Construction Change Orders

Whether because of a change of mind, a change of circumstances, or simply a need for clarification, the scope of work of a construction contract is often revised after the execution of the contract—sometimes substantially. All too often, these changes bring disagreement, conflict, and legal proceedings; so it is very important that construction professionals take every reasonable precaution to see that changes are made properly.

Original Scope in Contracts

The first step is for both parties to be absolutely clear what the original scope of work is to begin with—preferably as part of a written and signed contract. If the contract (including any exhibits or incorporated documents) is unclear or not detailed enough, or if a party does not thoroughly read and understand the contract it leaves room for later disagreement—most often in the form of one party claiming a portion of the work is within the scope of the original contract while the other claims it is extra work requiring additional cost.

If there is a written contract that sets forth a specific procedure for dealing with such changes, it is very important that the procedure is followed as closely as possible. Such procedures often include the requirement that a written document setting forth the change of scope, time, and price be executed by both parties before the changed scope is commenced. If such a procedure is not followed, it invites dispute later on when it comes time for payment.

Document Changes to the Contract with Change Orders

Equally important is to carefully review the language and terms of any proposed change order. Just like with contracts, it is important to fully understand the rights, obligations, and waivers that might be contained in a change order.

When such a contract provision is not applicable, the best practice is for the parties to prepare and sign some form of document memorializing the change—even an email exchange is better than nothing. The important thing is that there is some kind of proof other than mere recollection as to the existence and nature of the change.

Unfortunately, for a variety of reasons such as confusion, expediency, or misplaced trust, construction changes are often performed without following required procedure or without much in the way of physical proof as to the mutual assent of the parties or the precise terms. In such a case, there are still many potential methods of making a valid, enforceable, and good faith claim for extra work. The actions, intentions, verbal or written communications, or even circumstances surrounding the changed scope of work can sometimes legally imply a binding agreement to perform and pay for extra work, or simply create a situation where it would be unjust and unreasonable for payment for such work to be withheld.