In this blog, we’ll examine three common questions related to construction change orders. Our most important advice when it comes to change orders: document everything and be detailed about it!
Do change orders have to be in writing?
As a general rule, change orders should always be in writing, but anyone who works in the construction industry knows that this is not always possible. We all know that the primary goal of project managers and superintendents is to get the job done to satisfy the owner, and time is of the essence.
There are times when the formal construction change order process interferes with their goal; therefore, it is not uncommon for them to ignore written change order requirements and instead opt for handshakes and oral promises to be made concerning payment. When this occurs, you should confirm the change order details in writing via email or a letter. When sending the correspondence, be sure to send it in a manner that assures the other party received it. For example, send your letter via fax and retain the fax confirmation page or use certified mail.
What should be included in your change order?
Change orders in construction vary depending on the project. Many times, there may be a standardized change order form for all of the project’s change orders. However, as discussed above, it is not uncommon for change orders to be given verbally. When this happens, contractors should draft a written change order that includes detailed information, including:
- A clear description of the requested change compared to the original contract or bid;
- Itemized documentation of any subcontractor costs;
- A summary by the contractor of the total costs of the proposed change;
- A statement regarding the impact on the project completion date; and
- A summary of the promise of payment.
What can you do to protect yourself when it comes to change orders in construction?
Generally, you want to be as detailed as possible with construction change orders. The more information and documentation there is to reflect that the change is extra work at the owner’s request, the more likely you will receive payment. Most contracts place the burden on the contractor for notifying the owner that additional work is required. This is true even if the owner requires or proposes extra work. Contractors and subcontractors should always document and be timely in issuing change order requests every time they realize there may be a change to the original scope of work.
This blog is part of our 2020 Mastering the Subcontract series. Come back each week as we deep dive and pull apart everything you need to know about a subcontract.