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Updating a construction agreement through change orders

| Apr 16, 2021 | Construction law |

“Change orders” refers to amendments to construction contracts that change a contractor’s or subcontractor’s scope of work. Because change orders modify the work specified in construction contracts, they usually entail changes to significant details in a contract such as a price, timeline, and scope of the project. 

When change orders help

Because of the complex nature of construction projects, it’s not possible to anticipate every variable from the start. Change orders can help contractors, developers, and owners pivot and adjust to unforeseen situations. These could include mistakes, oversights, or ambiguities in the original project plans.

An example of a residential construction change order would include an owner’s desire to add a window to the original plans. In commercial construction, a change order could include an owner’s decision to add parking spaces and reduce green space.

Both examples are additive orders, but change orders can also be deductive, involving the subtraction of planned building elements. 

Implementing a change

Most construction contracts contain clauses establishing the process for revising the contractor’s scope of work. The “changes in the work” clause enable parties to agree in advance on a process for altering the work and on how to price the changes.

When a situation arises, all changes should be discussed, agreed on, and documented. A written change order is prepared and signed by all parties that should account for any changes in price or project scope.

Change orders and disputes

Changes to a contract can be a common cause of disputes during construction projects. Contractors and developers may argue over the scope of their original contract and whether or not something constitutes a deviation from this contract., disputes may arise if changes weren’t documented or agreed on. A contractor may have proceeded with extra work without a written change order.

It is important to review all contracts carefully and ensure all parties understand the price and scope of a project. Furthermore, owners and contractors must consider the complex nature of construction and should establish clear expectations around changes to the project. However, even with the best intentions, disputes can arise during a construction process. Proper and timely communication is a must on all construction projects, large or small, and the need to incorporate a clear and effective change order process is an essential provision that should be included in all construction contracts.