Over the last several weeks, I’ve explained the importance of documenting any work that deviates from the initial plan in a construction project. Whether you’re filling out the waiver of lien or the contractor’s affidavit, you must notate these additions to the job as they occur. By neglecting these steps, you’ll abandon your right to be paid.
With that said, let’s now focus on change orders. This form is also essential when it comes to detailing any alterations in the job’s scope of work. Like the waiver of lien and contractor’s affidavit, you must have a change order for each adjustment. Otherwise, the project could easily get off track. And, worst of all, you might end up losing money you’ve legitimately earned. As a rule, change order paperwork is implemented after the contract has been awarded. Typically, either the property owner, architect, general contractor and/or a field condition requires that the original scope of work (as described in the architectural drawings, specifications and/or contract) be modified. You should also be aware that every time there’s a variation in the scope of work, a separate change order work item needs to be created.
Types of Change Orders
In order to understand how to use change orders, it’s essential to know that they fall into one of two main categories:
- Changes with a cost impact – Changes in the scope of work of the contract that increases or decreases the original or revised Contract price; and
- Changes with no cost impact – Changes in the scope of work of the contract that do not increase or decrease the original or revised contract price.
Keep in mind that time extensions and other variations from the original planning may be necessary in either of these types of change orders.
One Final Note
The construction paperwork is a critical safeguard and should always be examined carefully. So before you sign any agreements, it’s always in your best interest to have an attorney look over the documents and advise you on the most appropriate route to take.
Next time, I’ll take a look at what “extras” mean for your change order paperwork.