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Handle construction change orders in advance to avoid disputes

Things seldom go entirely as planned in any construction project, which is why change orders were invented. However, there are limits to what's reasonable and expected.

Too many change orders end up complicating a project, lead to financial difficulties for everyone involved, make for unhappy contractors and customers and even spell the end of a project altogether. They can also lead to legal disputes with the developer.

Thankfully, there are steps you can take to avoid a negative outcome to your project.

Make sure everyone agrees on what they consider a "material" change

Is a change in a client's choice of paint really material enough to count as a change order? Do you only count an order that's going to make an actual difference in the amount of time or money that has to be expended in the process of the build as a change order? Not having an agreement can lead to massive misunderstandings.

Determine who can authorize a change and for how much

Can the on-site supervisor agree to a change order? Does it need to go through the general contractor first? Who has the right to give the order? Unless you narrow it down, you can end up with competing orders that create more work and confusion.

Write down material changes and adjust the projected end date and cost

Contractors need to make clients aware that material change orders do cost both time and money. Putting it in writing ensures that everyone has clear expectations and that no one can later claim in court that they were misled.

Limit the number of material change orders that a client can request.

The only way that a contractor can protect himself or herself from a disaster is to limit the number of material changes that a client can make. Without limits, a project can go on forever, which keeps other clients waiting.

Ideally, if you go over all the potential problems carefully before you start, material changes should be a fairly uncommon experience. They are usually not something that you have to worry about unless something unexpected happens. By establishing boundaries before the project get started, everyone knows what to expect, which reduces the potential for both misunderstandings and litigation down the road.

Source: ProRemodeler.com, "10 Rules for Change Orders," Sal Alfano, accessed March 22, 2018

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