As a construction project manager, you are always on the lookout for issues that can throw a wrench in the works of your business.
Constructive change orders are an important component that you must keep track of, but they can be confusing.
Well, they don’t have to be.
In this article, we’re going to explain constructive change orders and when they might occur. We’ll also tell you about the different kinds you should be looking for.
And best of all, we’re going to help you keep track of them along with all your other paperwork.
Whether you need to …
Keep track of constructive change orders
Enhance communication among your team
Control business costs; or
File reports properly and efficiently
… CM Fusion is the best choice for your construction management software needs.
Our team has experience in the construction industry and we’re prepared to help with any situation a general contractor might run into.
The paperwork involved with a construction project can be overwhelming. But we are here to take those worries away by offering an app that will not only give you cloud-based storage, but it will also promptly generate and file reports for you.
Signing up with CM Fusion is like having an assistant who never misses a deadline — and best of all, you can try it out for free.
Constructive change happens when the extent of construction work is changed without first beginning a change order.
It does not need to be a direct order, but can be an indirect result of the actions of the client, such as:
Interpreting the contract in a way that increases the scope of the work.
Interpreting the specifications in a way that increases the cost.
Threatening penalties or termination due to delays that are not the fault of the contractor.
A constructive change is an alternative way to direct the contractor to perform differing work to the contract — even if the time and/or cost of the work is not in agreement between the client and contractor.
This means that the team will have to figure out extra compensation and time at some point in the future. Fortunately, the contractor can include price adjustments on future invoices.
Constructive changes are not formal change orders. They are informal changes that the contractor could have ordered in the changes clause if the change had been recognized by the owner.
A change order is simply an amendment to a construction contract that modifies the scope of the work.
A change order can:
Revise the work required by contract documents
Adjust the time allowed to complete the work; or
A change order is not valid unless the owner and contractor both agree to all the terms.
A change order can be:
Additive — Putting in something that was not in the original plans, such as a wall where there was none before or a new window; or
Deductive — Deleting portions of the work, which typically results in a price decrease.
While constructive changes are less formal and may not be written, change orders are always formal, written modifications.
There are four general categories of constructive change:
When an owner informally directs or orders extra work. This is any time a client or authorized representative tells the contractor to do something beyond the scope of the original contract without issuing a change order.
When the contractor has to expend extra effort because of defective specifications or drawings. This is based on the Spearin doctrine, a 1918 Supreme Court decision that is still a landmark construction law case to this day.
When the client misinterprets the contract and wrongly rejects work that satisfies requirements or asks for an unreasonably high standard of performance. One example of this would be when a contract states that the builder can use any method or material on some aspect of the project, but after it’s complete the client says they would prefer something different.
When the client denies the contractor a justified time extension and forces the work on the job to go faster than planned. This is also called constructive acceleration, which we will discuss further below.
So now that we know what a constructive change order is and when one might occur, let’s discuss the different types.
Constructive acceleration occurs when it is demanded that contractors meet an original deadline even though there is an excusable delay. If this happens, the contractor is entitled to receive additional costs and should submit an acceleration claim to the contracting officer.
This is when errors or omissions in the plans and specifications lead to unforeseen changes in work scope or methods.
It also happens when the contractor performs the work as directed but can’t produce the desired result.
This is when the owner rejects work that meets standards or interprets the plans in such a way that leads to more work by the contractor.
A constructive change that arises when the client does something or fails to do something that impedes the contractor’s work is known as interference and disruption.
These are problems that arise when the owner is supposed to supply materials or equipment but they are late, defective, or not as expected.
This happens when the client doesn’t disclose information to the contractor that would have influenced the bid price or method of operation.
If there is a variation in physical conditions that is unknown by the contractor and would have affected the bid price or method of operation, a constructive change can occur.
Finally, if the contractor attempts to perform the work and finds it completely or nearly impossible, a constructive change will be produced.
We’ve discussed a lot of information surrounding constructive changes — so what about the practical applications?
If a change from the original plans occurs that is not the contractor’s responsibility, immediate written notice should be given to the client that the change has been made.
If there is any possibility that the change will lead to additional compensation, the contractor should state this directly and reserve the right to make the claim.
A complete description of the change and its impact on the schedule and cost should be given. After this, the contractor should follow up with a detailed request for a change order and time extension as soon as possible.
If this sounds like too much to keep up with and you need help with task management on your projects, be sure to look into CM Fusion. We send out automated notifications and reminders to keep tasks on track — so you’ll be able to stay on top of jobs with ease.
If the owner receives a constructive change order from their contractor, a prompt response is required. Time is money, and quickly acting on the information and making a decision is likely to be more economical.
If the contractor’s request is accurate and reasonable, it should be approved right away.
If the contract is ambiguous or exact costs are unknown, the owner and contractor should work together to come up with a compromising solution.
Construction change orders can be complicated, but with CM Fusion you can easily:
Create and manage change order forms
Track and approve change orders; and
Avoid added costs and delays
Many people underestimate the consequences of change. A client may want to throw in something new at the last minute and be unaware of the extensions this will cause in the cost and timeline of the project.
With CM Fusion’s tools at the ready, you can be prepared for whatever your clients request. And since it is cloud-based and mobile-ready, you can use it on the go for whatever new situation you encounter.
If you’re not sure this is the software for you, sign up for our 30-day free trial and check it out. If you don’t like it, you haven’t spent a dime. But we’re sure you will have found something that changes the way you run your business, saving you time and money in the process.
If you are trying to figure out where to look now, our company CM Fusion offers a free version of Construction Project Management Software. Not to mention, our customers brag about it’s ease of use, so you should be able to sign up and start managing your projects in minutes.