What Is A Construction Change Order?

A change order or change directive in a construction contract is an amendment to the legally binding contract.

Like death and taxes, changes to a construction project are a pretty sure thing. Maybe the owner decides he needs a bigger man cave added to his house, or perhaps the original drawings failed to show the requisite number of windows in the living room. Whatever the case may be, changes to a construction project can cause major headaches for both the owner and the contractor.

Most construction changes are made using change orders. However, if the sides can’t agree on how the change will affect the project and pricing, the owner may issue a construction change directive to instruct the contractor to make the changes. Read on to learn about construction change directives and how they might affect your project.

Construction Contracts Generally

Even if it’s not specifically required by your state’s laws, it’s always best to have your construction contract in writing. This helps all parties see the rights and obligations they are agreeing to from the start. Additionally, construction contracts should include a section on how changes will be handled. It’s important to read through the specifics before signing your construction contract to ensure that it’s fair and that you’ve anticipated as many potential roadblocks as possible.

Basics Of A Construction Change Order

A construction change directive is a way for the owner of a construction project to instruct the contractor to perform work in addition to what has been agreed to in the contract. This mechanism is used when the owner and contractor cannot agree on the schedule or budget of the additional work, or when they agree to determine pricing and timing later. Unlike a change order, to which both the contractor and owner have to agree, the construction change directive is not a request but an order to do something. This type of directive may be a helpful tool for the owner, but it can also lead to drawn-out legal disputes.

Does the Contractor Have to Follow the Construction Change Directive?

Unless the details of your construction contract speak directly to this issue, the contractor generally does not have to agree to the construction change directive in order to be bound by it. For example, Washington State’s construction change directive form says that once the document is signed by the state and received by the contractor, the contractor must proceed with the construction changes. Other directives require the signature of the owner and the architect in order to be effective.
The contractor can either agree to the changes in price and timing proposed by the owner, or dispute them after the work is completed. Either way, he or she is still supposed to perform the work specified while the dispute is pending.

How Are Disputes Resolved?

Sometimes the original contract will provide guidance for determining prices for additional work. For example, if the contract specifies that the contractor will be paid based on the actual cost of materials and labor, plus a fixed percentage, then this could help determine the additional amount. Similarly, the contract might specify that a neutral third party, such as the architect, will decide the cost.

If the parties still can’t agree, the contract may have sections regarding alternative dispute resolution. These could specify that disputes will be settled through mediation or arbitration. If these other methods fail, the dispute could move into litigation, where each party will likely argue that the other side has breached the contract.

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When you need legal help with a construction contract in Utah, please call Ascent Law LLC (801) 676-5506 for your Free Consultation. We can help you with loan review, construction financing addendums, real estate title work, quiet title actions, lawsuits, contract disputes and much more. We want to help you.

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