Change orders are extremely common. A significant percentage of construction projects diverge from the original scope. Work can be added, reduced or substituted.
For example, unforeseen site conditions can call for additional excavation. Or a project owner can remove components of the project, such as the construction of a parking garage, or want materials/equipment to be replaced, such as expensive tiles with cost-effective ones or curtain wall glazing with precast panels to speed up installation.
A change order usually results in increased cost, additional time and a lower contract price. Thus, it should be implemented appropriately, since it alters an existing legally binding contract. Here is how to do this:
Have a written and signed change order
It’s best practice for a change order to be written and signed by the involved parties. This formal amendment should include:
- Information of the contract being altered (date, project title and contract number) to link the two documents
- Detailed descriptions of the change
- Added costs
- Changes to the completion date
- The updated contract value
A contractor or subcontractor agreeing to make changes without a legally binding agreement can be risky.
Avoid disputes as much as possible
A change order can lead to disputes if it’s not handled carefully. Involved parties should try as much as possible to avoid them. Many disputes stem from poor documentation, differences over valuation of the extra work, verbal authorization of extra work and slow approval processes that cause even more delay.
Having numerous change orders in a single project can also increase the likelihood of disputes, especially when the aforementioned factors are at play.
Change orders are generally considered inevitable in construction projects. However, they need to be approached from the right angle to be effective. Get more information to take the right steps when implementing a change order.
