Dangers in Remodeling Change Orders
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. Other common 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.