Definition of a Change Order
A change order is needed when work is added to or deleted from the original scope of work of a contract. Change orders are common in construction projects since unpredicted things happen all the time, causing a need to change the original agreement.
Oral vs. Written Change Orders
Oral change orders are the least desirable, as they are very difficult to enforce as it’s the contractors word against the property owner’s word and could even require costly expert analysis to determine the value of the work performed by the contractor.
Written Change Order are the most desirable as it clearly lets a third party (judge, mediator, arbitrator) know the parties agreement. ALWAYS get the change order in writing before the work is done.
Scope of Work – Be Very Specific
If both parties agree that a change order is necessary, make sure that the additional work or change in the scope of the work is written out clearly and in detail. The change order should include revised costs, schedule, the scope of work, or any other change that is being implemented.
How to Limit your Change Order
Change orders on construction projects are inevitable. With that said, contractors should try to limit the number of change orders on a project.
The best way to avoid unnecessary change orders is to spend to spend extra
- Talking with the property owner to understand the scope of work
- Walking the project to get the best understanding of your project
- Having your subcontractors also walk the site and know the site conditions so that they can give an accurate quote for their work
- Prior to submitting your contract to the property owner double- or even triple-check numbers before you submit it to the client.
What to Include In Change Order. A typical change order will include:
- Name of the project
- Property owner’s name and contact information
- Address of the project
- Detailed scope of work
- Total cost
- Whether the cost is an increase or decrease
- New expected date of completion
- Signatures of the contractor and the property owner
If you’re unsure what key contract clauses to look out for, check out this blog post to help you avoid liability.