A change order is an official request for additional time and funds in order to complete revised contractual obligations. The reasons behind construction change orders vary from project to project, but most are related to one of five different types of issues. Change orders can be a headache when the complexity and timeframe of the requested addition impose schedule constraints. Therefore, change order management should be included with every contract, as changes often can lead to legal battles, disputes, and arbitration.
Errors or Omissions in Drawings
The most common reasons for construction change orders are errors or omissions in the project scope. Inadequate details, misrepresentation, or failure to prepare a complete set of detailed drawings can lead to serious change order requests. Errors and omissions may relate to the building design and/or to the land or environment where the construction is sited. To prevent these common problems, it is important to review all contract documents and verify that the owner-provided information is accurate and adheres to the latest standards and specifications.
It is not uncommon for builders or developers to start a construction project before the project scope is completely defined or without final drawings. This type of error is perhaps most common on design-build projects, where the ongoing process of design can lead to work stoppages and cost overruns. This can result in labor issues due to delays in project execution and can have a significant impact on overhead costs.
Sometimes the construction drawing asks for one product or material, but the specs call for something else. This situation is very common on construction projects where the drawings are assigned to different consultants, each one of them acting on their own, without any kind of direction from a team leader. This can lead to a situation in which the contractor quotes on one article, while the owner insists on a different article when it's time for the article to be installed.
A soil problem is the most common type of unforeseen condition and usually results from a failure to perform a complete soil boring. An inadequate soil study can lead you to expect certain conditions based on the specific testing criteria, but if the soil profile varies, it might present additional challenges and soil types throughout the site. Assumptions about soil conditions or other issues regarding the construction of the project can be different from the actual conditions found on the site.
Contractors often make substitutions when specified materials are not available or when there is a shortage of supplies. This can lead to a change order and possibly an additional issue: a request for a credit if the cost of the substitute material is less than that of the specified material. In this case, the contractor may need to make up the difference in cost between the different materials or products. In other substitution situations, the owner may ask for upgrades during the construction process. This request should initiate a change order for extra compensation and time associated with the proposed modifications.