Construction One-Minute Read: Preparing Change Orders

Because change orders are ubiquitous in the construction industry, they are often prepared with less scrutiny and attention to detail than is needed. Each change order is intended to be a modification to the original (prime or sub) contract. Because they have such significant implications, parties should treat each change order with care. In the heat of a busy job, brevity is tempting, but this can lead to confusion and disagreement later on. Contractors may want to consider the following issues:

Scope: Think of all the aspects and impacts of the changed condition when preparing a detailed scope description (e.g., the type of work to be performed; the quantity of materials and labor; overtime labor; expedited material delivery; areas of the job where each aspect of the changed work will occur; how additional work may impact other trades). A generic work description without a location (e.g., additional fireproofing) and reference to specific drawing details could invite an argument that a prior change order precludes a future one on the same or a similar topic. Time: For change orders that do not involve a time extension, a specific statement to that effect may help prevent an argument that a change order for additional scope implied a reasonable time extension. For change orders involving additional time, consider whether all deadlines are extended or only certain ones. Consider the likelihood of cumulative and incidental impacts. If the project involves liquidated damages, consider whether all or only part of the liquidated damages is impacted by the schedule adjustment. Writing/Signature: A pressing schedule often leads to on-the-spot verbal agreements for additional time and/or cost. To avoid a future dispute regarding the validity of an unsigned or oral change order, consider identifying the date on which the agreement was...