A Guide to Construction Change Orders Part 1
Changes to a well-thought out construction project aren’t the most fun endeavors to undertake. As Clearwater construction attorneys, we know that drafting a contract and completing plans and specifications takes a lot of work so when unanticipated changes happen, we know they can be a real headache. Nevertheless, changes are more likely to happen than not, so we advise you to understand the nuances of changes orders and to be thoroughly prepared and proactive when managing them.
This two-part series will cover change order basics, among them, who initiates them, change order types, and some best practices. Visit Part 2 to learn more.
What is a Change Order?
A change order is a contract amendment that is agreed upon by contract parties and covers any changes beyond the original scope of work as outlined by the contract agreement. The can be a pain to owners because it means more money will be spent on the project whereas contractors benefit because they have the opportunity to earn more money. When a change or is written, it becomes a legal part of the contract and signatures are needed from each party to execute any changes.
Types of Change Orders
Change orders are introduced into a project when an unexpected event such as a change in tasks, design document mistakes, or a change in site conditions happens. Common types of change orders include fixed sum, Time and Materials (T&M), constructive, and consequential.
Who Initiates Change Orders
Change orders are typically initiated by a Request for Information (RFI), owner-initiated, or an error or omission in the project documents. Owner-initiated changes are the most likely to get a contractor paid.
Change Order Provision
Every construction contract should have a written change order form which can be attached as an exhibit. Change order provisions should describe what happens if a delay occurs, when a contractor can stop work, and a timeframe to accept or reject the change order. If you want to avoid change order disputes, a legal expert such as a Clearwater construction attorney will be a great asset for executing effective contract clauses.
Disclaimer: The information contained in this article is for general educational information only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation.