Adjusting a contract is standard procedure in construction. Depending on the context and what is being adjusted, these changes in the nature of the contract may use different terminologies and have different procedures that must be followed to become official.
So, let’s look at addenda vs change orders vs amendments, and try to parse the difference between these similar terms.
Addendum vs Change Order: Two Different Ways of Altering a Contract
On a basic level, addenda are small revisions to a contract, whereas a change order usually involves significant design changes to a project. However, things are not always so clear-cut.
Contract Addenda: Fixing Minor Issues in a Contract
Generally speaking, an addendum to a construction contract is for small errors or omissions.
These can include the changing of dates, clarifying ambiguous wording, and other easy to overlook items that were missed during the initial draft of the contract. They also may not require specific signatures to be enacted.
However, by definition, most construction contract addenda must be enacted before bids are submitted. The AIA A701, a standardized form, explains this requirement:
“3.4.3 Addenda will be issued no later than four days prior to the date for receipt of Bids except an Addendum withdrawing the request for Bids or one which includes postponement of the date for receipt of bids.”
So, unless the addendum is removing bids or delaying the date for bids to be given, then the addendum technically must be given at most 4 days before bids are being accepted.
Change Orders: Significant Changes when a Project is Already Underway
Change orders, on the other hand, can be given when a project is underway. Change orders need to have the specific signatures of all parties involved and can encompass much larger changes than that of an addendum.
Change orders that affect scope include orders for additional work or a change in the timeline caused by the discovery of previously unknown problems at the job site. These often add additional payment to the contractor, but from time to time they can actually reduce the scope of a project creating what is known as a deductive change order.
That being said, small change orders that don’t affect scope are also common and are sometimes used as a way to add an addendum to a contract past the AIA’s 4-day mark.
The important thing to note is that change orders can be issued at any time, and require all party’s signatures to be enacted. Whereas an addendum is issued before bids are accepted, makes small clarifications or minor changes, and has much lighter requirements to be added.
Change Order vs Amendment
Essentially, a change order is a specific type of amendment to a contract used in construction. While there are other forms of contract amendments, change orders are the most common in this industry.
As previously mentioned, they can be used to change the scope, positively or negatively, and require multiple signers to agree on the changes. They are not beholden to the AIA’s 4-day threshold for addendums and often constitute changes in pay and timeline.
Additionally, change orders or amendments can be further defined into subcategories dependent on the nature of the changes.
Lump sum, also known as fixed price, amendments are used when the change in work can have a definite price. If you can look at what needs to be added and can confirm a specific price for it then these amendments can add that amount to the initial contract.
This goes back to the idea of change orders being used as addenda in certain cases. As their name suggests, they are changes that do not affect the overall price of a contract and are generally quite minor.
Time and Material (T&M)
When the price of a change is more difficult to quantify, then a T&M amendment is often issued. The contractor will meticulously track any additional time and materials used to address the changes, and that total is added to the price of the contract. Usually, clauses regarding T&M change orders are part of the original contract.
Here, the price changes are based on additional defined units of work, even if the total amount of units may be difficult to know upfront.
Sometimes the price of these are already stated in the initial contract, other times additional itemized units may have to be added as part of the amendment.
Keeping Track of it All
Clarity during any type of change, big or small, is a big deal to keep everyone on the same page and the job going smoothly. This is why we built Trak Changes to handle all of this for you.
Trak Changes quickly updates all parties when a change order, amendment, or addendum is issued and allows for easy online signing. Changes are no longer a hassle and can become tools to maximize your bottom line.
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