Change orders – those sometimes inevitable and unavoidable changes in the plans after construction on a project already begins – are the frequent source of litigation.
Disputes often start because the owner, the contractor, the developer, investors or even the architect involved in a project can end up in a mess through poor communication. That can lead to major disputes about whether certain materials were included in the original bid, what additional time was to be allotted for any changes and what compensation is to be added for the additional work.
So, how do you avoid a legal mess from a change order? Make sure that every change order you have includes the following things before you sign off:
A clear description of the requested changes
This should include a description of how the change differs from the original contract, whether major or minor. Include such details as to the size, location, materials and anything else relevant to the changes.
A statement of the contractual basis for the change
Perhaps there were mistakes in the architect’s original drawings, or there were obstructions that couldn’t be predicted that now affect the project’s overall design. Maybe there’s a supply shortage on the materials that were supposed to be used, or a labor shortage that’s going to slow down the work.
A summary of the costs associated with the proposed change
Costs can be manifold. A change in materials could be negligible – or they could be astronomical. A change in the way something has to be constructed (especially if the contractor has to work around a major obstacle) can be huge. Subcontractors, too, may need to be paid more for their services.
An estimate of how the project’s timeline will be affected by the change
Construction projects often have shifting timelines, but change orders should reflect any estimated delays they may cause.
When change orders lead to legal woes, make sure that you’re as proactive as possible about your options.