By Sara Bour, Esq., Manager and Counsel, AIA Contract Documents
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A201®– 2017 General Conditions of the Contract for Construction
G714-2017: Construction Change Directive
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Construction projects rarely follow the original plans. As projects evolve, changes to the scope of work are inevitable, often due to factors like supply chain disruptions or labor shortages. These changes can lead to disputes and claims if not documented correctly. Proper documentation is crucial for managing changes to the work, Contract Sum, and Contract Time. The two main documents used for this purpose are Change Orders and Construction Change Directives. Both are key to managing contract adjustments and ensuring that the project progresses smoothly. Let’s dive into the differences and best practices for using each.
A Change Order is a formal document used to implement changes in the scope of work that have been agreed upon by the owner, contractor, and architect. It modifies the original contract by documenting any alterations to the Contract Sum or Contract Time. Change Orders are essential when all parties agree on the terms of the change. These documents ensure that both the scope and timeline of the project are accurately reflected and updated.
Change Orders can arise from various situations. Some common starting points for Change Orders include:
For example, when the owner requests a design change, it can trigger a Change Order. The architect issues a proposal request, which could affect the contractor’s performance schedule and cost. Once all parties agree to the change, a Change Order is signed and the contract is adjusted accordingly.
But what happens when the parties don’t agree on the terms of a change? In these cases, Construction Change Directives (CCDs) are used to ensure the work proceeds promptly, even before a consensus on the cost or timeline is reached. A Construction Change Directive is typically issued by the owner and architect and directs the contractor to begin the altered work immediately. Failure to implement the changes promptly may delay the project and lead to claims or disputes.
CCDs allow the project to continue even in the absence of agreement on financial terms. However, it’s important to note that while the CCD can propose changes to the Contract Sum and Contract Time, these adjustments are not finalized until both parties agree on the terms. Typically, only the owner and architect sign the CCD. Once the contractor completes the work, a Change Order can be issued to document the adjustment.
After receiving a Construction Change Directive, the contractor may still need to get paid for the changed work. According to the AIA Document A201-2017, contractors can request interim payments for the changed work, even if the final cost determination is still pending. The architect is responsible for determining a reasonable amount to pay for the changed work and certifying it for payment.
When the cost and timeline adjustments are finalized, the Contract Sum and Contract Time will be adjusted in the same manner as a Change Order. This ensures that both the payment and timeline for the project are properly managed and documented.
To effectively manage changes in construction projects, it’s important to understand the primary documents involved:
These documents are part of the AIA contract documents, which provide a structured approach to documenting changes. They help ensure that modifications to the contract are properly executed and recorded, while also ensuring the original contract remains intact and enforceable.
Successfully managing contract changes requires a clear understanding of when to use Change Orders and Construction Change Directives. Here are some best practices for handling contract modifications:
In summary, both Change Orders and Construction Change Directives are essential tools in managing changes during construction projects. Understanding when and how to use these documents can help avoid delays and disputes, ensuring that projects stay on track. By using the correct documentation, construction professionals can efficiently manage modifications to the scope of work, Contract Sum, and Contract Time, all while maintaining clear and enforceable contract terms.
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.