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G701-2017 Change Order

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June 27, 2023

In the world of construction projects, changes are inevitable. Whether due to unforeseen circumstances, design modifications, or client requests, it’s essential to address these changes effectively. Two common methods for managing changes are Construction Change Directives (CCDs) and Change Orders. Though similar in purpose, these two tools differ significantly in their nature, timing, and processes. This article will help clarify the distinctions between CCDs and Change Orders, guiding you through their application and benefits in construction projects. 

What is a Construction Change Directive (CCD)? 

A Construction Change Directive (CCD) is an instruction issued by the owner or client to the contractor, authorizing a change in the project scope, schedule, or other contract terms. CCDs are typically used when a change is necessary, but there isn’t enough time for the formal Change Order process. They allow work to continue while the final details, such as costs and schedule adjustments, are still being negotiated. 

Key Features of a CCD in Construction Projects: 

• Immediate Implementation: CCDs are issued in urgent situations, allowing the contractor to proceed with the change without waiting for formal approval or negotiation. 

• Provisional Nature: CCDs are temporary instructions. While they outline the change, they do not specify the final cost or schedule adjustments. 

• Cost and Schedule Determination: Once a CCD is issued, the contractor is required to implement the change, but the final cost and schedule adjustments will be negotiated after the fact. 

Understanding Change Orders in Construction 

On the other hand, Change Orders are formal documents used to modify the terms of the construction contract. They are usually required when changes in project scope, specifications, or other contract elements are substantial enough to warrant a more detailed review before implementation. Change Orders provide a structured process for reviewing, negotiating, and documenting changes, ensuring that all parties are aligned on the scope, costs, and schedule impacts. 

Key Features of Change Orders: 

• Formal Process: Change Orders follow a detailed procedure, including documentation, review, negotiation, and agreement between the owner and contractor. This ensures that the impact of the change on the project’s cost, schedule, and scope is fully understood. 

• Contractual Modifications: Once a Change Order is agreed upon, it becomes a legally binding modification to the original contract. This ensures that both parties are legally protected and that the updated terms are clearly documented. 

• Change Evaluation: Change Orders involve a thorough evaluation of the proposed change, considering all factors such as project costs, schedule impacts, quality, and other relevant considerations. This process provides transparency and accountability, benefiting both parties involved. 

Differences Between Change Orders and Construction Change Directives 

While both CCDs and Change Orders address changes within a construction project, they differ significantly in their timing, urgency, and processes. Below are the key differences between these two mechanisms: 

Timing and Urgency in Construction Changes 

• CCDs are used in urgent situations where work needs to proceed immediately, even before final details and cost impacts are fully assessed. They allow for faster implementation but lack the formal structure of a Change Order. 

• Change Orders, by contrast, involve a more deliberate process. They require proper evaluation, negotiation, and agreement before work can begin. This ensures that all changes are thoroughly considered. 

Cost and Schedule Considerations in CCDs vs. Change Orders 

• CCDs do not determine the final cost or schedule impact when initially issued. Instead, they provide provisional instructions to move the project forward while those details are finalized later through negotiation. 

• Change Orders are fully evaluated and documented, including the impact on the project’s cost, schedule, and scope. This formal evaluation provides both parties with a clear understanding of how the change will affect the overall project. 

Best Practices for Managing Change Orders and Change Directives in Construction Projects 

Understanding when to use CCDs and Change Orders, as well as how to manage them effectively, can streamline the construction process and minimize delays or disputes. Here are some best practices to follow: 

How to Streamline Change Order Approvals 

• Implement a clear internal process for reviewing and approving Change Orders as quickly as possible. 

• Ensure that all required documentation and details are included in the Change Order to avoid delays during the approval process. 

Tips for Effective Project Scope Management 

• Maintain clear communication with all project stakeholders to ensure that scope changes are understood and agreed upon before work proceeds. 

• Use CCDs for urgent changes but transition to Change Orders for more substantial alterations that require detailed review and documentation. 

Conclusion 

Both Construction Change Directives (CCDs) and Change Orders are essential tools for managing changes in construction projects. While they serve similar purposes, they differ in how and when they are used. CCDs provide a flexible, immediate solution when time is of the essence, while Change Orders offer a more formal and structured approach for evaluating and documenting changes. Understanding the key differences between these two tools will help ensure that construction projects are managed efficiently, minimizing delays and ensuring that both owners and contractors are aligned on the changes. 

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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.