Article 7 of AIA A201 General Conditions
covers (i) change orders, (ii) constructive change directives, and (iii) “minor
changes.” Work that falls outside the
scope of the construction contract will often fit into one of these three categories. Rea’s presentation focused on the fact that,
regardless of which category applies, proper documentation of the change work
is vital.
In an ideal world, a contractor receives a signed change order before commencing the additional work that is the subject of the change order. However, in practice, an Owner or upstream contractor often requests that the performing contractor begin the work in advance of receiving a signed change order. While it is easy to encourage a contractor to strictly follow the contract provisions regarding written notice for change work and to refuse to perform prior to receiving written confirmation, the reality is often more complicated. Among other things, pressure to keep a job on schedule or to minimize delays can lead to pressure on a contractor to perform change work without written documentation. In an effort to minimize project delays, there may even be cascading undocumented change work without well-documented costs. A lack of responsiveness from the owner or upstream contractor can act as an additional barrier to proper documentation.
Rea discussed best practices
for a contractor to maximize their chances of getting paid for change work
without prior written agreement. He
stressed that the key to getting paid for such work rests with the Project
Manager. The more timely and careful the
management of documents, the better the chance of resolving any disputes about the
change order work. Specifically, Rea recommended that the Project Manager document
all oral promises or requests for change orders and send confirmations of the
same to everyone involved, including a disclaimer such as “if you disagree,
contact me immediately.” Documentation
of the oral promise/agreement and resultant costs can avoid litigation
altogether by showing a position of strength and reminding project participants
of what actually happened – especially on longer projects, memories fade and
people may legitimately remember details differently if there are no
contemporaneous records to serve as a reminder.
In addition, Rea encouraged a
performing contractor to follow the contractual provisions regarding change
work even if the upstream contractor or owner fails to comply with the change
order process. When doing so, it is
important to be purposeful in the content of the documentation to assure that there are no
contradictions between written submissions.
As for owners or upstream contractors, Rea urges them to timely reject unmerited Potential Change Orders
(PCOs). Ignoring such PCOs can raise contractual
compliance issues, and the passage of time can make the illegitimacy of such claims unclear. Also, upstream parties should be aware of applicable
state laws on prompt payment.
Thank you to Don Rea for the organized
and pragmatic presentation on undocumented change work.
Author Douglas
J. Mackin is a construction attorney with Cozen O’Connor in Boston,
Massachusetts. Doug counsels owners, developers, contractors, and
subcontractors in all phases of a construction project, from contract
negotiation through to completion, including disputes, litigation and
arbitration. Doug can be contacted at dmackin@cozen.com.
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