S.E.2d at 643-44.  Notice of a claim as to the second winter 
period was not addressed and is, therefore, not at issue. 
AMEC, however, contends that VDOT had timely written 
notice of all of AMEC’s claims, that the evidence supported the 
circuit court’s ruling, and that the Court of Appeals erred 
when it reversed the circuit court’s findings of proper notice.  
AMEC contends that the Court of Appeals erred by failing to 
consider that notice is timely when given at the time of the 
occurrence, which can properly be regarded as when a dispute 
over payment actually arises between the parties.  AMEC argues 
that the Court of Appeals erred by not considering the adequacy 
of the written notice in context of the fact that VDOT had 
actual knowledge and suffered no prejudice, that actual notice 
followed by written notice may be timely, and that the writings 
exchanged by the parties documenting the various problems 
giving rise to the claims, the written requests for additional 
compensation, and the administrative claim package are 
sufficient to satisfy Code § 33.1-386. 
A. 
Notice Under Code § 33.1-386(A) 
Code § 33.1-387 gives government contractors the right to 
file a civil action for any claim “under the contract” that has 
previously been submitted to and denied by VDOT.  We have 
stated that this statute must be “strictly construed.”  XL 
 
7
Specialty Ins. Co. v. Commonwealth, 269 Va. 362, 371, 611 
S.E.2d 356, 361 (2005).  Code § 33.1-387 further provides that 
“[t]he submission of the claim to the Department of 
Transportation within the time and as set out in § 33.1-386 
shall be a condition precedent to bringing an action under this 
chapter.”  By using the language “condition precedent,” Code 
§ 33.1-387 makes notice under Code § 33.1-386 a mandatory 
prerequisite to filing suit against the Commonwealth. 
In Sabre Construction Corp. v. County of Fairfax, 256 Va. 
68, 71, 501 S.E.2d 144, 146 (1998), we addressed language in 
the Public Procurement Act that allowed bidders to institute a 
legal action within ten days of an adverse decision of a public 
body.  We held that when a statute imposes such a “condition 
precedent” to maintaining a cause of action against the 
Commonwealth, such limitation is “not merely a procedural 
requirement, but a part of the newly created substantive cause 
of action.”  Id. at 72, 501 S.E.2d at 147.  Thus, notice given 
in accordance with Code § 33.1-386 is an element of AMEC’s 
prima facie case. 
Code § 33.1-386(A) details the proper form and procedure 
for submitting a claim “under the contract.”  Code § 33.1-
386(A) requires that the administrative claim “set forth the 
facts upon which the claim is based, provided that written 
notice of the contractor’s intention to file such claim shall 
 
8
have been given to the Department at the time of the occurrence 
or beginning of the work upon which the claim and subsequent 
action is based.”  (Emphasis added.)  Compliance with this 
notice requirement is mandatory, and part of the substantive 
cause of action authorized by Code § 33.1-387. 
In its first letter opinion, the circuit court ruled that 
“AMEC did not provide VDOT with written notice of its claims as 
required by Va. Code Ann. § 33.1-386.”  Nevertheless, the 
circuit court held that AMEC had actual notice of AMEC’s 
claims, and concluded that “AMEC’s actual notice was a valid 
substitute for written notice since it effectively accomplished 
the purpose of the written notice requirement.”  The circuit 
court also noted that “although AMEC did not fully comply with 
the written notice requirement of Va. Code Ann. § 33.1-386, 
every purpose of the notice provision has been achieved and 
VDOT has not suffered any prejudice since it is aware of every 
fact and circumstance ‘essential to a just determination of the 
plaintiff’s claim.’ ”  
In its post-trial ruling, the circuit court reaffirmed its 
ruling that actual notice is an acceptable substitute for 
written notice under Code § 33.1-386(A).  The circuit court 
also stated: 
The evidence presented at trial proves that the 
Commonwealth had actual notice of the 
plaintiff’s claims, ab initio, that the parties 
 
9
met on several occasions to discuss the issues 
before the action was filed, that minutes of 
those meetings were kept, and that memoranda 
addressing the issues were exchanged between the 
parties.  It is clear, then, that [VDOT] also 
had written notice of the plaintiff’s claims. 
 
In neither of its letter opinions nor in its final order did 
the circuit court identify the documents that supported its 
conclusion that the written notice requirement for AMEC’s 
various claims was satisfied, so we must consider whether the 
record supports the circuit court’s blanket endorsement that 
AMEC complied with the requirement of written notice or whether 
the Court of Appeals correctly determined that proper written 
notice was lacking as to certain claims. 
B. 
Actual Notice 
The Court of Appeals, in addressing the circuit court’s 
ruling regarding actual notice, held that the “circuit court 
erred in finding that anything other than written notice would 
suffice” under Code § 33.1-386(A).  AMEC Civil, LLC, 54 Va. 
App. at 254, 677 S.E.2d at 640.  The Court of Appeals stated 
that “[t]o permit actual notice to suffice when the governing 
statute requires written notice would create an exemption that 
has no basis in the text of the statute.”  Id. at 255, 677 
S.E.2d at 640 (internal quotation marks omitted).  We agree 
with the Court of Appeals that written notice is required. 
 
10
Code § 33.1-386(A) is to be strictly construed, and is 
clear and unambiguous, stating that contractors “shall” provide 
“written notice” to VDOT.  We hold that actual notice cannot 
satisfy the written notice requirement in Code § 33.1-386(A), 
and that written notice is required.  See also BBF, Inc. v. 
Alstom Power, Inc., 274 Va. 326, 331, 645 S.E.2d 467, 469 
(2007) (“In construing a statute, we must apply its plain 
meaning, and we are not free to add [to] language, nor to 
ignore language, contained in statutes.” (internal quotation 
marks omitted)). 
C.  Timely Written Notice 
Having concluded that notice under Code § 33.1-386(A) must 
be written, the issue becomes what constitutes “written notice” 
under the statute.  Code § 33.1-386(A) provides that the 
“written notice” must announce the contractor’s “intention to 
file [a] claim.”  The statute also requires that such notice be 
given at one of two times:  1) “at the time of the occurrence” 
of the claim; or 2) at the “beginning of the work upon which 
the claim . . . is based.”  Code § 33.1-386(A). 
Written notice under Code § 33.1-386(A) must be a written 
document delivered to VDOT clearly stating the contractor’s 
intention to file a claim.  We reject AMEC’s argument that 
minutes of meetings constitute written notice under Code 
§ 33.1-386(A).  To the extent such minutes may reflect a record 
 
