CHANGE ORDER TIP!

TIP: Be sure to use the space on ACT Contractors change order forms to add extra time to the job completion date for the time required to complete the change order! Always add extra time when appropriate. You won't think it matters until the customer wants damages for the job taking too long and you realize the reason for the delay was because of the change orders! Even changes that do not cost anything or that might even result in a credit due back to the customer like a change in the color of a roofing material should be documented in a change order and allowed extra time! After all, even a change like this will require extra time from SOMEONE in your company.

Who initiates a Change Order?

Change orders can be initiated by either the client, their agents such as an architect or engineer, or the contractor (once again providing the contract has a properly written change provision).

Should I make changes without getting the change order signed?

Every job seems to require some type of change to the original contract. This is a fact of the construction world! But, should you make a necessary change without the signature and agreement of both parties in order to keep the job from being held up? NEVER... unless you are prepared to take the chance you are doing the work covered under the change order FOR FREE! Change orders must be in writing and must be signed and agreed upon by both parties BEFORE anything covered in the change order is done. Changes should never be executed by the contractor on the verbal say so of ANYONE. Our legal system runs on paperwork and we all know that written and signed documents stand up while "he said she said" verbal communications rarely do. When it comes time for you to get paid, property owners have a hard time denying or arguing over a change order that they have previously signed and agreed to. Attach copies of the signed change orders to your contract invoice so there are no disagreements over the amount of the check!

CONSTRUCTION CONTRACTOR CHANGE ORDER FORMS also known as EXTRA WORK ORDER FORMS

Contractors... When properly used, a change order will do more to prevent customer disputes than ANY OTHER FORM... yet most contractors consider it merely a bothersome and time-consuming addition to their paperwork load...

A CHANGE ORDER is used whenever a change is made to a signed, valid contract that has a provision allowing changes. This is where it is important that ALL the construction forms you use for your contracting business work together. All the forms, especially including your change order form, that are used to manage your project must work with, be provided for, and be referenced in the contract or agreement signed between you and your customer. To be effective, change orders become part of the original contract so the original contract must contain the correct provisions for changes!

Equally important, a properly written change order provision for "unexpected circumstances or conditions" or "uncovered conditions or problems" built into the contract will protect you from a potentially costly situation. For example, you have a job to replace the wood siding on a house. You start tearing off the siding and immediately notice that the sheathing underneath is dry rotted and needs to be replaced so that your work can be done! The owner will see this and, being the good fellow he is, certainly give you the extra money you need to replace the sheathing since it was not charged for in the contract....right!?? Without the right contract provisions the owner might not have to pay you. The owner might insist on the contract being completed AS IS with no increase in the price to pay for re-sheathing. You argue that you could not see the damage until the wall was "opened up"! The owner argues that you are the "expert" not him and that you should have foreseen the possibility that more damage existed under the siding. Further the owner tells you he has only budgeted for the amount of your contract and if you do not do the work as agreed upon, he will sue you for damages. You are then faced with two choices.

1. "Eat" the extra costs to replace the dryrot in order to get the job done correctly. or...

2. Get involved in a costly lawsuit that your own poorly written paperwork makes it almost impossible for you to win!

These seemingly small details in your construction forms can make the difference between a profitable job and a loser or worse, a job that costs YOU money!

Changes can have one of three impacts on the total contract price.

1. Change Orders can INCREASE the contract price. An example of a change order increasing the contract price would be the example given in the paragraph above. An EXTRA WORK ORDER is just a type of change order where the contract price can only increase.

2. Change Orders can DECREASE the contract price. An example of a change order decreasing the contract price would be if during a hardwood flooring job, the customer decides to cut back on the square footage to be installed.

3. Change Orders can keep the contract price the same. An example of a change order keeping the contract price the same would be if a customer changes the color of his paint job (assuming the paint is not a custom color that has already been purchased).

CAN THERE BE ONE TYPE OF CHANGE ORDER THAT FITS EVERY SITUATION?.... NO!

ACT CONTRACTORS FORMS OFFERS THE FOLLOWING 7 CHANGE ORDER FORMS TO MEET EVERY SITUATION...

Click on links to see samples

CO1- Change Order
Initiated by Contractor to
Property Owner or agent

CO2- Extra Work Order
Initiated by Contractor to
Property Owner or agent

CO3- Change Order
Initiated by Subcontractor
to General Contractor
or agent

CO4- Extra Work Order
Initiated by Subcontractor
to General Contractor or agent

CO5- Change Order
Initiated by Contractor to
Subcontractor

CO6- Extra Work Order
Initiated by Contractor to
Subcontractor

COL- Change Order Log
Keep track of the
change orders on
the project

 

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