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How can you best handle change order disputes?

On Behalf of | Nov 4, 2019 | Real Estate

In construction lingo, a change order refers to modifications to a construction contract that changes the contractor’s scope of work. According to the American Bar Association, most change orders alter the work that the contract documents require and thereby increase the price. Some, however, amend the amount of time it will take the contractor to complete the job, while others do both. For a mediator, arbitrator or judge to recognize a change order as valid, both the contractor and the owner must agree to all terms. Unfortunately, what constitutes a change order is often up for debate, which leads to change order disputes. If you find yourself trying to defend a change order to your New York contract, there are a few tips you can keep in mind to resolve said dispute quickly and efficiently. 

Before you request a change order or pursue a dispute, you need to determine whether a change order is really justified. This involves looking at the facts. To decide whether a “change” is really a change, review the documentation, including pre-bid forms, your responses to requests for information and field work orders. You should also review the contract for clauses that outline an order-of-precedence. This clause may indicate that drawings take preference over specifications or vice versa. 

Once you determine that a change order is justified, you then need to seek written approval for said change. Do not just proceed with the work unless the language in your contract explicitly waives this requirement. If the agreement requires you to secure a written change order and you fail to do so before continuing with the work, you have no legal grounds on which to recover additional payment. 

Finally, if you are a subcontractor, you must receive a change order for the change order between the owner and the general contractor. Failure to do so could create a gap in the scope of work, which may result in issues with the project as a whole. 

You should not construe the contents of this article as legal advice. The information is for educational purposes only.