11
of a contractor’s stated intent to file a claim, they still do 
not meet the written notice requirement of Code § 33.1-386(A), 
because they are merely a recorded summary of what was said at 
meetings.  At a minimum, to satisfy the written notice 
requirement, the written document at issue must clearly give 
notice of the contractor’s intent to file its claim and must be 
“given to [VDOT]” by letter or equivalent communication 
directed to VDOT at the appropriate time. 
In Flory Small Business Development Center v. 
Commonwealth, 261 Va. 230, 237, 541 S.E.2d 915, 919 (2001), 
this Court interpreted a notice requirement in the Virginia 
Public Procurement Act (former Code §§ 11-35 through –80), 
which required parties making claims under the Act to submit a 
written notice of intent to file a claim given “at the time of 
the occurrence or beginning of the work upon which the claim is 
based.”  The relevant language in the Code section at issue in 
Flory is, for purposes of this case, identical to the notice 
language in Code § 33.1-386(A).  In interpreting the notice 
provisions of the Procurement Act, this Court stated that the 
Act 
does not specifically require that the notice of 
intent be separate and distinct from the claim 
itself in time or in form.  By identifying more 
than one event that triggers the filing of an 
intent to file a claim, the statute acknowledges 
that not all claims will arise under the same 
circumstances.  For example, a dispute over 
 
12
payment under the contract may not arise until 
the work is completed, preventing a contractor 
from giving notice of an intent to file a claim 
for such payment at the “beginning of the work 
upon which the claim is based.”  Thus, the 
timing and form of an alleged notice of intent 
pursuant to Code § 11-69(A) requires an 
examination of the circumstances of each case. 
 
Id. at 238, 541 S.E.2d 919 (emphasis added). 
In determining whether AMEC has met its statutory 
obligation to provide VDOT with written notice, we must examine 
the documents sent by AMEC to VDOT regarding the various claims 
alleged.  Guided by the principles stated in Flory and the 
plain language of Code § 33.1-386(A), we will examine the 
circumstances of each particular claim at issue to determine 
whether notice is timely and clearly shows AMEC’s intention to 
file a claim. 
1.  Claim Involving Drilled Shaft Work 
AMEC’s claim for drilled shaft work stemmed from problems 
it encountered during construction of Bridge 616.  The Court of 
Appeals held that AMEC’s notice was untimely because it was 
given in 2003, two years after the beginning of the work on the 
drilled shafts.  AMEC Civil, LLC, 54 Va. App. at 257-58, 677 
S.E.2d at 642.  We agree with the Court of Appeals that AMEC’s 
notice for this claim was untimely. 
The record contains letters and minutes from meetings 
exchanged between AMEC and VDOT which show that the parties 
 
13
were aware of problems with the drilled shaft work on Bridge 
616 as early as 2000.  However, it was not until 2003 that AMEC 
sent VDOT a letter stating its intention to file a claim for 
additional compensation due to the problems associated with the 
drilled shafts.  Clearly this notice was not given at the 
“beginning of the work” on this claim because it was given two 
years after work began.  Code § 33.1-386.  The notice was also 
given long after a legitimate dispute regarding the problems 
with the drilled shafts arose between the parties, as evinced 
by the correspondence in the record.  Therefore, the notice was 
also given after the “time of the occurrence” of this claim, 
rendering it untimely under Code § 33.1-386. 
2.  Claim for Defects in the Drilled 
Shaft Concrete Specification 
 
During construction of the drilled shafts, AMEC 
encountered problems with the concrete mix specification 
established by VDOT pursuant to the contract, requiring AMEC to 
expend significant amounts of additional time and money.  These 
problems began in 2000, and persisted for more than a year.  
AMEC claimed that VDOT was responsible for its loss in 
productivity regarding concrete placement from 2000 until 2002, 
when VDOT allowed the concrete mix specification to be changed, 
which solved the problems AMEC was experiencing in laying the 
concrete. 
 
14
The Court of Appeals held that there was no evidence 
presented at trial that AMEC provided VDOT with written notice 
of its intention to file a claim for damages resulting from the 
concrete mix specification.  AMEC Civil, LLC, 54 Va. App. at 
258, 677 S.E.2d at 642.  We agree with the Court of Appeals 
that although the record contains letters exchanged between 
AMEC and VDOT discussing the concrete mix specification and 
problems associated with it, there is no evidence that AMEC 
provided VDOT written notice of its intention to file a claim 
for damages caused by the concrete mix specification. 
3.  Claim for Concrete Formwork for Foundation 
Caps, Piers, and Columns 
 
In its administrative claim, AMEC alleged that it suffered 
damages for problems associated with certain foundation caps, 
piers, and columns.  With regard to these claims, the Court of 
Appeals held that there was no evidence that AMEC provided 
written notice of its intention to file independent claims for 
these additional costs.  Id. at 259, 677 S.E.2d at 642. 
As part of its administrative claim, AMEC asserted a claim 
for damages resulting from a plan error regarding the 
construction of concrete shafts for pier 18 on Bridge 616.  In 
May 2004, AMEC sent VDOT a letter in response to VDOT’s denial 
of AMEC’s request for additional compensation resulting from 
this plan error.  This letter affirmatively states that it 
 
