Modifying a Construction Contract Part II: Change Order Initiation
In last week’s blog post, we discussed certain instances that may require your construction project to implement a change order to the original scope of work. As noted, when a change needs to be made during a project, it’s essential to rely on the process you’ve outlined and described in detail in your original contract.
When creating a template for a change order form for your business, consider including the following features, as recommended by eSUB Construction Software: a revised scope of work, new pricing, relevant modifications (e.g. updates to timeframes, delivery schedules, completion schedules, etc.), and signatures of the contractor and customer. Just like you review the original contract with your customers, be sure to review the change order form with them as well, ensuring they understand what modifications are being made.
Oftentimes, a change order affects more than one party involved, especially if you are a company that works with subcontractors. Once you receive an authorized (i.e. signed and agreed-upon) change order form, don’t forget to quickly communicate the modifications to any of your employees and subcontractors and give copies of change order documents to necessary parties. Jones notes that subcontractors may need to “make adjustments to their schedules and timelines” as well, minimizing any impact to the completion of the project. Once all parties are informed and aware, you can move forward on the newly modified project.
Documentation & Record Keeping
Paperwork and record keeping are vital in running any business; however, when dealing with addendums to original contacts like change orders, it is even more crucial to stay vigilant and organized with your documentation, so you can be sure you are performing the job that has been agreed upon. Occasionally, you may have multiple change orders per project, so keeping all change order documentation and communications with the customer regarding project modifications ensures you have all necessary information needed to finish the job and to accurately bill your customer.
Consult with a Business Law Attorney
Because the success of a construction business heavily relies on the terms illustrated in a contract, it has to be done with the upmost care and consideration. It may be helpful to consult with an experienced business attorney to help draft and execute a contract that works best for your business, your employees, and your customers. Your attorney will be able to work with you on drafting a contract that clearly identifies a detailed scope of work, change order process, expectations and responsibilities, deadlines, disclaimers, and more, while knowing the ins and outs of such legally-binding documents.