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Construction project contracts: change orders

So, you are contractor with a contract, the scope of work is defined, the price is set. You created an itemized list in your scope of work to help you get a better sense of the project’s cost and help you manage the expectations of your customer. Assuming you did this, at what point do change orders become excessive? How should they be dealt with?

A change order acts to amend the original contract, and in the event it becomes excessive, it is best that you do not handle these verbally. Get them in writing, and document how these changes will alter the schedule of the project. Both parties should sign.

The point at which change orders become an issue is when requests threaten to throw the timeline off track and start costing you money, particularly when you have subcontractor and owner expectations to manage. One factor to keep in mind if you need legal intervention is the extent of the changes as compared with the original contract. Are these requests dramatically beyond what you initially agreed upon?

To protect yourself, you should document the following:

  • The type of change requests, when they were made and how you responded. Include dates.
  • How many times were these requests made? Did they frequently change? If so, were the changes substantial to the project’s timeline and costs?
  • Most importantly is to document the consequence of these changes on the project as whole. Think of it as a ripple effect that you need to demonstrate to a judge or a mediator.

Furthermore, you want to provide notice to key stakeholders in the project. Notify any subcontractors that will be impacted by delays, as well as the owners to provide notice of these excessive change orders. When you start to suspect that a pattern is emerging in change requests and believe it may become excessive, consult with an experienced attorney to help you guide the way.

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