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What is a Change Order?
A change order, or variation order, is an agreement between a contractor or subcontractor and a consumer that makes modifications to an existing construction contract. These changes can consist of addition, omission, or substitution for the work, schedule, price, or other aspect of the contract.
A change order is only successful when both the contractor and client agree on the terms.
How Change Orders in Construction Work
Change orders play a vital role in project management. They are great for making sure project management modifications can be implemented seamlessly for everyone involved. Change orders benefit consumers by itemizing modifications and they benefit contractors by creating a space where they can request extra funds or more time when needed.
What is Considered a Change Order?
A contractor or subcontractor and their client make an agreement when they decide to work together, which is typically called a construction contract . This contract includes information about the scope of the work . A change order goes into effect any time something about the original job agreement changes to modify the initial contract.
Who Prepares a Change Order?
Contractors make way for change orders by placing a “changes in work” clause in the contract. Construction lawyers help draft these special documents to make sure there is a clear pathway for all parties of an agreement to make any changes. The result is a smooth and simple workflow that helps to make changes stress-free for all involved.
Construction Change Order Example
Sarai hires a construction company to add a new roof and new windows to her home. She and the contractors agree that it will cost $20,000 and will take 6 weeks to complete the job. After the subcontractors start working they realize some needed materials went up in price, which makes the needed budget higher.
Since the contractor and subcontractor made sure to include a change order clause in their contract with Sarai, they have the freedom to make changes seamlessly:
- The contractor contacts Sarai to explain the increase in the price of the material
- Sarai decides that the new cost is acceptable and she agrees to pay more
- The contractor contacts his construction lawyer to give him the details about the higher price and his agreement with Sarai
- The construction lawyer documents the new agreement on a change order form, which outlines the new price and increased budget
- Sarai and the contractor are presented with the change order form, which they both review and sign
- The change order goes into effect, modifying the original price and allowing the subcontractors to finish the job
Browse some of our construction lawyers .
Types of Construction Change Orders
Construction variation orders are a vital part of making sure construction jobs run smoothly. They cover many different situations and are also helpful in ensuring that everyone stays informed about the unexpected.
Contractors enjoy the peace of mind knowing their customers agree on any deviations and clients can rest easy knowing that they will be notified about any changes.
Here are some examples of types of change orders in construction:
- Budget: When any changes are made to the amount of money a client can pay or the amount that a contractor or subcontractor needs to complete a project.
- Timeline: When a construction job is expected to take longer or to be completed sooner than expected.
- Cost of Materials: Sometimes, the cost of materials can change between the time an agreement is made and when the work is done. When this happens, the original contract must be modified with a change order.
- Changes in Scope of Work: It is nearly impossible to predict how a project can change from start to finish. When a client or subcontractor decides to make changes to the work being done, change orders allow for new terms to be established.
Learn more about types of change orders here .
Key Parts to Include in a Change Order
One of the most important things construction lawyers do when putting a change order together is ensuring it includes any information regarding a modification to the original agreement. There are several key parts that construction lawyers must include in a change order.
Here are a few examples of the most important aspects of any change order:
- Contract number
- Name and contact details of contractor or subcontractor
- Name and address of project
- Important dates such as deadlines, dates when change order is proposed and when it’s approved
- Information about what change is being made
- Details about any difference in price or timeline caused by the proposed modification
- An outline of the original contract terms versus the proposed changes
For more a more in-depth look at the key parts of any change order, check out this article .
Planning for Change Orders
One of the best things any contractor or subcontractor can do to protect their business is to plan for change orders. It is nearly impossible to predict whether something will go wrong on a project, so it’s always best to come prepared. Having a process in place to follow when a change needs to be made alleviates pressure for everyone.
Perhaps the easiest way for contractors and subcontractors to plan for change orders is to include a provision for them in the original contract. This ensures that all agreeing parties understand that change orders are a possibility. Including these provisions in the original contract also reduces the chance of any negative interactions, including a breach of contract .
Read more about how to prepare for a change order here .
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How to Write a Change Order
Contacting a construction lawyer is always a good idea when a contractor wants to write a change order. A change order is a legally binding document, and if the terms aren’t up to par with legislation, it could cause problems for the construction company. Construction lawyers use a multi-step process and their expertise to write change orders.
Here are a few steps lawyers take when writing variation orders:
Step One: Identify the Changes
The first step to writing any change order is identifying the changes that need to be made. Decide what you want your change order to communicate and document the changes.
Step Two: Discuss the Changes
Once you have a map of needed modifications, it is time to communicate them to the client. Make sure to come prepared to answer any questions or concerns the client might have.
Step Three: Create an Action Plan
Any changes in timeline or cost that arise from the changes should be discussed before a change order is formed. This ensures that no unexpected charges or changes are revealed in the paperwork.
Step Four: Write the Change Order
With the help of a construction lawyer, it’s time to write the change order. Include all vital information such as the contractor’s contact details and name, the budget, the timeline, and any other project-pertinent information. It’s also important to include a summary of the applied changes.
Step Five: Sign the Change Order
Now that the hard work is done, it’s time to sign the document. Make sure the contractor and the client both agree and sign the dotted line.
Here is another article about how to write a change order.
Get Help with a Change Order
Are you ready to learn more about a change order and want to get some advice from an expert? Post a project today on ContractsCounsel to start receiving bids from construction lawyers who focus on change orders.
Meet some of our Change Order Lawyers
Small Business Attorney licensed in Texas and Colorado. Based in Dallas, appointments available in DFW area.
I am an attorney with six years of experience drafting and negotiating a wide variety of business contracts, in industries including technology and software, finance, professional services, hospitality, and non-profits.
Attorney Joshua K. S. Cali is a respected business, estate planning, and real estate attorney based in Ashland serving Middlesex County and other nearby areas. Joshua graduated summa cum laude from Bentley University in Waltham, MA, and from UCLA School of Law in Los Angeles. Before starting his own firm, Joshua practiced estate planning for high net worth clients at a boutique law firm in San Diego, CA.
A business-oriented, proactive, and problem-solving corporate lawyer with in-house counsel experience, ensuring the legality of commercial transactions and contracts. Michael is adept in reviewing, drafting, negotiating, and generally overseeing policies, procedures, handbooks, corporate documents, and more importantly, contracts. He has a proven track record of helping lead domestic and international companies by ensuring they are functioning in complete compliance with local and international rules and regulations.
Businesses, Contracts, Operating Agreements, Corporate, Real Estate, Start-Ups, Cannabis
Drew is an entrepreneurial business attorney with over twenty years of corporate, compliance and litigation experience. Drew currently has his own firm where he focuses on providing outsourced general counsel and compliance services (including mergers & acquisitions, collections, capital raising, real estate, business litigation, commercial contracts and employment matters). Drew has deep experience counseling clients in healthcare, medical device, pharmaceuticals, information technology, manufacturing, and services.
Daniel is an experienced corporate attorney and works closely with corporations, privately held companies, high-net worth individuals, family offices, start-ups and entrepreneurs. Daniel graduated from the Gonzaga University School of Law and is licensed to practice law in Illinois.