The change order provision in a contract is one of the most important parts, allowing the parties to increase or decrease the scope of work. Every contract has its own unique terms as to what is required to have a change order completed correctly, who can sign, what will be included in the change order, and when it is paid. Another provision being added to the change order section of the contract is the change order directive.
How Does a Change Order Directive Impact Subcontractors?
A change order directive means that the subcontractor and the general contractor agree that the work to be performed is extra and outside the original scope of work. But they cannot agree on the price of the work, so the subcontractor is ordered to do the extra work and a resolution as to the price will come later. In most cases, the "later date" is after the work is completed and the parties mediate the issue. This causes obvious problems for the subcontractor, who has to do the work without being paid.
Should You Negotiate a Change Order Directive?
When you see a change order directive in your subcontract, I highly recommend that you negotiate this provision. From my experience, the best way to handle the change order directive provision is to provide a formula to determine the cost of the extra work. For example, you can say the formula for determining the cost of additional work is time and materials, plus 15%. This way when you are asked to do extra work, you already know how much it will cost and there will be no need for a change order directive.
How The Cromeens Law Firm Can Help You?
New things are constantly being added to standard subcontract forms, which is why it is important to have your contracts reviewed before you sign them. The Cromeens Law Firm does flat fee contract reviews with a 5-business day turnaround. We will tell you where the risks are, and you can determine what provisions you would like to negotiate, and we will give you suggested language.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.