Written Change Orders

Most construction contracts and subcontracts allow owners or general contractors to make changes in the work to be performed.

The right to make changes is limited only to the extent that they cannot alter the general scope of the work. Changes may either add to or delete from the work to be done. If made, the contractor or subcontractor is entitled to a commensurate increase or decrease in the amount he is to be paid.

Many contract change provisions also require that changes be agreed to in writing, failing which the contractor or subcontractor would not be entitled to additional payment, i.e. "extras."

Legal battles are fought when changed work is performed but no written change order has been executed in accordance with contract requirements. The courts of many states appear to resolve the issue by ruling that a written change order is not required, notwithstanding the contract language, if the extra work was performed pursuant to directive or with the full knowledge of the party from whom payment is sought.

The theory behind these rulings is that one cannot request additional work or be aware that it is being performed and rely on a strict contract language simply to avoid payment for another's additional work.

On the other hand, where it is questionable whether the work is in fact extra work, courts may be expected to rule differently. Thus, where a contractor performs what he believes to be extra work without placing the owner on notice that he will expect additional compensation for that work, the owner might avoid payment if the contract documents can be interpreted to require the particular work involved as being within the original requirements, and he did not receive advance notice of the contractor's different interpretation and additional compensation expectation.

It is therefore definitely in the interest of the party doing the work to promptly give written notice when he is performing what he believes to be extra work. This written notice will permit the parties to attempt an amicable resolution of both the question of whether the work is extra and any appropriate adjustment in the payment to be made.

If the parties disagree, dispute clauses in the contract (such as arbitration provisions) might be promptly invoked for resolution, rather than having one of the parties risk substantial monies and/or time loss before the extra issue is resolved.

It should also be noted that under some contract forms (particularly those provided by the American Institute of Architects) written change orders are likewise required for time extensions. Again, the party whose performance is delayed should promptly give written notice to the other party of any delays being experienced and seek resolution of the length of time extension by appropriate change order.

While parties may be successful in court in avoiding stringent contract requirements of written change orders, the risks and complications A involved dictate that they make every effort to give written notice of any extra work they think they are performing and any delays being experienced. They should also attempt to get appropriate written change orders adjusting the amount of their payments and the time for their performance.