Design and Build Firms Handle Change Orders
Change orders are part of the dynamic nature of construction projects. In fact, they are a critical part of the contract between the owner and contractor to address the many unforeseen conditions that occur during the course of a project. But these changes can add cost, time, and risks to a project that may not be anticipated at the start. Fortunately, most construction contracts include a “changes in work” clause that establishes procedures for revising a contractor’s scope of work.
The most common reason for a change order is unanticipated site conditions. These include things like underground obstructions, the discovery of hazardous materials on renovation projects, or weather delays that require de-watering or other measures to protect the project. In some cases, the owner’s desire to make aesthetic or other non-structural changes in the design can also necessitate a change order.
Whether a change order is warranted depends on a number of factors, including the scope and impact of the change, any impacts on the contract price or contract time, and the parties’ course of dealings and previous experience with this type of change. The most common method for implementing changes in the contract is through a written change order, which should describe the change to be implemented. This should include the affected portions of the contract documents, the architect’s description of the change and its impacts, the contractor’s proposed adjustment to the contract sum and/or contract time (with reference to its bid), and a statement that the contractor agrees with the change order.
How Do Design and Build Firms Handle Change Orders?
Design and Build Firm in Sacramento In addition to a change order, most construction contracts allow the owner to make unilateral changes to the work through a Construction Change Directive (CCD). Issuing a CCD can have the same effect as issuing a change order if the changes are consistent with the original scope of the contract.
For both owners and contractors, frequent change orders can strain project relationships, cause confusion on the jobsite, and lead to strained relations in the event of a dispute. The best way to mitigate this risk is for everyone involved in the construction process to communicate openly and regularly, especially when discussing potential changes in scope or site conditions.
It’s also a good idea for each construction company to develop a policy of maintaining copies of all project documents, including change orders. Document retention periods may vary, but in most cases it’s a good idea to keep all change orders for as long as the project is active. For government projects, this may be up to 12 years.
As an aside, it’s important to note that there are some special considerations when working with public agencies on design-build projects. In addition to statements of qualifications and past performance, some agencies also require a background investigation for the design-build entity, including workers’ compensation history, safety training records, and evidence that it is able to obtain all required bonding, liability insurance, and errors and omissions coverage. This information can be crucial if there’s a dispute about a project.
