When it comes to project management, change orders happen as part of the change management process. This changes the scope of the work that the owner, architect and engineer and contractor agreed to implement.
Change orders can add or delete the original scope within the contract, but this also depends on the extent of the changes made to the current project. In this way, it could alter the original contract, and it might tack on a different deadline to the project.
When Change Orders Happen the Most?
Most commonly, change orders that happen with a larger construction project. Once you have detailed the original scope, it completes itself with the total price and specific work tasks that need completion. As the plans unfold, the client might decide that the original plans don’t represent his definition for a finished project, and as a result, he will change them. In some cases, the client suggests an alternative approach.
Some of the most common causes for a change order includes:
- Incorrect estimate of the project’s work
- Potential obstacles or a more efficient approach causes the project to deviate
- Team or client incapable of completing the project in budget
- New options perceived
- Poor weather conditions
Reasons to Dispute
Sometimes change orders have caused a reason to dispute between the clients and the contractors. Because their nature, a change order will tack on time, labor or cost to a project that already has a great deal of complexity. Legally speaking, change orders happen when the written agreement between the commercial contractor and owner comes into question because modifications and alterations have arisen.
You will have to establish the new contract items, basis for payment and the time adjustments for work made due to changes. Any change order that takes place must obey the building codes because like any construction project, building codes will have a legal precedence over the trade practices, construction industry and custom.
The Most Common Elements of a Change Order
As the contractor of the project, you may be required to give a formal written notice of the changes made to the scope. Documentation from the change order will be separate from the rest of it. The documentation could be said to be an instrument that lets the owner investigate, accommodate and correct the change order so that he has the chance to lower the costs and change the project completion schedule.
The change request will usually describe the nature of the change and come with other documentation. You will look at the description of the change request and compare it to the original big. The documentation will also include documentation of the subcontractor costs, and you will receive a summary of the total costs. A change order should have the primary contractor, third party and owner sign the change. The third party will be the one affected by the change like the construction lender or the surety company.
Not Paid for the Extra Work?
One of the most explosive problems happen when a contractor believes they won’t get paid for the extra work. They might threaten to slow down as a result or stop altogether. In contrast, the owner might say the contractor should have known about the unknown conditions, unexpected items, extra features and factored these things into the bidding price. As a result, the owner will say he should have to pay more than what was originally agreed upon.
You want to control the change order process throughout the initial stages. To do this, specify each step the contractor will have to undergo before the additional work or the reduction of work can be authorized. When you require contractors to get a written change order as part of the condition of additional payment, it hands the owner the authority to approve changes within the original scope of the project.
You should document everything that might be perceived as outside the scope of your construction project. Through the contract, you can require that your commercial building contractor notifies the owner through written documentation. This is important even when the change won’t add up to additional costs.
Breach of Contract What Happens?
As a way of deterring contractors and the work crew from stopping or slowing down, the contract should also have a liquidated damage clause that happens if the work stops. The clause adds a penalty defined in the money amount for the contractors, and he agrees to pay or forfeit this much in the event that a breach of contract takes place.
The amount forfeit or paid won’t be fixed. It gets set as the punishment to threaten and prevent a breach of contract with. For example, the contract might outline the completion date for the project and specify the liquidated damage. It could be as high as $1,000 per day for each day delayed past the deadline.
Change in the Contract Value
With commercial construction companies, you have to look at if an addition or deletion of a project will have an increase or reduction in the contract value amount. It’s possible to amend the contract so the change order becomes a must. The commencement and completion of the project will also play a role in the construction contracts. A contractor can negotiate with the client to delay the change orders, and they won’t be held liable.
The construction change order will affect both the California commercial contractors and the client. Signatures should go on both of the orders. The contractor will have a representative learn the procedures. In some cases, the contractor will charge more in fees because it disrupts the commercial construction services.
Everything in the contract should get discussed upfront. As the contractor, you should mention how many change orders and the original contract amount. In the construction contract, you will see specifications, drawings, the bill of quantities and the type of constructions with a building project.