It is imperative that
construction contracts provide a clear and concise directive in dealing with
the fluid course every project takes. Doing so will greatly aid in avoiding the
confusion and mistakes that often lead to costly and laborious legal action
between disgruntled parties.
While there is no
such thing as a perfect construction contract, this guide will address the
importance of keeping control of costs by making a provision for change orders.
Much like a
construction contract, there is no perfect set of construction plans. Even the
most meticulous scope of work is subject to change due to any number of
unforeseen circumstances before or during the construction process.
Should the client decide
to make alterations to the design specifications, desired materials are
unavailable or found to exceed the costs outlined in the budget, or conditions
at the worksite require amendments to the original plan and/or changes in personnel,
a provision for such changes should be made in the construction contract.
While it is
impossible to predict every such event, a competently written construction
contract includes a “changes” clause that accounts for the likelihood of a
request to add to or delete from the original scope of work.
The language of these
clauses does vary depending on the contract, but most contain provisions allowing
the client unilateral powers to modify the plan and specifications, and
compelling the contractor to perform said modifications.
provisions include a means for both parties to agree on how the revisions will
affect budget and schedule, and a means for both parties to agree on how to
handle any disputes that may arise concerning same.
The changes clause
also addresses the prudent legal protocol to follow when parties wish to move
forward with adjustments to the original scope of work.
For the protection of
all involved and as required by the Contractors State License Board for
residential projects, the clause should mandate that any modifications to the contract
be done in writing, in the form of a change order, and specify the change in
work. It should show any and all adjustments to the budget and schedule as
finalized in the present contract.
Typically a change
order is prepared by the architect or the contractor based on his/her
discussion with the client. The change order must be signed by all relevant
parties to ensure proper payment for the work performed.
On a more practical basis, if you wish to preserve your working
relationship with your Contractor, having a written change order will prevent
differences in memory and the resulting disagreements that go along with it.