A construction project is very complex undertaking, and the only real certainty is that things are going to change along the way. We all know this, yet our understanding of how to manage that change can be poor. In theory, a well-defined system of requests, exploration, and resolution ought to handle any change that comes along. But having a change order rejected remains a huge source of frustration and liability for everyone involved in construction projects.
A big part of this is due to misunderstandings about what kinds of change orders will and will not be accepted by architects and owners. Here are six reasons why your change order may be denied — and four reasons why it could be accepted.
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Why was my change order rejected?
1. The change order doesn’t benefit the owner
The architect’s job during construction is to represent the owner and look after the owner’s best interest. So, a change that will only save the contractor time or money is almost certain to be rejected.
Yes, it may be easier for you to do things differently than the contract spells out, but you agreed to follow the contract documents the architect has developed and the owner has approved. Unless you’re offering some savings or convenience to the owner, they are very unlikely to waver from the contract.
2. Your change order was not submitted properly (or at all)
Typically, Division 1 of the project specifications lays out the procedure for submitting a change order. It’s not usually a complex procedure, but it does require a certain amount of diligence and supporting information. If that information isn’t there, if the form is incomplete, if the justification isn’t clearly explained, or if the impact on the project is unclear, the architect will reject it.
Remember, the architect has hundreds of requests, submittals, transmittals, supplemental instructions, and questions coming in from every discipline, every engineer, and every code enforcement agency. They’re often looking for the most efficient way to get something off their desk. Following the procedures makes it easier for them to accept it (and harder to reject it).
3. Your request was not submitted in a timely fashion
Any change to the contract becomes the property of the owner and the legal responsibility of the architect. They’re going to live with this decision for a long time. So, they have to review any request for a change order very carefully, consider all the ramifications that might be felt in every discipline, and weigh the costs.
This takes time — and while that’s happening, the project is moving forward, and sometimes it’s just too late to absorb a change into the schedule, even one that might otherwise be approved.
It’s critical to submit any change order requests as quickly as possible.
4. The change order has clerical errors or omissions
These are surprisingly common. Often, change order requests are done by clerical staff unfamiliar with the details of construction, or by craftspeople unfamiliar with clerical work.
But if the terminology (a “square” of roofing is a very different measure than a “square foot” of roofing), math, or dates affected are incorrect or unclear, or if the form lacks a date or a signature — you’re likely to have your change order rejected. Remember, these are proposed revisions to a legal contract guiding large sums of money: The details count.
5. The change order was submitted to cover bidding mistakes
Many contractors submit for change orders because they missed something on the drawings or in the spec when they prepared the bid. They assume that the owner will be fair and pay fully for all the work called out in the contract documents. But this is not how contracts, especially fixed sum contracts, work.
There’s the old analogy of the chef coming out halfway through a meal and doubling the price because the steak was harder to cook than he thought it would be, and he didn’t realize you wanted a potato, even though it’s listed on the menu as part of the meal. This is how owners and architects see many requests for change. If it’s called out in the contract documents, you’re responsible to provide it, whether you anticipated it or not.
6. The change order was submitted for increases in hard costs
Some costs naturally increase over time. On a project with a schedule of several years, some contractors will build employee raises and inflation right into the bid.
But unexpected rises in costs can spell trouble. This is especially true of materials costs, which can fluctuate due to supply chain disruptions caused by a pandemic, surges in demand, or even political events in faraway places.
Yet, a change order request justified by rising materials costs will usually be rejected. The rationale is that estimating costs is the contractor’s job and the contractor is the one with the expertise to predict changes in those costs. Often, if the case is extreme, the owner and architect will work with the contractor to source and pay for the materials in order to keep the job moving, but they aren’t obligated to. The best solution to this is to have an escalation clause in your contract and not depend on change orders to cover rising costs.
Four reasons change orders are accepted
There are many reasons you may have your change order rejected. So, what are the reasons for a change order that will be accepted?
The theory is: You’re entitled to be paid for things that cost time or money, but were unknown to you when you submitted your bid. The following circumstances (and submitting correctly filled-out forms) mean your change order can be approved.
1. A change order was submitted due to unforeseen conditions
No matter how diligently the architect and engineers investigate the site, there are usually some unknowns discovered once construction begins and those things often impact the work.
Known as unforeseen conditions or differing conditions, these are any existing conditions that affect your ability to complete the work as shown in the contract documents. If they require corrective measures or extra work on your part, you’re entitled to a change in time and fee.
Just be sure you get clear direction from the architect — in the form of a completed change order — before you do the work, so you know exactly what additional work is to be done. Then you can be sure you’ll be able to add it to your pay application and get paid.
2. The construction documents contained incorrect or incomplete information
You are certainly not expected to absorb the cost of any work that needs to be done but isn’t shown in the construction documents. This is usually straightforward and these changes are readily approved, because the architect and owner want the building to be complete, even if the drawings aren’t.
3. There were delays in the completion of the project
These are trickier in the age of the Critical Path Method, and with complex scheduling software like P6, but justified delays in completion are typically approved. Again, these have to be due to factors out of the contractor’s control.
For example, if an unusually wet summer means thunderstorms have delayed earthwork and foundations, there’s no way the builder could have foreseen that, and nothing they could have done to prevent it. If properly justified with weather records and photos, these kinds of changes are usually approved.
4. The change order creates a win-win scenario
Suppose you get in the field and discover that an existing foundation isn’t as deep as anticipated, and now instead of going around it with the waste line, you can go under it, saving 600 feet of trenching. A deductive change order for reducing the earthwork and piping would certainly be approved. And if it makes your schedule easier to manage and lets you de-mobilize the job site a week earlier and save those costs? You make more money.
Ultimately, change order requests coming from the contractor are viewed in pretty simple terms. Will it benefit the owner? Will it preserve the functionality or aesthetics of the project? Is it justifiably outside of the work called out on the contract documents?
If it meets those criteria, the architect will almost certainly approve it. Then you can do the work and, most importantly, get paid.
Further reading: 3 Ways the Architect Can Change a Contractor’s Work