Change Order andChange Order Disputes

By Mick Martin

MRM Enterprises

Definition of Change Order:

• A change order is essentially an agreement to modify the parties contract. In this respect a contract modification is binding so long as both parties consent to the change.

What is a Change Order?

Some common factors leading to change orders:

• Delays

• Specific Design Alterations

• Lack of Coordination

• Building code compliance

What a Change Order is NOT:

• Interpretation of General Concepts of the Contract

• Device for Contractor or Client to get “Something for Nothing”

• A way to get out of a screw-up

• An after thought of specific work performed

Get your Change Order in Writing

• Verbal agreements are not binding on any party

• Use specific language rather than general terms

• Include signatures and dates of all parties

• Copies to all parties

Performance

vs.

Non-Performance

Getting the Change Order Right

• Opportunity to do a better job and make more money

• Go above and beyond

• Be fair

• Communication is key

Getting the Change Order Done

• Expedite the work in a timely fashion according to contract / change order

• Stick to the contract / change order

• Make sure all workers are instructed as to the specifics of the change order

• Get Paid

Addition

or

Subtraction

Add-ons (Additions)

• Any addition to the original contract, addendum or amendment

• Changing light bulbs to adding an east wing

• Common sense is not always so common

Knock-offs (Subtractions)

• Any deletion to the original contract, addendum or amendment

• Change in material, money or time

• Always under promise and over deliver

To Claim

Or

Not To Claim

What is a Claim?

• Request for adjustment of contract terms

• Request for payment of money

• Request for extensions of time

Contract Dispute Process

• Resolution

• Mediation

• Arbitration

• Litigation

Resolution

• Resolve the claim without a 3rd party

• Contractor and client come to an agreement

• Work is performed – contractor is paid

• Client is satisfied

Mediation

• Third party assistance in attempt at resolution

• Non-binding

• Mediator unbiased

Arbitration

• Provisions enforceable by statute

• Inclusion of arbitration guidelines in construction contract

Litigation

• Involvement of the judicial system

• Designed to produce accurate and fair outcome

• Method can be costly and time consuming

Obstacles are those frightful things you see when you take your eyes off your goal”

~Henry Ford Inventor and Founder of Ford Motor Company

Get It In Writing!

Questions??

Thank you!