Change Orders and Construction Contract Disputes
Being a contractor is not easy. There is so much to worry about. Contractors build six- or seven-figure structures while dealing with subcontractors, employees, and clients. There are competing priorities and a constant concern about finances.
On top of everything else, contractors must often deal with change orders. A change order is when one of the parties involved requests a change to the contract, scope of work, and/or schedule. Basically, a change order is how contractors and owners formally agree to make changes to the contract after work has already begun.
If the parties agree to the request, a formal written change order should be prepared. However, that is not always what happens. Contractors often rely solely on a verbal agreement and this creates issues that lead to litigation.
If change orders are not handled properly, they can also lead to cost overruns and delays. Here is a breakdown of how they work and why they matter.
Common Types of Change Orders
- Owner-requested changes. These occur when the property owner decides to alter the project, like upgrading materials or adding features.
- Unforeseen conditions. Unexpected issues such as hidden structural damage, poor soil conditions, or outdated wiring can require immediate changes.
- Design errors or omissions. If architectural or engineering plans are flawed or incomplete, corrections often require change orders.
- Regulatory or code changes. New building requirements or inspector demands can force modifications mid-project.
Why Change Orders Matter
Change orders are more than just paperwork. They directly impact legal rights and obligations under a construction contract.
They come with several key legal implications, such as:
- Payment disputes: Contractors may not get paid for extra work without a signed change order.
- Breach of contract claims: Performing work outside the contract without approval can trigger disputes.
- Delay claims: Changes often extend deadlines, which must be documented to avoid penalties.
Most contracts require change orders to be in writing and signed by both parties to be enforceable.
What Should Be Included?
A solid change order should include:
- Description of the change.
- Reason for the change.
- Added or reduced costs.
- Time extensions.
- Signatures of all required parties.
Common Issues With Change Orders
- Verbal agreements. “Go ahead and do it” instructions often lead to disputes when it is time to pay.
- Scope creep. Small, undocumented changes accumulate, significantly increasing cost and time.
- Lack of documentation. Missing details about cost, materials, or deadlines can create confusion and legal risk.
- Disagreements over pricing. Parties may dispute whether the added cost is reasonable or justified.
Contact Us Today
Change orders can be tricky for contractors to deal with. Construction professionals need to protect themselves and ensure any changes to the contract are always in writing.
A Bradenton construction litigation lawyer from Cahall Law Firm can help you with your construction issue. Our firm is ready to stand by your side and help protect what you’ve built. To schedule a consultation, fill out the online form or call (941) 281-2019.
Source:
cmaanet.org/sites/default/files/resource/Five_Steps_Order_Disputes_Cdive.pdf
