November 13, 2013

Nearly every construction contract will contain a “changes clause.” This clause allows the Owner to make changes to the contract, without invalidating it. It also allows the Contractor to receive adjustments to the contract price and time of performance, which result from the change. Change orders, and the pricing and negotiating of contract adjustments, are an integral part of construction contract administration. This section will present typical change order clauses, the key provisions normally included, constructive versus directed changes, notice requirements, the pricing of change orders, and accord and satisfaction.

 A.    TYPICAL CLAUSES / KEY PROVISIONS

Typical changes clauses in use today in Colorado are reproduced at the end of this section.

Included are changes clauses from the following standard contracts

1. Federal Acquisition Regulations – 52.243-4 Changes (Fixed Price Construction Contracts)
2. American Institute of Architects A201 – Article 7. Changes in the Work.
3. Engineer’s Joint Contract Documents Committee – Article 10 – Changes in the Work.
4. Colorado Department of Transportation – Paragraph 104.02 (c) Significant Changes in the Character of Work.

Each of these clauses contains most of the following key provisions:

• Gives the Owner the right to make changes to the contract (usually without notice to the surety.)
• Change can be made to the work, the specifications, the method of performance, the contract time, or owner-furnished equipment/services.
• The changes usually must be within the general scope of the work.
• The changes must be in writing.
• The contractor is usually required to give notice of a change and to submit pricing information within certain time limits.
• The methods of pricing change orders are usually spelled out.

The opening paragraph of the Federal Government’s Changes Clause, presents an excellence example of many of these key provisions: 52.243-4 Changes

“(a) The contracting officer may, at any time, without notice to the sureties, if any, by written order designated or indicated to be a change order, make changes in the work within the general scope of the contract, including changes-

1. In the specifications (including drawings and designs);
2. In the method or    manner of performance of the work;
3. In the Government-furnished facilities, equipment, materials, services, or site; or
4. Directing acceleration in the performance of the work….”

It is also very important to determine who is authorized to make changes to the contract, especially those which increase the price or time of performance. Changes by unauthorized personnel, even if in writing, can lead to disputes long after the work has been completed.

Authors: Alan Jongeneel &  Andrew Lonergan

For more information regarding change to contracts, visit www.lorman.com for all of your continuing education needs.