15
shall serve as notice that AMEC will file a claim for damages 
resulting from this plan error.  Therefore, we hold that AMEC 
did provide VDOT with sufficient written notice for its claim 
for damages resulting from the plan error for construction of 
pier 18 on Bridge 616.  AMEC’s letter clearly stated its 
intention to file a claim, and it was timely because it was 
made shortly after VDOT’s denial of AMEC’s request for 
additional compensation, which was the “time of the 
occurrence.” 
With regard to AMEC’s claims for problems associated with 
other foundation caps, piers, and columns, we agree with the 
Court of Appeals that the record does not contain evidence that 
AMEC provided VDOT with written notice of such claims. 
4.  Claim for Pier 17 Foundation Cap Repair 
AMEC experienced problems constructing the pier 17 
foundation cap on Bridge 616 because fluctuating lake levels 
caused leakage around the seals of the foundation cap.  This 
leakage continued during placement of the concrete, which 
ultimately rendered the foundation cap defective.  VDOT 
rejected the foundation cap, and AMEC had to construct a new 
foundation cap for pier 17. 
The Court of Appeals held that the record contained no 
written notice from AMEC to VDOT indicating its intention to 
file a claim for work on the pier 17 foundation cap.  Id. at 
 
16
259, 677 S.E.2d at 643.  We agree with the Court of Appeals 
that the record contains no evidence of such notice from AMEC 
to VDOT. 
5. 
Claim for Work Authorized by Work 
 Orders 4, 6, 7, and 16 
 
Work Orders 4, 6, 7, and 16 were authorized by VDOT for 
additional work that was required during construction, but not 
provided for in the contract.  These work orders extended the 
contract end date by a total of 41 days.  In its administrative 
claim, AMEC alleged that VDOT failed to compensate AMEC for 
delay costs associated with these work orders.  In addressing 
this issue, the Court of Appeals held that notice was not 
timely because AMEC provided such notice in July 2004, which 
was “after commencement of the work authorized by Work Orders 
4, 6, 7, and 16.”  Id. at 260, 677 S.E.2d at 643. 
We agree that AMEC did not provide timely written notice 
for its claim regarding Work Orders 4, 6, 7, and 16.  AMEC’s 
notice was not timely under Code § 33.1-386 because it was made 
after “beginning of the work” on which the claim was based, and 
after the parties developed a legitimate dispute on this claim, 
which served as the “time of the occurrence” of this claim. 
6.  Claim for Acceleration Damages 
In its administrative claim, AMEC alleged that it is 
entitled to acceleration damages resulting from its accelerated 
 
17
effort to meet contractual timelines.  The Court of Appeals 
held that AMEC filed a written notice evincing its intention to 
file a claim in April 2004.  Id. at 260-61, 667 S.E.2d at 643.  
The Court of Appeals held that this “notice was untimely as to 
acceleration efforts prior to April 2004 but timely as to 
acceleration efforts after April 2004 to the extent they were 
reasonably attributable to contractually compensable delays not 
‘correctly and fully addressed by Work Order No. 39.’ ”5  Id. at 
262, 677 S.E.2d at 644.  The Court of Appeals directed the 
circuit court on remand to “determine whether any such post-
notice efforts existed consistent with our views of the 
contractual compensability of AMEC’s claims.”  Id. 
As an initial matter, we agree with the Court of Appeals 
that AMEC first provided VDOT with written notice of its 
intention to file a claim for its acceleration efforts in April 
2004.  However, this notice was not timely for all of AMEC’s 
acceleration efforts during the contractual period.  The notice 
was not timely for AMEC’s acceleration efforts prior to April 
2004 because the notice was given after the work that comprised 
the acceleration began, and after the occurrence of the claim 
because the parties’ dispute regarding the compensability of 
AMEC’s acceleration efforts arose before April 2004.  
                                                 
5 Work Order 39 extended the contract end date to September 
3, 2004 “due to the high lake elevations.” 
 
18
Nevertheless, AMEC’s notice is timely for its claim for 
acceleration efforts after April 2004 because the notice was 
given prior to acceleration efforts made after that time.  
Therefore, AMEC’s notice was timely under Code § 33.1-386 for 
acceleration efforts after April 2004 because it was given at 
the beginning of the work upon which AMEC’s claim was based. 
7.  Claim for Damages During the First Winter Period 
The contract originally provided for three winter periods.  
However, the contract contemplated the possibility of an 
extension that would push the completion date into later winter 
periods.  Specification § 108.09(b) provides, in pertinent 
part: 
If there is a delay in the progress of the work 
due to unforeseen causes . . . and the delay 
extends the contract time limit into the period 
between November 30 of one year and April 1 of 
the following year and working conditions during 
such period are unsuitable for completion of the 
work, then consideration may be given to 
granting an extension of time that will 
encompass a suitable period during which such 
work can be expeditiously and acceptably 
performed. 
 
In March 2003, AMEC sent a letter to VDOT stating its 
intention to file a claim for damages resulting from extending 
the contract from November 30, 2003 to April 1, 2004.  AMEC 
contended that this winter period extension was necessary 
because work orders 6, 7, 12, and 16 extended the contractual 
 
19
period into the winter period, a time when working conditions 
were unsuitable under Specification § 108.09(b).  The Court of 
Appeals held that this was adequate written notice under Code 
§ 33.1-386(A).  AMEC Civil, LLC, 54 Va. App. at 262, 677 S.E.2d 
at 644.  We agree with the Court of Appeals.  AMEC’s notice was 
timely because it was given when the parties’ dispute regarding 
the extension for the first winter period arose, which was the 
time of the occurrence of the claim under Code § 33.1-386. 
In summary, we agree with the Court of Appeals that AMEC 
provided VDOT with timely written notice regarding its claims 
for damages arising during the first winter period.  We also 
agree with the Court of Appeals that AMEC provided VDOT with 
timely written notice regarding its acceleration claim as 
applied to AMEC’s acceleration efforts after April 2004.  On 
remand, the circuit court should determine the amount of 
compensation to which AMEC has proved it is entitled for 
damages arising during the first winter period and for its 
acceleration efforts from April 2004 to completion of the 
contract. 
Unlike the Court of Appeals, we hold that AMEC provided 
VDOT timely written notice of its intention to file a claim for 
damages resulting from the plan error regarding the 
construction of concrete shafts on pier 18 on Bridge 616.  On 
 
