By: Donald K. Archer
It has been my experience that contractors do not manage changes in the scope of work particularly well. You probably know that you are contractually entitled to receive compensation for any changes made in a contract. But, are you aware of what constitutes a change?
Contract changes take many forms:
- – Acceleration of schedule
- – Delays
- – Changes in the scope of work
- – Deletions of any provision
- – Unforeseen conditions
Getting paid for some of these types of changes may not be easy. There is one type of change, however, for which you should certainly be paid without argument – the directed change.
Dealing with Directed Changes
In a directed change, the owner has directed the contractor to perform work not included in the contract. Both parties should be in agreement that an adjustment to the contract in terms of scope of work, cost and time has occurred.
While the contractor and the owner may not agree on the dollar amount for the work or the time to perform it, they both must understand that a change to the contract must be executed. Most construction contracts provide that the contractor must perform the change regardless of whether the two parties disagree on the cost or time requirements of the change order. This provision puts the contractor in the unenviable position of having to file a claim – a position you want to avoid if at all possible.
Plan for Changes
What should you do if you are directed to make changes in the work?
Use extreme caution to ensure you follow the terms and conditions of the contract exactly with respect to changes. Some typical contract provisions you need to follow include:
Notification of the change to the owner; Timely documentation of the scope change, extra costs and time required to execute the added work.
Develop a Field Change Request (FCR) form to document the change. Provide the scope of the change, cost to perform, the time required and the effect on the overall project schedule and a place for the owner to acknowledge/accept the provisions of the change.
If the owner does not accept the FCR, then don’t perform the extra work and notify the owner in writing that you are not performing the work related to the change.
The keys to getting paid for the work you perform are having your paperwork in order and following the terms of the contract exactly. Complete and accurate documentation doesn’t always guarantee you’ll get paid, but it does improve your chances.
Mr. Archer is a Civil Engineer with a Masters degree in Business Administration and a Masters Degree in Engineering Management. He is an Adjunct Professor of Engineering Management at the University of Louisville and is the President of his own engineering company, Lindon Engineering Services, Inc.