How To Use a Construction Change Order

What is a Change Order? “Change order” is just the industry term for an amendment to a construction contract that changes the contractor’s scope of work.

What is a Construction Change Order?

Elements of a construction change order

Change orders in construction usually include these elements:

Original contract number

Knowing precisely which contract a change order modifies is crucial for contractors, owners, and designers. This is crucial when a contractor is working on several projects at once or a property owner is making improvements to several properties at once.

Project name and location

Most change orders include the name of the project they modify, a brief description of that work, including its physical location, in addition to a contract number. This helps ensure that the correct contract is changed.

Owners information

Additionally, it’s crucial to start a change order with the name and contact details of the property owner. This facilitates communication and guarantees that each change order is properly filed.

Contractor or architects information

In a change order, just as it is beneficial to include the property owner’s information early on, it is also advantageous to include the contractor’s or designer’s information close by. This makes it simple for other interested parties to get in touch with them quickly and easily.

Change order series number

Sometimes, a single contract can have many registered change orders. In these situations, keeping track of how many change orders you finish is helpful.

Change order and project dates

The dates of the original contract and the date the change is registered are typically included in change orders. A change order will also include the date that all parties have approved it. This also helps keep orderly records of the job.

Explanation of contract changes

This section of a change order is frequently the most comprehensive part. Here, the contractor will outline the specific changes that must be made to the original contract, their justification for the changes, and how they plan to implement them.

Here is where a contractor would explain the need for the new material and any adjustments to the project’s overall cost as a result, for instance if they had to swap out one kind of material for another.

Revised contract terms

Additionally, change orders typically include a thorough justification of how the modifications will affect the contract’s terms in general. This can include scheduling, price and contract value changes.

Signature section

Change orders are usually addenda to a legally binding contract. They typically include signature sections consistent with the original contract.

What is a construction change order?

Any modifications made to a construction contract after all parties have signed it are described in a construction change order. This document may address a variety of changes, such as using different materials, broadening or narrowing the scope of the project, adding or removing subcontractors, or altering the project schedule.

When changing a construction project, it’s crucial to use change orders because they can ensure that all parties are in agreement regarding what those changes entail and the related change in cost.

When do companies use a construction change order?

A change order is used by businesses when they need to change specifics in their initial construction contract. As an illustration, suppose a property owner decides they want additional work done or different tasks completed. On occasion, you might discover that changes are also necessary due to the conditions at a job site.

For instance, unanticipated terrain changes might necessitate more preparation than was initially anticipated. Weather conditions may also have an impact on a construction contract and necessitate a change order, particularly if they cause a project’s timeline to be extended.

How to create and implement a construction change order

Here are some steps that may be useful if you need to create a change order for a construction contract:

1. Write a detailed original contract

The fewer change orders you are likely to need, the clearer the original contract was. It can be helpful to visit the site beforehand and negotiate the terms of your contract in writing.

2. Establish a change order process and form

Make sure to create a change order form before the original contract needs to be modified. Use the information provided here to create your own change order template or think about using one that is already made. Prior to any actual contract changes, obtain unanimous consent for this template from all parties.

3. Use your change order for every modification

Without using a change order, it might be tempting to make small changes to work that has already been done. However, it is typically best to use a change order for each modification made. Later on in the construction process, this can help to ensure clear communication and accurate billing. As a contractor, make sure to send out a change order after deciding on specific changes, but before you start working to put them into action.

4. Get signatures promptly

It is crucial to quickly obtain signatures to formalize each change order. After issuing a change order, getting the contractor’s and the property owner’s signatures as soon as possible can help everyone understand what needs to be done.

5. Keep your change order on file

Finally, maintain a copy of each change order and the related contract. Your change orders can be kept organized and the billing and payment process accelerated by using a numbering system and a comprehensive cover sheet.

Tips for creating a construction change order

Additional pointers for drafting your change order are provided below:

Include all relevant parties

An agreement between a general contractor and any subcontractors isn’t necessarily altered by a change order between the general contractor and the property owner. Make certain that every pertinent party participates in the change order procedure.

Maintain professionalism

Sometimes, clients might find the change order process challenging. For instance, they might anticipate receiving work completed without providing additional compensation. A positive experience with change orders can be supported by maintaining clear, professional communication.

Leverage technology

Making the contract as accurate as possible by using technological tools, such as computer software, during the initial contracting process To communicate change orders, take into account using technological tools like email and electronic signature software.

FAQ

What are the types of change orders in construction?

Generally, there are four types of change orders. These change orders include Time and Material, Lump Sum, Zero Cost, and Unitary Cost. When the defined change in the work scope can be quantified and a clear price established, a lump sum change order is used.

What causes a change order in construction?

Contractors must anticipate change orders because they frequently result in cost overruns on projects. Inaccuracies in the original design or contract, incorrect drawings, unanticipated conditions on the job site, and other factors are frequently cited as justifications for change orders. Change order form submissions can be prepared for.

What is the first proper steps for a change order on a project?

Here are some tips for crafting an effective change order process:
  1. Start With the Contract. …
  2. Review Plans and Specifications. …
  3. Don’t Ignore or Delay Change Orders. …
  4. Communicate With All Parties Involved. …
  5. Negotiating the Change Order. …
  6. Document Everything.

How do you manage change orders in a construction project?

A Quick Guide to Managing Change Orders in Construction
  1. Get Clarity on Scope of Work. …
  2. Review the Construction Contract. …
  3. Get Written Approval for All Change Orders. …
  4. Communicate With Stakeholders. …
  5. Understand the Impact of Change Orders. …
  6. Final Thoughts on Change Orders.

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