20
remand, the circuit court should award AMEC damages that it 
incurred regarding this claim. 
With respect to the remaining claims discussed above, we 
agree with the Court of Appeals that AMEC did not provide VDOT 
with timely written notice of its intention to file a claim. 
II.  Elevated Lake Water Levels 
A.  Issue 
The key feature of the contract was the construction of 
Bridge 616 across Kerr Lake, a dam-controlled reservoir, which 
is managed by the United States Army Corps of Engineers (the 
U.S. Army Corps) in part to prevent flooding downstream on the 
Roanoke River.  The U.S. Army Corps regulates Kerr Lake’s water 
level, usually maintaining a “normal level” of 300 feet.  When 
the water level rises to 305 feet, the U.S. Army Corps begins 
releasing water at a certain rate and increases that rate as 
the water continues to rise.  The lake water level was critical 
to the construction of Bridge 616 because AMEC could not access 
the lake and complete the columns that hold up the bridge when 
the water level was too high. 
The contract contemplated routine fluctuations in the 
water level of Kerr Lake.  Specifically, the Site Information 
section of the Special Provisions for Drilled Shafts states, in 
pertinent part, that  
 
21
due to the method of operating the John H. Kerr 
Reservoir and other factors beyond the control 
of the Department, the power pool elevation in 
the reservoir routinely fluctuates by several 
feet.  These fluctuations can take place within 
a few days.  It is the responsibility of the 
Contractor to avail himself of the historical 
records of the water levels maintained by the 
U.S. Army Corps of Engineers, Wilmington 
District and determine the impacts possible 
fluctuations may have on planned construction 
methods and operation. 
 
At trial, Grant Ralston, AMEC’s estimate and engineering 
manager, testified that AMEC knew that the lake water level 
fluctuated and looked at the historical average lake water 
levels before determining that AMEC could complete the project 
even if it had to shut down construction for a while due to 
high water.  Ralston acknowledged that he “knew [Kerr Lake] 
fluctuated over a long period of time” and that “[t]here was no 
doubt in [his] mind that the water had been up and down for a 
long period of time,” but asserted that he took into 
consideration the U.S. Army Corps’ information regarding lake 
water levels while preparing the estimate for the project.  
Ralston testified that while creating the project schedule, 
“[they] were aware that [they] would have to deal with this 
[sic] fluctuating lake elevations, so [they] would have to 
adjust the amount of time [they were] out there to reflect 
that.”  Essentially, AMEC planned to do other tasks during the 
time periods when the lake water level fluctuated to a higher 
 
22
level.  According to Ralston, AMEC also properly planned at bid 
time for the usual high water period between February and June 
of each year. 
However, in 2003, the lake water level remained high for 
six months, thereby substantially delaying AMEC’s work, 
primarily the construction of Bridge 616.  Charlie H. Guerrant, 
VDOT’s construction manager, who lived in the area of the 
project his entire life, testified that Kerr Lake had been at 
higher levels than those encountered in 2003, “but not for that 
long of a period.”  Guerrant described the duration of the 
elevated lake water levels as unusual and stated that when he 
began the project, he did not expect the water level to remain 
as high as it did for the length of time that it did in 2003.  
Dale V. Goodman, VDOT’s resident administrator, also testified 
that the duration of the high water at Kerr Lake was an unusual 
circumstance.  In March 2003, AMEC’s project manager, Peter 
Buchardt, wrote a letter to VDOT informing it that “[c]ontrary 
to the information provided [on the U.S. Army Corps’ website], 
the levels actually encountered during the past month exceed 
307.71 [feet],” and that “[t]hese conditions ha[d] stopped 
[AMEC’s] critical path operations,” and advised VDOT that an 
overall claim for the delays would be submitted. 
A year later, as a result of the sustained elevated lake 
water levels, VDOT issued two work orders extending the project 
 
23
completion date from December 31, 2003 to October 14, 2004.  In 
an August 2004 letter to AMEC, VDOT asserted that the time 
extension was granted because “the period of time from 
approximately March 1, 2003 through July 27, 2003 represented 
an unusual period of high water levels (148 days),” but VDOT 
did not award AMEC compensation for the delays. 
B.  Discussion 
Specification § 104.03 of the contract, titled “Differing 
Site Conditions,” provided for relief in the form of additional 
compensation to AMEC when either (1) “subsurface or latent 
physical conditions” encountered during the work “differ[ed] 
materially from those indicated in the Contract,” (Type I 
condition) or (2) “unknown physical conditions of an unusual 
nature, differing materially from those ordinarily encountered 
and generally recognized as inherent in the work provided for 
in the Contract” are encountered (Type II condition). 
The Court of Appeals held that AMEC’s “high-water” 
differing site condition claim was defeated by the contract as 
a matter of law.  AMEC Civil, LLC, 54 Va. App. at 264, 677 
S.E.2d at 645.  The Court of Appeals concluded that no Type I 
condition existed because the elevated lake water levels did 
not differ from any condition indicated in the contract, as the 
contract established neither a baseline nor even a range of 
fluctuations, but instead advised AMEC that the water level of 
 
24
the lake routinely fluctuates by several feet and directed AMEC 
to review the historical records to take into account non-
routine possible fluctuations.  Id. at 265, 677 S.E.2d at 646.  
The Court of Appeals also held that no Type II condition 
existed.  Id. at 266, 677 S.E.2d at 646.  The Court of Appeals 
reasoned that only an unknown, unforeseeable and unusual 
physical condition can be a Type II condition under 
Specification § 104.03.  Id.  In the Court of Appeals’ opinion, 
routine and non-routine water level fluctuations presented 
known conditional risks associated with the worksite, and such 
known conditional risks, “whether of an unusual nature or not,” 
should have been factored into AMEC’s risk assessment.  Id. 
On appeal to this Court, AMEC argues that the sustained 
periods of elevated lake water levels constituted a differing 
site condition, because they were sustained high water levels 
beyond anything recorded by the U.S. Army Corps and unusual and 
unexpected by everyone, including VDOT representatives.  
According to AMEC, the Court of Appeals applied an improper 
standard of review to the circuit court’s findings of fact, in 
reviewing the circuit court’s findings de novo. 
VDOT responds that the Court of Appeals correctly held 
that the elevated water levels were neither a Type I or Type II 
differing site condition.  VDOT maintains that the sustained 
water levels were not a Type I differing site condition because 
 
