Anybody who works construction will tell you, “Changes happen.” However, change orders can become a source of major frustration for both the owner and the contractor. They are also, frequently, at the heart of litigation when something doesn’t go as planned — especially when the change orders come along late in the building process when the associated costs are higher.
A lot of times, the funding isn’t always there to pay the contractor immediately for the changes — which ends up slowing things down (or halting the building altogether). That drives costs up even further.
Is there any way around the problem?
Sometimes, yes. It just takes a little creativity and a lot of co-operation between the owner and the contractor to make a plan work.
Some potential solutions that can mitigate the cost of a change order to the contractor and keep construction going include:
- Agreeing to change some of the product specifications so that less-expensive materials can be used (like fiberglass in place of steel wherever possible). This is often extremely effective since materials account for a tremendous percentage of construction costs.
- Agreeing to reduce the scope of a project in unimportant areas — like redundant backup systems for noncritical items.
- Having the owner supply the contractor with power, so that the contractor doesn’t have to rent generators for the construction.
- Letting the contractor use the owner’s space for materials, reducing the contractor’s overhead for storage.
Naturally, these are only a few of the possibilities. The better that an owner and contractor work together on a solution, the more agreeable the end result is likely to be to both parties.
One important issue, however, is the agreement itself — it needs to be in writing. All the changes have to be documented and signed off on by both parties. That makes it easier to avoid litigation over the construction down the line because there’s reliable evidence that the plans were understood and agreed upon.
Source: Interface Consulting International, Inc., “An Ounce of Prevention: Creative Solutions for Change Orders May Avoid Costly Litigation,” accessed April 26, 2018