A change order clause is part of the construction contract that dictates how changes to the project should be handled. It’s important for you to read and understand the contracts you are signing so that you know how to proceed in the event that a change order is needed on the job.
You might feel that including them in your own contracts is unnecessary because your proposals are solid and you’ve never had to deal with change orders before – but therein lies the problem. You don’t know what issues or difficulties lie ahead in your next job and it’s best to prepare yourself and business against any disputes in the future.
Remember, when you signed your contract for the project, there was most likely language in it which spelled out, exactly, what you are to do when you encounter any kind of a change. You have an obligation, and you signed your name to it, pledging you would handle it in accordance with the contract provisions. You can’t just ignore it.
Also, when you are having a discussion with the project’s GC, construction manager (CM), or homeowner and there is an attempt to make you look bad or feel guilty for even suggesting the very idea of a change order, it’s a good time to bring up this fact. If it were extremely rare for change orders to occur, then it might not even be mentioned in your contract.
To illustrate the point, here are two examples from public agencies in California, the San Diego County Water Authority and Caltrans (California Division of Highways).
The paragraphs above are examples of “change order clauses” in large construction contracts. They happen to be with public agencies, but similar clauses exist in the contract language of most private works as well.
Private jobs between homeowners and contractors too often ignore these kinds of clauses or, for that matter, project contracts—all together. They do that at their peril! They are the most vulnerable yet take the most risks. Ever notice how the ‘big box’ home improvement stores, or window companies, or hvac and roofing companies NEVER ignore the paperwork when they deal with private, homeowner-type projects. There’s a reason for it. You shouldn’t ignore it, either.
The following sample clauses are from lawinsider.com.
The California’s Contractors State License Board also provides sample change order clauses verbiage to include when putting contracts together.
We aren’t attorneys, so we can’t give legal advice. That’s one of the advantages of using Trak Changes, it greatly simplifies the process of change, if and when it happens.
Final Thoughts About Change Order Clauses
One reason that many smaller and mid-size contractors and subs may be inclined to ignore change orders and the contract clauses dedicated to them is a mistaken belief that they are there for the use of general contractors—not a small sub—and they couldn’t be more wrong. Or, they may incorrectly believe that the GC they are working for will take care of them, will file the RFIs and the change order requests and sign the formal change orders. Wrong, again!
Too often, GCs can see a potential change order as a nuisance, and you have to guard against it. For instance, let’s assume you have a change worth $1,000.00 to you, but the markup for the GC might only be 5 or 10%, so $50 or $100, and it’s often a hassle.
This is why you need to be the shepherd of your own change orders. Keep them in your view. Fight for them. After all, it’s your money laying on the table. Using Trak Changes helps you create a transparent log of all requested and approved changes – ensuring that you get paid and don’t cause any unnecessary delays on the job. Click here to get started for free today.
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