25
they did not differ materially from any indication in the 
contract, as the contract did not establish a baseline or even 
a range of fluctuations and did not make any binding 
representations on the subject.  VDOT argues that the sustained 
water levels also were not a Type II differing site condition 
because they were a known, predicable condition, and AMEC knew 
that there had previously been sustained periods of high water. 
In Asphalt Roads & Materials Company, Inc. v. 
Commonwealth, 257 Va. 452, 457, 512 S.E.2d 804, 806 (1999), 
this Court stated, when interpreting a similar differing site 
condition clause, that 
[t]he purpose of the differing site 
conditions clause and similar clauses, described 
in a number of cases as the “changed conditions 
clause,” has been stated in several cases.  The 
North Carolina Court of Appeals, for example, 
has stated that its purpose is “[t]o encourage 
low, competent bids,” Ray D. Lowder, Inc., v. 
North Carolina State Highway Comm’n, 217 S.E.2d 
682, 696, (N.C. Ct. App.) cert. denied, 218 
S.E.2d 467 (N.C. 1975). 
 
 
Similarly, the Court of Claims stated that 
the purpose of the clause was: 
 
 
[T]o take at least some of the gamble 
on subsurface conditions out of bidding.  
Bidders need not weigh the cost and ease of 
making their own borings against the risk 
of encountering an adverse subsurface, and 
they need not consider how large a 
contingency should be added to the bid to 
cover the risk.  They will have no 
windfalls and no disasters.  The Government 
benefits from more accurate bidding, 
without inflation for risks which may not 
 
26
eventuate.  It pays for difficult 
subsurface work only when it is encountered 
and was not indicated in the logs. 
 
Foster Constr. C. A. & Williams Bros. Co. v. 
United States, 435 F.2d 873, 887 (Ct. Cl. 1970). 
 
The differing site conditions clause is intended to “shift 
the risk of adverse subsurface or latent physical conditions 
from the contractor, who normally bears such risk under a 
fixed-price contract, to the government.”  Olympus Corp. v. 
United States, 98 F.3d 1314, 1316 (Fed. Cir. 1996).  The 
differing site conditions clause is designed to ensure low, 
competent bids.  Asphalt Roads & Mat’ls Co., 257 Va. at 457, 
512 S.E.2d at 806. 
To determine whether a Type I differing site condition 
existed requires the court first to interpret the contract, 
which is a legal inquiry reviewed de novo on appeal, and then 
to engage in a factual inquiry.  Randa/Madison Joint Venture 
III v. Dahlberg, 239 F.3d 1264, 1274 (Fed. Cir. 2001); Turnkey 
Enterprises, Inc. v. United States, 597 F.2d 750, 755 n.12 (Ct. 
Cl. 1979).  For a contractor to show the existence of a Type I 
differing site condition, “the contractor must prove, by a 
preponderance of the evidence, that the conditions indicated in 
the contract differ materially from those it encounters during 
performance.”  Randa/Madison Joint Venture III, 239 F.3d at 
1274 (quoting H.B. Mac, Inc. v. United States, 153 F.3d 1338, 
 
27
1345 (Fed. Cir. 1998))(internal quotation marks omitted).  The 
contract must contain a “reasonably plain or positive 
indication that the conditions to be encountered would be other 
than those actually encountered at the time of performance,” 
Turnkey Enterprises, Inc., 597 F.2d at 754-55, and “[t]he 
conditions actually encountered must have been reasonably 
unforeseeable based on all the information available to the 
contractor at the time of bidding.”  Meyers Cos., Inc. v. 
United States, 41 Fed. Cl. 303, 309 (1998) (quoting Stuyvesant 
Dredging Co. v. United States, 834 F.2d 1576, 1581 (Fed. Cir. 
1987)) (internal quotation marks omitted). 
Analysis of whether a Type II differing site condition 
exists does not require contract interpretation, and is a 
factual determination.  Randa/Madison Joint Venture III, 239 
F.3d at 1277; Turnkey Enterprises, Inc., 597 F.2d at 758.  In 
order to qualify as a Type II differing site condition, “the 
unknown physical condition must be one that could not be 
reasonably anticipated by the contractor from his [or her] 
study of the contract documents, his [or her] inspection of the 
site, and his [or her] general experience[,] if any, as a 
contractor in the area.”  Randa/Madison Joint Venture III, 239 
F.3d at 1276 (quoting Perini Corp. v. United States, 381 F.2d 
403, 410 (Ct. Cl. 1967)) (internal quotation marks omitted).  
The contractor must show that “it did not [know] about the 
 
28
physical condition, that it could not have anticipated the 
condition from inspection or general experience, and that the 
condition varied from the norm in similar contracting work.”  
Walser v. United States, 23 Cl. Ct. 591, 593 (1991). 
We hold that under the plain language of the 
Specifications, the sustained elevated water levels did not 
constitute a Type I differing site condition, as the water 
levels were not a subsurface or latent physical condition in 
existence at the time that the contract was executed.  We 
therefore do not need to engage in an interpretation of the 
Site Information section of the Special Provisions for Drilled 
Shafts or to determine if the sustained elevated water levels 
differed materially from what was represented in the contract. 
We conclude, however, that the sustained elevated water 
levels formed a Type II differing site condition under 
Specification § 104.03, as they were an unknown physical 
condition of an unusual nature, which differed materially from 
those ordinarily encountered and generally recognized as 
inherent in the work provided for in the contract.  The Court 
of Appeals erred by deciding this issue as a matter of law, as 
an inquiry into whether a Type II differing site condition 
existed presents a question of fact.  Randa/Madison Joint 
Venture III, 239 F.3d at 1277; Turnkey Enterprises, Inc., 597 
F.2d at 758. 
 
