3 Types of Change Orders in Construction (Explanantion)

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The different types of Changes Orders in Construction

 

How does a Change Order originate?

There are several ways a change order can exist on a construction project.

Unforeseen conditions,

On a new ground-up project the earthwork, the Contractor may encounter unsuitable soil during his excavation that was not identified in the geotechnical report.

The contract documents indicate stripping the site, scarifying the base, and then lime-stabilizing the base. However, during the rolling and compaction of the site, you may notice that a particular area pumps up and down as the heavy equipment rolls over it.

It is at this point that the Construction team and the site excavator notify the civil engineer and the Architect of this unsuitable soil.

Upon mutually agreeing that the soil must be replaced with suitable soil, the Architect, Civil Engineer, or Construction Manager may issue a change order to the excavating contractor. If you have a General Contractor, then this change order is directed to the General Contractor.

Other unforeseen issues involve old buildings that are to be remodeled. The drawings may not indicate material containing asbestos, however, after a field test before demolition, there is evidence of it There may also be inadequately supported walls or floors.  And after removing the wallboard it is determined by your structural engineer that supports must be installed.


Bulletins from the Architect or Engineer

The Architect or Engineer may issue a Bulletin relating to the design change to the project. They may issue these after the review of the Trade Contractor’s shop drawings and product data. 

They may mark up the shop drawings indicating a change. 

The Bulletin identifies the change and asks the Construction Manager to proceed with a change order, either an additive change or deductive.

Change Directive

 The Owner, Architect, or Construction Manager may issue a Change Directive to the Contractor for work to be performed. 

A change directive requires agreement with the Owner and Architect and may not be in agreement with the Contractor. 

If the Contractor disagrees with the amount or the scope of the work, he is still obligated per the contract to perform the work from this directive.  

The Change Order

A change order is to be developed by the architect and signed by the Owner and General contractor/Construction Manager.

There are three methods of determining the cost of the change order, either additive or deductive.

1) A mutually acceptable lump sum cost that is properly itemized and supported by sufficient substantiating data to permit evaluation. Example below

Lump Sum Price Change Order



Unit Price Change Order

2) A Unit price method that is established in the contract. Example as follows.

Time, material, and equipment Ticket Change Order

3) If the contractor disagrees with the amount, then the Architect can unilaterally assess an amount on the change order. 

The contractor is to proceed and then they can produce an itemized account of the change. In this case, it would be on a Time & Material basis. 

The contractor is to produce time and material tickets daily to the Architect and Owner for review and approval.  Example below.


The time and material ticket must be signed by all parties each day. 

The Time and Material should be avoided if at all possible. It can become impossible at times to acquire the necessary signatures daily. And someone has to verify the time amounts on the ticket. 

A lump sum change order is the best approach to a change order. If necessary, review the contractor's change proposal and negotiate a reasonable amount. 


Change orders are a part of the construction process. Understand them and attack each change order as it comes into existence. By doing this you will have a continuous and mutually beneficial project for all parties.


Shettig Construction Management provides Professional Construction Management services from the inception of your project through completion. www.shettig.com

mshettig@gmail.com



 





  

 

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