I think you need to dilute the sludge by distilled water in the rate of 1 vol. sludge to 100 vol. of distilled water or more then calculate the COD after you get the results of test multiply it by dilution factor
I would dilute your sample until you get the COD value in the middle range of your hach kit, probably near 500 mg O2/L. I would be very careful in the dliution that you homogenize well as you could introduce bias by your dilution. Also, if you can blend and homogenize your sample I think your results will be more accurate. I would suggest you do multiple dilutions, as this is where the real variability in COD measurements comes. Homogenous solutions usually give very similar COD values with replicates. Small variations in particulate matter, however, can produce huge distributions in your COD results.