29
We stated in Asphalt Roads & Materials Company, Inc. that 
“in the absence of clear evidence to the contrary in the 
record, we presume that [the circuit court] correctly applied 
the provisions of [Specification] § 104.03 to the facts and 
that, in doing so, it resolved any conflict in the facts in 
favor of the contractor.”  257 Va. at 458 n.6, 512 S.E.2d at 
807 n.6.  This presumption is bolstered by ample evidence in 
the record, from both AMEC’s and VDOT’s witnesses, that the 
sustained elevated water levels were of an “unusual duration,” 
presenting an “unusual circumstance,” and not ordinarily 
encountered as inherent in the construction work provided for 
in the contract.  Moreover, the unknown physical condition was 
not one that could be reasonably anticipated by AMEC from its 
study of the contract, inspection of the site, or general 
experience as a contractor in the area.  Randa/Madison Joint 
Venture III, 239 F.3d at 1276. 
The risk of sustained high water in Kerr Lake was unusual, 
and not one that AMEC was charged with the responsibility of 
including in its bid.  AMEC properly incorporated only the 
costs associated with routine fluctuations after consulting the 
U.S. Army Corps’ website and reviewing historical water level 
information.  VDOT benefited from more accurate bidding, 
without inflation for a risk that might not have eventuated, 
but now must bear the costs associated with a risk that came to 
 
30
fruition and adversely impacted AMEC’s ability to complete 
construction as scheduled. 
Additionally, we disagree with VDOT’s assertion that the 
sustained elevated water levels were a natural event and 
therefore an act of God.  It is undisputed that Kerr Lake is a 
dam-controlled reservoir and that its water level is managed by 
the U.S. Army Corps, partly to prevent flooding downstream on 
the Roanoke River.  The sustained elevated water levels were 
not a natural event, as they resulted from the U.S. Army Corps’ 
exercise of its control over the dam, which dictated the water 
level of Kerr Lake.  Thus, VDOT’s contention that the sustained 
elevated water levels are barred from consideration as a 
differing site condition on this basis is unsupported by the 
evidence. 
C.  Calculation of Damages 
With regard to calculation of AMEC’s additional 
compensation, AMEC argues that it is entitled to compensation 
on a force account basis per Specification § 109.05 for damages 
it sustained from the elevated lake water levels.  AMEC 
contends that Specification § 109.05 provides that contractors 
will be paid on a force account basis for extra work caused by 
a differing site condition when the parties cannot agree on a 
price for such extra work. 
 
31
VDOT argues that AMEC is not entitled to damages as 
calculated under Specification § 109.05 because VDOT did not 
require AMEC to perform work on a force account basis.  
Additionally, VDOT asserts that “AMEC did not seek recovery 
based on work VDOT ordered AMEC to perform on a force account 
basis.” 
Specification § 109.05, titled “Extra and Force Account 
Work,” provides cost mark-ups for “extra work” and “force 
account work” performed by contractors.  Under Specification 
101.02, “Extra work” is defined as an “item of work that is not 
provided for in the Contract as awarded but that is found to be 
essential to the satisfactory fulfillment of the Contract 
within its intended scope.”  Although the sustained elevated 
water levels caused construction delays and problems, the work 
performed, namely the construction of Bridge 616, was work 
provided for in the contract.  Thus, AMEC’s claim for damages 
caused by the sustained elevated lake water levels is not a 
claim for “extra work” because the work at issue was provided 
by the contract. 
“Force account work,” under Specification § 101.02, is 
defined as “[p]rescribed work of a contractual status performed 
by the Contractor and compensated for as specified in Section 
109.05.”  Specification § 109.05, in pertinent part, provides: 
 
32
Extra work performed in accordance with the 
requirements of Section 104.03 will be paid for 
at the unit prices or lump sum specified in the 
work order.  In lieu of such agreement, the 
Department may require the Contractor to do such 
work on a force account basis . . . . 
 
The work performed by AMEC, which was required by the contract 
but complicated due to the elevated lake water level, was also 
not “force account work” because it was neither additional work 
prescribed by VDOT, nor work that VDOT ordered be done on a 
“force account basis.”  Therefore, AMEC is not entitled to 
compensation under Specification § 109.05 for damages caused by 
the elevated lake water level. 
Specification § 104.03, however, provides relief to 
contractors when differing site conditions impede performance 
of the contract.  This Specification contains a clause that 
allows for an adjustment to the contract for additional costs 
resulting from differing site conditions, which states: 
Upon written notification, the Engineer will 
investigate the conditions, and if it is 
determined that the conditions materially differ 
and cause an increase or decrease in the cost or 
time required for the performance of any work 
under the Contract, an adjustment, excluding 
anticipated profits, will be made and the 
Contract modified in writing accordingly. 
 
Therefore, Specification § 104.03 provides that “an adjustment, 
excluding anticipated profits” is the proper measure of damages 
for increased cost or time for performance of work caused by a 
differing site condition. 
 
33
Upon remand, the circuit court shall calculate the 
appropriate adjustment to the contract, excluding any profit, 
based on costs incurred by AMEC through increased time required 
to perform the contract, as a result of sustained elevated lake 
water levels. 
III.  Home Office Overhead 
 
The Court of Appeals held that AMEC failed to prove that 
it could not recoup home office overhead costs from other 
revenue-producing work.  AMEC Civil, LLC, 54 Va. App. at 275, 
677 S.E.2d at 651. 
AMEC argues that the Court of Appeals improperly created 
an unreasonable standard of proof concerning home office 
overhead, and should have examined whether the circuit court’s 
findings were plainly wrong or unsupported by the evidence.  
AMEC asserts that because it kept its labor and equipment on 
site and performing non-critical and less productive work, the 
evidence showed that AMEC could not recoup the project’s pro 
rata share of home office overhead elsewhere. 
VDOT contends that AMEC failed to prove it could not 
reasonably recoup its home office overhead from other revenue-
producing work during the periods of delay and therefore was 
not entitled to an award of those expenses.  According to VDOT, 
the circuit court made no findings of fact or conclusions of 
law on AMEC’s entitlement to home office overhead, and the 
 
34
circuit court’s general verdict was contrary to the evidence 
and to the contract. 
This Court explained in Fairfax County Redevelopment and 
Housing Authority v. Worcester Bros. Co., Inc., that 
[h]ome office expenses, commonly called 
overhead, include those costs that a contractor 
must expend for the benefit of its business as a 
whole.  These expenses include, for example, the 
salaries of office staff, accounting expenses, 
dues and subscriptions, equipment costs, and 
utility services.  Unabsorbed home office 
expenses comprise “those overhead costs 
needlessly consumed by a partially or totally 
idle contractor.  A contractor continues to 
incur overhead costs during periods of reduced 
activity or delay on a particular contract.  
When this occurs, the ‘reduced activity’ 
contract no longer ‘absorbs’ its share of 
overhead costs.” 
 
