In the last chapter, I covered Proposal Requests, which must precede Change Orders in the construction industry. In this chapter, I am going to cover the actual Change Order itself.
If it turns out that a Proposal Request that was submitted was acceptable to the owner, or becomes acceptable after adjustment of the scope, negotiation of the price, and/or the adjustment of the Contract time, then a Change Order can be prepared. After execution by the Owner and Contractor, and countersignature by the Architect, it becomes a modification of the construction Contract. It authorizes the Contractor to do the work and obligates the Owner to pay for it.
There are two types of Change Orders:
Change in Contract Price—Any change, up or down, in the Contract price should be agreed and entered into the Change Order form.
Change in Contract Time—Any change, up or down, in the Contract time should be agreed on and entered into the Change Order form. If there is no change in time, then the change order should state that there is no change in Contract time. It is a big mistake to leave the time blank, as this will often result in a dispute. The Owner will assume that the blank means no change in time, while the Contractor reasons that the blank means that it will be discussed later.
When there is to be a change in Contract time only, but with no change in Contract price, it is good practice to handle it as a Change Order complete with a Change Order form and signatures ...