Change order is a ubiquitous term in the construction industry. But, though you may not have come across it, knowledge of change orders and how to handle disputes that arise from them is important. Change order is used in the construction industry in reference to an amendment to the construction contract with the potential to change the scope of the work to be done by the contractor.
Essentially, a change order alters or modifies the work that a contract document requires the contractor to complete. In turn, this increases price of the contract. It also leads to the adjustment of the time required by the contractor to complete the project. For a change order to be valid, the contractor and the owner must reach an agreement.
Unfortunately, change orders lead to disputes in most cases. That’s because contractors and owners do not seem to reach an agreement when it comes to changing parts of their contractor scope. If you are involved in a change order dispute, here are tips to help you.
Determine Whether a Change Order is a Real Change
The first and most crucial step is to determine whether the change order in question is fact-specific. Determine whether there is real change in the contract. Look at the pre-bid documents, field work orders, RFIs responses, and dealing course for the parties. It’s also crucial to consider the order-of-precedence clauses that determine if drawing control or written specifications are necessary.
Consider Actions or Words
Most contractors proceed with the extra work without securing a change order in writing first. If your contractor doesn’t have a written CCD or change order, consider the party to have waived this requirement via their actions or words.
Know that Contract Change is Not Automatic
When one contract changes, it does not mean the other contract will change. If the contractor and owner execute one change order and the contractor fails to get a change order from subcontractors a gap in the work scope will be occasioned. Therefore, ensure that both the contractor and subcontractors get your change orders.
Change orders are a crucial concept in construction. They allow contractors and owners the flexibility required to address unexpected changes. Nevertheless, this flexibility has a cost due to possible disputes. Follow these tips to deal with change orders disputes.