257 Va. 382, 387-88, 514 S.E.2d 147, 150 (1999) (quoting 
Michael W. Kauffman and Craig A. Holman, The Eichleay Formula: 
A Resilient Means for Recovering Unabsorbed Overhead, 24 Pub. 
Contr. L.J. 319, 321 (1995)).  Entitlement to home office 
overhead is a question of fact.  Id. at 388, 391, 514 S.E.2d at 
151-52. 
To prove that it suffered unabsorbed overhead damages, a 
contractor is not required to show that its overhead was 
increased due to the delay, “but only that it could not 
otherwise reasonably recoup its pro rata home office expenses 
incurred while its workforce was idled by the delay.”  Id. at 
388, 514 S.E.2d at 151. 
 
35
We agree with the Court of Appeals that AMEC did not meet 
its burden of proving that it could not reasonably recoup its 
home office overhead from other revenue-producing work.  The 
record contains no evidence addressing this issue.  The 
evidence presented by AMEC consisted of a mathematical model 
that assumed that AMEC could not have directed employees to 
other revenue-producing work, including other work under this 
contract.  AMEC’s expert merely calculated a per diem rate of 
delay and multiplied the rate by the number of days of delay.  
Neither AMEC’s expert or any fact witnesses presented any 
evidence that AMEC could not have recouped its home office 
overhead from other revenue-producing work.  Lockheed Info. 
Mgmt. Systems Co., Inc. v. Maximus, Inc., 259 Va. 92, 116, 524 
S.E.2d 420, 433 (2000). Therefore, AMEC is not entitled to home 
office overhead expenses. 
IV. Calculation of Actual Costs 
 
The equipment costs included in AMEC’s claim were priced 
according to the “Rental Rate Blue Book” (the Blue Book), 
utilizing specific portfolios of equipment for all the elements 
of work that were performed.  AMEC based its use of the Blue 
Book on Specification § 109.05.  Pursuant to Specification 
§ 109.05(d), 
Equipment:  . . . The Contractor will be 
paid hourly rental rates for pieces of 
machinery, equipment, and attachments necessary 
 
36
for prosecution of the work that are approved 
for use by the Engineer.  Hourly rental rates 
will not exceed 1/176 of the monthly rates of 
the schedule shown in the Rental Rate Blue Book 
modified in accordance with the Blue Book rate 
adjustment tables that are current at the time 
the force account is authorized.  Adjustment 
factors or rate modifications indicated on area 
maps in the Blue Book will not be considered 
when acceptable rates are determined. . . .  
 
AMEC made no adjustments to the Blue Book rates for age or 
region of the equipment. 
The Court of Appeals held that the circuit court was not 
plainly wrong in accepting the Blue Book as a standard used in 
the profession to estimate actual costs for owner-furnished 
equipment.  AMEC Civil, LLC, 54 Va. App. at 277 n.32, 677 
S.E.2d at 652 n.32.  Therefore, the Court of Appeals held that, 
on remand, the Blue Book estimates could be relied upon by the 
circuit court as a basis to determine owner-furnished equipment 
costs.6  Id. 
It is undisputed that the measure of damages in this case 
is actual cost.  However, the parties dispute whether the Blue 
Book is an appropriate method of proving actual cost. 
VDOT contends that AMEC did not make out a prima facie 
case of damages because AMEC did not prove actual cost.  VDOT 
argues that the Blue Book provides only an estimate of costs 
                                                 
6 The Court of Appeals remanded to the circuit court to 
determine whether the evidence provides a reasonable basis to 
 
37
and does not prove actual cost, which is the measure of damages 
required by Specification § 105.16.7  Additionally, VDOT argues 
that if it intended to allow AMEC to use the Blue Book to 
calculate costs for claims under Specification § 105.16, VDOT 
would have included a provision allowing the use of the Blue 
Book. 
Lastly, VDOT asserts that, assuming AMEC’s use of the Blue 
Book was appropriate, AMEC failed to make adjustments to the 
Blue Book’s estimated base equipment rental rates taking into 
account such factors as the age of the equipment, the region 
where the equipment was used, and purchase price.  According to 
VDOT, these adjustments would generally reduce the rental rates 
to more closely approximate actual costs. 
AMEC contends that, even if Specification § 109.05 is 
inapplicable, the Blue Book was properly used to establish 
AMEC’s actual damages for owner-furnished equipment under 
                                                                                                                                                           
establish the actual costs AMEC incurred.  AMEC Civil, LLC, 54 
Va. App. at 277, 677 S.E.2d at 652.  
7 Specification § 105.16, “Submission and Disposition of 
Claims,” provides, in pertinent part, that “[a]t the time of 
occurrence or prior to beginning the work, the Contractor shall 
furnish the Engineer an itemized list of materials, equipment, 
and labor for which additional compensation will be claimed.  
Only actual cost for materials, labor, and equipment will be 
considered.”  It further provides that, “[u]pon completion of 
the Contract, the Contractor may, within 60 days from the time 
the final estimate is paid, submit to the Department a written 
claim . . . for the amount he deems he is entitled to under the 
Contract. . . . Only actual cost for materials, labor, and 
equipment will be considered.” 
 
