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Understanding Change Orders in Construction Contracts

On Behalf of | Jun 16, 2023 | Construction Law | 0 comments

When a building’s construction is ongoing, change is often inevitable. As a project progresses, a need may arise to modify the original plans, specifications, or scope of work. This is where change orders come into play.

Change orders are written agreements. They outline alterations or additions to a construction contract’s original scope of work. They accommodate changes requested by the owner, architect, or other project stakeholders during construction.

Why Are Change Orders Necessary?

Change orders address the need for flexibility in construction projects. They allow for adjustments when unforeseen circumstances arise. Or it may be because the owner desires modifications to the original plans. Change orders ensure that all parties are on the same page regarding the changes. This also includes changes in the associated costs and timeline adjustments.

Process of Initiating a Change Order

The process of initiating a change order involves careful evaluation, negotiation, and clear communication between the parties involved:

  • Request: The owner, architect, or other authorized party submits a written request for a change in the project scope.
  • Evaluation: The contractor evaluates the proposed change. They must consider its impact on the project’s timeline, cost, and feasibility.
  • Pricing: The contractor provides a detailed breakdown of the costs associated with the change. This includes labor, materials, and any additional expenses.
  • Negotiation: The owner and contractor engage in a discussion to agree on the pricing and terms of the change order.
  • Approval: Once both parties have agreed to the terms, the change order is signed and becomes a legally binding amendment to the original contract.

Open and transparent communication is vital when dealing with change orders. Owners should clearly articulate their desired changes. On the other hand, contractors should provide detailed breakdowns of the following:

  • Additional costs due to labor, materials, or project duration changes
  • Timeline adjustments that may cause delays or extensions
  • Contractual obligations such as warranty provisions, payment schedules, or dispute resolution methods

Documenting all changes and agreements in writing is essential to avoid misunderstandings and disputes down the line.

Change orders are an integral part of the construction process. By understanding the purpose, process, and implications of change orders, owners and contractors in the construction industry can navigate project modifications smoothly and effectively.

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