Use our construction change order for streamlined project adjustments with full transparency and legal compliance.
Updated April 22, 2024
Written by Josh Sainsbury | Reviewed by Brooke Davis
A construction change order is an essential document that allows project stakeholders to manage and track changes within a construction project. These changes can vary, from minor adjustments in project specifications to substantial modifications affecting project scope, budget, and timeline.
The document serves as a formal request and authorization for modifying the original contract, ensuring clear communication and preventing unnecessary legal action.
Change orders are subject to limitations to maintain project integrity and fairness. They should not:
These restrictions ensure that change orders serve their intended role within the project’s framework.
In a construction change order, several vital elements need to be included to ensure clarity and transparency in managing project modifications:
This section typically includes project details such as the project name, location, and unique identifiers, facilitating proper project association.
This section provides a comprehensive description of the nature of the change. It elucidates the specifics, whether it involves design alterations, material substitutions, additional work, or other variations.
Changes frequently influence project costs. This section delineates the financial implications of the change, whether it results in added or reduced costs. It includes a breakdown of the additional costs or savings associated with the change, including labor, materials, permits, and other relevant expenses. This helps project stakeholders assess the impact on the project’s budget and make informed decisions.
Before initiating a construction project, obtaining an accurate and detailed construction quote is crucial. It establishes an initial understanding of the project’s financial aspects, which is a reference point for assessing any changes through construction change orders.
In cases where the change impacts the project’s schedule, this section outlines the adjustments made to the timeline, allowing project managers to plan and allocate resources accordingly.
As for federal change orders, the U.S. Government Accountability Office (GAO) released a report emphasizing how delays in processing these orders disrupt cash flow for contractors and hinder project schedules. The GAO recommended that agencies improve data collection and address these issues.
A construction change order requires approval from all pertinent parties involved in the project. This typically includes the asset owner, general contractor, subcontractors, and other relevant stakeholders. Signatures indicate agreement and authorization for the document to take effect.
Knowing when to use a construction change order is crucial for maintaining project clarity. Here are the critical scenarios:
Effective communication with regulatory authorities is vital to ensure that any necessary permits or approvals are obtained promptly. Failure to address regulatory requirements can lead to project delays and potential legal consequences.
Change orders should always be executed with the agreement and approval of all parties involved in the project. This collaborative approach ensures that changes are well-documented and executed to benefit the project and all stakeholders.
Construction change order can vary depending on the contract type and project requirements.
Fixed price contracts, also known as lump sum or fixed-sum contracts, involve an agreed-upon price for completing the project. The contractor bears the risk of any cost overruns, and changes to the original scope of work require the approval of the general contractor and the asset owner.
When managing change orders in fixed-price contracts:
Cost-plus contracts involve the asset owner paying the general contractor the actual costs for labor and materials and an additional fee for project management. The price can be calculated as a percentage of the total cost, a set fee, an hourly rate, or a combination of these factors.
Critical considerations for change orders in cost-plus contracts include:
Time and materials contracts are characterized by flexibility, often involving ongoing changes throughout the construction process. The contractor is expected to be willing to adapt plans as needed, with payment reflecting the work completed.
Here’s a step-by-step guide on how to use a construction change order to ensure project modifications are well-documented and approved by all parties involved:
Orders are initiated when project changes are necessary. Describe the nature of the change in detail, specifying what aspects of the project are being altered. This step includes defining changes in scope, materials, timeline, costs, or other relevant factors.
For each change, estimate the financial and timeline impact and specify the amounts if it results in additional costs or savings. Similarly, if it affects the project’s timeline, describe the adjustments.
Once the form is completed with all the necessary details, it’s time to review. All relevant parties involved in the project should participate in this review process.
The review ensures that everyone understands and agrees with the proposed modifications.
Obtain signatures and approval from all relevant parties participating in the review. For forms that need an architect’s signature, use industry-standard forms like the American Institute of Architects Form G701, widely recognized in the construction business.
Signatures reveal that the involved parties endorse and commit to the proposed changes. This step is essential for creating a legally binding agreement and ensuring accountability.
Once the document is reviewed and signed, distribute copies to all involved parties. This step ensures that everyone is informed about the approved changes and that all stakeholders are on the same page regarding the modifications.
Maintain an organized record of all change orders, including the original project documents, correspondence, and signed documents. This documentation is invaluable for project history, dispute resolution, and financial accountability. It is also vital for monitoring the project’s progress and ensuring that the requested changes are implemented as agreed.
Throughout the construction change process, maintain open and consistent communication with all stakeholders. Address any questions, concerns, or additional details that may arise. Effective communication fosters trust and cooperation among all parties involved in the project.
Ensuring that change orders comply with all applicable laws, regulations, and contractual agreements. Legal counsel may be necessary for complex changes or disputes.
Additionally, construction invoices should be meticulously prepared to reflect the agreed-upon cost adjustments. Accurate invoicing is vital to financial transparency and serves as an essential record for project owners and contractors, helping maintain financial accountability and compliance with contractual agreements.
Project stakeholders can effectively manage modifications by including essential elements in the construction change order form, maintaining clear communication, and abiding by legal and regulatory requirements while minimizing disputes and delays.
The proper use of this document ensures that the project proceeds smoothly, remains on budget, and meets its objectives.
Below, you can download a construction change order form in PDF or Word format.
