Change Orders: What Are They?

In a normal contract, there is very little room for changes, after the contract is finalized. The parties are expected to have anticipated any unforeseen circumstances, and accounted and bargained for them in the agreement. If circumstances don’t turn out to be what you thought they were, you are nonetheless bound by the terms of the agreement that you signed.

Uncertainty in Construction

But construction contracts work a bit differently, because the nature of construction is that there will almost always be unanticipated changes or alterations that can’t be predicted in advance or anticipated. That means that a construction contract has to be solid enough that the parties know what their rights, duties and obligations are, but flexible enough to “go with the flow” should circumstances make it such that changes need to be made.

This is essentially what a change order does and what it is for. A change order is just an agreement between the parties to a construction contract to modify the terms of the original contract. The change might encompass the nature and scope of the work being done, but also, the time frames and of course, the cost.

Why It’s Needed

Most change orders are only required, if circumstances out of the parties’ control dictate a change–say, the unavailability of materials, or a surveying error changes the plans, or unavailability of required laborers.

Law changes may force changes, as might other construction–imagine that, for example, the state or county builds an electrical pole nearby that prevents certain machinery from accessing the construction site on your project.

Often, They’re Necessary

It would be nice to have no change orders ever necessary, but that’s not reality. For example, it is well known that architectural designs can often be incorrect, or dimensions may not be exact. Slight errors in construction can domino, and lead to wholesale changes being necessary, and increased costs, and time.

Even a slight increase in time, can lead to a long increase; if a project cannot be finished on time, other subcontracts may need to be rescheduled based on their availability.

The owner may simply want the ability to make changes. Once a structure is built, an owner may decide, once seeing it in person, that he or she wants a room to be bigger, or wants walls to be spaced differently than they are laid out.

If the builder made an error, the builder may prefer a change order, to being in breach of a contract or agreement. Even if the change order costs the builder a little money because it’s the builder’s fault, that may be better than litigation over an unfinished construction project.

Change Orders vs. Amendments

Although a subtle difference, a change order can be seen as an amendment, but is not exactly the same.

An amendment changes the terms of the contract, for example, altering payment schedules, or changing the rights of the parties–something internal about the contract and its language–not external, related to the project itself, which is a change order.

Construction law legal problem? Call our Fort Lauderdale business attorneys at Sweeney Law P.A. at 954-440-3993 for help.

Sources:

ironcladapp.com/journal/contracts/change-orders

sirion.ai/library/contract-management/change-order-vs-amendment/