By Salvatore Verrastro, AIA and Mark I. Baum, AIA
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A201™ General Conditions of the Contract for Construction (2017)
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Change orders play a crucial role in construction contracting as the primary method for modifying the terms of a construction contract. In fact, the term “change order” appears 23 times in the AIA’s A201™ General Conditions of the Contract for Construction (2017), where it is defined as:
“A written instrument prepared by the Architect and signed by the Owner, Contractor, and Architect stating their agreement upon all of the following: 1) the change in the Work; 2) the amount of the adjustment, if any, in the Contract Sum; and 3) the extent of the adjustment, if any, in the Contract Time.”
At its core, a change order is an agreement among all parties involved—owner, contractor, and architect—that formalizes adjustments to the scope, cost, and timeline of the project.
Change orders often get a bad reputation for being associated with errors or mistakes, but in reality, mistakes aren’t the primary cause. Most contract modifications, including change orders, occur due to factors beyond anyone’s control, such as owner-driven changes, unforeseen conditions, or weather delays.
Owner-directed changes can range from altering the scope of a project (like customizing a tenant space) to adjusting milestones to meet lease deadlines. In addition, changes can arise due to unforeseen site conditions, like encountering underground obstructions, hazardous materials, or concealed building elements during renovation projects. Other causes may include weather-related delays, labor disputes, shipping issues, and more.
At the close of the project, change orders can also address contract reconciliations, including back charges, liquidated damages, early completion bonuses, and unresolved punch list items.
Open communication between parties can help mitigate the negative impacts of change orders on both project cost and schedule. Frequent change orders, however, can strain relationships, impact jobsite morale, and potentially lower work quality.
When a change order results from an architect’s “error” or “omission,” it’s crucial to assess whether the architect met the “standard of care.” While architects don’t guarantee a perfect set of documents, they are expected to apply “reasonable and ordinary care” in preparing them. If an omission increases the project’s value, the owner should cover the additional costs.
However, if the error does not add value, or if it causes unforeseen costs, the architect must consider whether they fell short of their professional duty and the standard of care.
The change order process typically begins with one of the following documents:
Proposal Request: This document may be issued by the architect to gauge the cost of potential changes or to address anticipated issues with the work.
Architect’s Supplemental Instructions (ASI): Used for minor changes or clarifications that do not impact the contract sum or time.
Construction Change Directive (CCD): This tool directs the contractor to proceed with additional work that may not yet have an agreement on the financial or scheduling adjustments. A CCD is a provisional step; a change order must still be formalized later.
Change Order Request: This document is issued by the contractor to propose modifications in scope, cost, or time, either in response to an ASI or CCD or as a standalone claim.
Once a proposal is received from the contractor, the architect must carefully review it for accuracy and reasonableness, confirming that the costs are valid and that the proposed time extension is justified. The architect’s responsibility includes ensuring the proposal doesn’t double-count costs or request reimbursement for work already included in the original contract.
Once all parties agree on the changes, the architect will prepare the change order. This formal document should clearly outline:
The change order should be detailed enough that any third party could understand the nature of the change. Attach any relevant supporting documents, including the contractor’s proposal, and ensure all parties review and sign the form.
After finalizing the change order, the architect typically signs first, followed by the contractor and then the owner. In today’s digital age, this can also be done electronically.
The AIA Document G701™-2017 is commonly used to implement changes in the work agreed to by all parties. It serves as the official documentation for change orders and helps ensure that modifications are accurately recorded.
Request an AIA Contract Documents Software Demo to streamline your change order process and ensure all modifications are properly handled throughout the construction lifecycle.
Change orders are an integral part of the construction process, enabling flexibility and adjustments when unforeseen circumstances arise. By understanding the causes, process, and best practices for managing change orders, you can minimize their impact on cost and schedule while maintaining positive relationships among all project stakeholders.
For more detailed insights into change orders, construction contracts, and project management, feel free to explore our additional resources on construction contracting and architectural roles in managing change.
AIA Contract Documents has provided this article for general informational purposes only. The information provided is not legal opinion or legal advice and does not create an attorney-client relationship of any kind. This article is also not intended to provide guidance as to how project parties should interpret their specific contracts or resolve contract disputes, as those decisions will need to be made in consultation with legal counsel, insurance counsel, and other professionals, and based upon a multitude of factors.