In most commercial construction projects, there are three ways an owner — via the architect — can alter the work of the contract: the architect’s supplemental instructions, change orders, and construction change directives. Each one is more powerful than the one before — and therefore riskier.
Architect’s supplemental instructions: No argument here
As the name implies, Architect’s Supplemental Instructions (ASI) simply give instructions, telling you how to do something you were already going to do.
These are issued for very minor changes to the work that don’t change the terms of the contract, meaning they don’t affect cost or time. This is very important to remember. If you get an ASI, it means the owner doesn’t expect to give you more money or more time to carry out the change.
If it’s going to change the scope, cost, or time, you need to respond accordingly and right away, letting them know that this change to the work requires a change order.
Examples of Architect’s Supplemental Instructions
- Minor revisions that don’t require agreement or negotiation, like changing paint colors or the location of a door already called out to be installed
- Clarify something left vague in the construction documents, like where exactly the signage goes or the height of electrical outlets not yet installed
- Specific items in an allowance, like calling out specific light fixture models which the cost of installing has already been included in the work
Change order: An argument resolved
A better term for this document might be “Change Agreement,” since a Change Order is an agreement that has been negotiated by the parties to a construction contract in order to make a change to the contract terms.
Notice that this isn’t just a change to the work — though it usually is that, too — it’s a change to the contract. This means it revises either the scope, cost, or the time previously agreed to. This is by far the most common type of change, occurring on almost every project. The process can be originated by the contractor by way of a Request for Information (RFI) or a change order proposal, or it can be begun by the architect simply by issuing the change order.
Examples of change orders
- An owner changes the work, like adding or deleting scope, or changing materials
- The architects missed something, so it has to be added — for example, if they failed to show or call out roof underlayment, then realized you really needed it
- Existing conditions are not as anticipated, such as finding a bunch of old cars buried on-site that have to be hauled off (true story)
- The contractor has an idea for improvement, like a way to reduce the number of piles needed, or a better joint detail
- External forces factor in, like a change in the economy that changes the size of the project, or a materials shortage that requires a different product to be used
Construction change directive: An argument unresolved
A construction change directive (CCD) is exactly what it sounds like — the owner is directing the contractor to make a change.
Not asking, not negotiating — directing. It’s a feature of most construction contracts that, as a last resort, the owner can use a CCD to simply force the contractor to change the work with any changes to cost or time to be sorted out later.
Depending on the language of the contract and the state it’s signed in, the cost can be determined by applying prevailing unit costs, by time and materials, or by an amount determined by the architect. Unsurprisingly, these kinds of changes are the most likely to ultimately be settled by a bunch of lawyers and a judge.
Examples of construction change directives
- No time to negotiate or investigate: On some projects, delaying the work to sort out and negotiate a change would just be too costly to the owner. A one-week setback in getting a surgery suite online, for instance, could cost a hospital hundreds of thousands of dollars of revenue.
- Disagreement overpricing: If the two parties can’t come to an agreement, but the work has to be done, the owner may choose to just force the issue and deal with the pain later.
- Parties agree to sort things later: It’s often in the contractor’s best interest, as well as the owners’, to get the project wrapped up in a hurry. If both parties are confident that a fair agreement will be reached, they might simply work under a CCD to keep the paperwork from delaying the job.
How should a contractor react to changes in the work?
If you’re a contractor and are presented with one of these change forms, there are three things you can do to protect your business and your ability to get paid: review, document, and respond.
Review what’s being asked of you
First, make sure this is the right mechanism for the change. If it’s by Architect’s Supplemental Instructions, you know they’re not expecting to pay more or add more time for this change.
Make sure you understand what’s being asked of you and that you agree that it’s not a cost or time item. If it’s a change order, verify that you agree to the terms before you do the work. And in any case, check the details, paying particular attention to ensuring the quantities, dates, and costs all correct.
Document everything
If it wasn’t documented, it didn’t happen. Log the date you got the forms. Reference the contract in your responses. Use a transmittal to send all paperwork. If you end up in a disagreement, including a lawsuit, you will want everything well documented.
Respond (and do it in writing)
One of the worst things you can do when you receive a change is to do nothing.
Either reply in agreement or reply in disagreement — but make sure you reply. Do it in writing, backing up your position with any documentation you have.
If the change looks at all like it might create a payment dispute later, send a Preliminary Notice right away. This lets the other party know you’re paying attention and lays the legal groundwork for filing a mechanics lien if that turns out to be necessary.
Remember, all of these changes revise the work and become part of the contract. To be sure you get paid for the changes, you have to understand and respond — whether you’re being instructed, ordered, or directed.