Change Orders Part 2

March 20, 2003

Change Order Recognition

The best way to recognize potential change orders is to have a full and complete understanding of the plans, specifications, and other contract documents. A primary duty of the project manager is to read and understand all contract-related documents. This requirement cannot be overemphasized, and any questions concerning those documents need to be resolved immediately.

Not all changes will come with the words "Change Order" written on them. Even when they do, it is necessary to conduct a complete evaluation against the original contract documents. Most jobs encounter cost and schedule difficulties because someone did not recognize that the work and working conditions were different from what was agreed upon and provided for in the contract documents.

The following summarizes some of the situations which can result in potential change orders:

    1. Directed changes where a customer issues a directive requiring work different from that provided in the contract plans and specifications.

    2. Constructive changes where an act, or failure to act, by the customer has the effect of requiring work different from the contract documents.

    3. Site conditions differing materially from those indicated in the bid documents, or differing materially from what would ordinarily be expected.

    4. A customer directive requiring work to be completed under a situation different from the contract. An example would be overtime on a time and material basis to accelerate some work activity.

    5. Excusable delays without obvious fault, such as strikes, severe weather, or Acts of God.

    6. Significant variations in material quantities which may indicate discrepancies in drawings and specifications. Plus or minus 10 percent to 15 percent can be considered significant.

    7. Conflicting interpretations of plans and specifications that result in additional work.

    8. Interference by the general contractor, owner, or other subcontractors which has the effect of disrupting the orderly and economical progress of the work.

    9. Direct delays caused by the customer such as late delivery of owner-furnished equipment.

    10. Forced acceleration where work is performed in an inefficient manner to make up time lost as a result of customer-caused delays. An example is where no time extensions are allowed for late delivery of owner-furnished equipment.

    11. Extra work, changes to work already installed, and similar situations resulting from defective or inadequate plans and specifications.

    12. Extra work resulting from damages by others to work already installed.

Too often, general contractors, owners, or other project participants will try to make up for their own deficiencies, mistakes, and delays by imposing inordinate conditions upon subcontractors. It is necessary for the project manager to remain fully aware of these potentials and, while you and your firm should cooperate to help overcome delays and to expedite project completion, these cannot be rendered in such a way that will be detrimental to the execution of your work.

In general, a thorough knowledge of (1) all contract documents, (2) the general contractor, (3) the owner, and (4) the project conditions will place your firm in a position to consider requesting a change order on anything that deviates from the agreements. While there is no intention to nickel and dime any job, you must place your firm in the position where decisions can be made on change order compensation without having to rely on someone else.

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