38
Specification § 105.16.  AMEC asserts that the Blue Book rates 
incorporate ownership and operating costs, including 
depreciation costs, insurance, property taxes, costs of 
facilities capital, repairs, and fuel.  AMEC maintains that 
expert testimony established that the Blue Book is accepted as 
a standard used in the profession for determining owner-
furnished equipment costs.  AMEC argues that the evidence at 
trial also supported the circuit court’s finding that the Blue 
Book rates accurately represented AMEC’s actual equipment 
costs. 
Theodore E. NeSmith testified as AMEC’s expert on 
construction cost accounting and construction damage 
calculations.  NeSmith is a certified public accountant and a 
certified valuation analyst for a certified public accounting 
firm that specializes in forensic accounting and business 
valuation, primarily in two areas:  business damages and 
construction damages.  AMEC hired NeSmith to “review, assess, 
and to the degree necessary, modify the damage claim that AMEC 
had already prepared relating to [the] project.” 
NeSmith testified as an expert that he has used the Blue 
Book to calculate costs incurred by a contractor on multiple 
occasions.  With regard to the integrity of utilizing the Blue 
Book, NeSmith stated, “if the objective is to get to the true 
cost number of operating owned equipment, clearly Blue Book is 
 
39
the most reflective of that.”  When VDOT objected to NeSmith’s 
testimony about the integrity of the Blue Book, the circuit 
court stated, “It seems to me it’s been established thus far 
that this Blue Book is a standard used in the profession for 
estimating these costs, and I don’t think you need to go 
further than that unless the validity is challenged by the 
defense.”  VDOT did not respond.  NeSmith testified that the 
equipment costs claimed by AMEC were “equivalent to and 
represent[] the damages that were experienced by AMEC.” 
The record supports the circuit court’s conclusion that 
the Blue Book represents an industry standard for determining 
the cost of operating owned equipment.  According to the 
unchallenged expert testimony, use of the Blue Book is an 
accepted method to prove actual costs.  Thus, the expert 
testimony has established that the Blue Book is an appropriate 
methodology of calculation so that VDOT’s challenge is a 
challenge to the weight of the evidence rather than to its 
admissibility.  Because the Blue Book is recognized as an 
appropriate tool for determining owner-furnished equipment 
costs for purposes of proving actual costs, we hold that the 
Court of Appeals properly affirmed the circuit court’s 
acceptance of the Blue Book for the purpose of calculating such 
costs. 
 
40
V.  Pre-Judgment Interest 
 
The circuit court did not award AMEC pre-judgment interest 
“because it [could] find no authority giving it jurisdiction to 
do so.”  The Court of Appeals held the circuit court properly 
denied AMEC’s request for pre-judgment interest, as Code 
§ 33.1-386(A) says nothing about an allowance of pre-judgment 
interest on contractually recoverable costs and expenses.  AMEC 
Civil, LLC, 54 Va. App. at 279-80, 677 S.E.2d at 652-53. 
AMEC argues that the Court of Appeals erred by determining 
that VDOT was not liable for pre-judgment interest and that a 
separate and distinct waiver of sovereign immunity was required 
before AMEC could recover pre-judgment interest.  AMEC 
maintains that the Commonwealth is like any other citizen and 
is liable for interest on contractual debts. 
VDOT contends that it is not liable for pre-judgment 
interest, as the Commonwealth is not liable for interest absent 
express statutory authority or a contract provision explicitly 
imposing such liability, and neither Code § 8.01-382 nor the 
contract make VDOT liable for pre-judgment interest.  According 
to VDOT, the Commonwealth does not waive its immunity simply by 
entering into a contract. 
We have previously held that the Commonwealth is “as 
liable for its contractual debts as any citizen would be.”  
Wiecking v. Allied Medical Supply Corp., 239 Va. 548, 553, 391 
 
41
S.E.2d 258, 261 (1990).  However, in order for the Commonwealth 
to be liable for pre-judgment interest, there must be a 
statutory or contractual waiver of sovereign immunity with 
respect to this distinct item of damages. 
Nearly a century ago, this Court stated, “it has never 
been held by this court that a claim asserted against the State 
or a county bears interest where there is no provision in the 
statute or authorized agreement creating the liability for the 
payment of interest.”  City of Lynchburg v. Amherst County, 115 
Va. 600, 608, 80 S.E. 117, 120 (1913).  We continue to adhere 
to this long-standing rule.  Thus, in the absence of a 
statutory or contractual waiver, the Commonwealth and its 
agencies have sovereign immunity from liability for pre-
judgment interest on contract claims.  In this case, there has 
been no statutory or contractual waiver of VDOT’s sovereign 
immunity and, therefore, the Court of Appeals correctly 
affirmed the circuit court’s denial of pre-judgment interest 
sought by AMEC. 
CONCLUSION 
For the reasons stated, we will affirm in part and reverse 
in part the judgment of the Court of Appeals.  We will affirm 
the Court of Appeals’ judgment on all but two issues.  
Specifically, we will reverse the Court of Appeals’ judgment 
that the sustained elevated lake water levels did not 
 
42
constitute a differing site condition, and that AMEC did not 
provide timely written notice of its claim for plan error 
regarding the construction of concrete shafts for pier 18 on 
Bridge 616. 
We will remand the case to the Court of Appeals with 
instructions to remand the case to the circuit court for 
further proceedings consistent with this opinion.  On remand, 
in deciding the issues addressed by this Court, the circuit 
court shall review the evidence already presented in the case 
and calculate damages to which AMEC is entitled for the 
following claims:  plan error regarding the construction of 
concrete shafts for pier 18 on Bridge 616; acceleration damages 
incurred after April 2004; and delay damages resulting from the 
sustained elevated lake water levels, as calculated per 
Specification § 104.03, which shall constitute actual costs 
incurred by AMEC, excluding profit.  Additionally, in computing 
owned equipment costs, the circuit court shall calculate a 
damage award based upon Blue Book estimates, as testified by 
expert witnesses, which reflect actual costs. 
On remand, the circuit court shall also consider the Court 
of Appeals’ holdings that were not challenged on appeal to this 
Court.  Specifically, the circuit court shall follow the Court 
of Appeals’ direction to:  review the record and make findings 
on whether AMEC is entitled to damages for conditions during 
 
43
either or both of the winter periods, and if the court finds in 
favor of AMEC, identify the contractual basis of such award and 
make factual findings as to any damages awarded; review the 
record and make findings on whether AMEC proved its entitlement 
to damages resulting from the boulders at bridge B640; and 
award damages associated with AMEC’s bond premium.  Finally, on 
remand, the circuit court shall apply actual costs as the 
measure of damages for the claims surviving appeal. 
Affirmed in part, 
reversed in part, 
and remanded. 
 
44