Contractor Change Order Form Template – This article includes best practices from leading construction industry experts and provides the most useful tips for creating a solid construction modification procurement process.
On this page, you’ll find information about construction change orders, price change orders, order dispute prevention, and more.
Contractor Change Order Form Template
Refers to the documentation of an agreement to add or remove work, change a plan, revise a schedule, change a price, or otherwise abandon a project.
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As part of this change order, the owner and general contractor (or general contractor and subcontractor) agree on a specific change in scope and record the details in a change order document. A change of construction indicates a change in order
Change orders are very common in the construction industry and occur in almost all commercial and public projects. However, your goal should be to avoid them as much as possible, as change orders can cause delays and high costs.
Changes to building plans usually have a negative impact on one side. For example, the owner may miss the opening date for the new building, or the contractor may have to use more expensive materials without receiving additional compensation.
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Many different conditions may require change orders: for example, soil conditions at a contractor’s construction site may be less stable than planners originally believed. Such inconsistency will inevitably lead to a change in your approach and will likely require more work, time and materials.
Another example is that after the contractor installs the equipment, the owner may decide to light the equipment. To accommodate this change, the contractor would write a change order that would eliminate the original orders and include the purchase and installation of new equipment.
“Change order disputes can have a significant impact on a project, especially if you stop work while the client is fighting the change order,” says construction attorney Colin McCarthy, principal of Orange, Lanak & Hanna, California. “If not resolved in a timely manner, change order disputes often result in project delays and additional costs for both parties.”
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The long-term nature of the commercial construction process usually creates a need for change orders: original plans, designs, budgets, etc. big differences between and actual conditions (when works commence) are inevitable.
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In the interim (between the submission of preliminary plans and the start of construction), several players are involved, including architects, engineers, and other design professionals. They work on different aspects of the project and try to coordinate their efforts. Despite these attempts to maintain order, when you increase the number of actors and roles, you increase the complexity of the project. Increasing complexity usually means the proliferation of design conflicts, specification gaps, and other conflicts and errors.
Contract Change Order Form
As these discrepancies and errors accumulate, change orders inevitably accumulate. General contractors and subcontractors use these documents not only to help determine their bids during the bidding process, but also to correct mistakes, errors, and other problems they discover during construction.
Additionally, the need for change orders often arises because large, ongoing construction projects exist in a state of constant fluidity: owner requirements or financial resources may change; unusual snow storms may stop work; economic crisis may affect project financing; or the contractor cannot find qualified tradespeople. .
The change order form should contain a very detailed description of the change and the new terms. It should also include the new price, the name and address of the project, the owner’s name, and more.
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Because change orders can have a significant impact on the cost and profitability of a construction project, all parties involved must follow a standardized change order process and not miss a single step.
1. Use a standard process to ensure consistency (including a template): For downloadable construction change order templates for all purposes, read the Complete Collection of Free Change Order Forms and Templates. Below you will find a good example of a summary of the change order. It contains sections for all the necessary information, such as a description of the desired change, approval documents and change specifications.
2. Meet with other stakeholders: Gather the owner, contractor, and subcontractor to discuss the change before documenting it in the form. Try to reach agreement on how the change will affect cost and schedule. (Remember that verbal agreements are not legally binding, so don’t rely on talking to the foreman.)
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3. Define the change: Use the change order to summarize the revision. Include details of the change, any change in material or technique, the reason for the change and any new specifications. Don’t forget to submit the form.
4. Explain the impact on budget and schedule. Make sure the document clearly shows the change in price and time. Also indicate how the change will affect the overall cost and timeline of the project. If there are no changes in the first or second category, state this clearly.
5. Send to the other party: If you have agreed on the terms of the change, send a change order to formalize the contract on the document.
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6. Negotiate more if necessary: If the parties have not yet agreed on how the change will translate into dollars and days, further negotiations are necessary. These discussions may include senior project managers, CFOs and construction lawyers. If you still can’t agree, the contractor may have to continue working, reserving the right to seek compensation after the project is complete.
7. Signature: After the agreement is signed, confirm that the change order document accurately reflects the final agreement and have both parties sign the document. Note: If you can’t come to an agreement, you must do the work anyway (without additional compensation until the end of the project) if the contract language so authorizes.
8. Check the impact on the project: If necessary, adjust the entire project schedule and update all dependencies (work related to the change order cannot start until it is completed) and identify conflicts.
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9. Communicate with All Stakeholders: Share details of changes with all project stakeholders, including field managers, crew foremen, and contractors.
10. Keep good records: Keep all documents, invoices/payments, construction change order for disputes or audits. Tax laws etc. it may require you to keep these documents for a certain period of time (from several years to more than a decade, depending on your location and whether your building is a government project). Find a downloadable template for tracking construction documents and contractor progress reports at Construction Management Excel Templates.
There are three types of costs involved in evaluating construction change behavior: direct, indirect, and consequential costs. You can calculate these costs using the forward or backward approach (described in more detail below).
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Research shows that in large projects, the order price is usually 10-15 percent of the contract price. Furthermore, these studies show that multiple changes mean a 10-30 percent decrease in productivity.
Additionally, timing can dramatically affect the cost of a change order. For example, requesting a change order early in the construction process (before the team begins work on the requested item) will not incur the same costs as requesting a change after the team has begun work or completed the work. Additionally, the order will be more expensive if the team has already completed the following work and is dependent on the requested item. In this latter scenario, the change will require you to redesign the item (and related items) that your team has deployed, creating a chain reaction of additional costs.
In the event of a change order proposal, the contractor must carefully break down his estimate. When you give an owner a one-time offer, you deny them transparency: look at the reasons for the costs; make sure that there are no hidden fees and that the profit margin of the order does not exceed that of the contract.
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As mentioned above, the three types of costs that construction change orders should consider are direct (the easiest to understand), indirect, and efficient (the latter two can be quite difficult to quantify).
When you use retrospective pricing, you can have first-hand experience to base your pricing on. on the other hand, you must rely on estimates and contract norms when using futures prices.
Both valuation methods take into account direct, indirect and consequential costs. Whether you use forward or backward costing for your construction change order, you also need to determine the impact of time and productivity on cost.
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