Change Orders – What the Builder Needs to Know

Unforeseen factors can change the scope of work on a project. Fact is, people change their minds, and builders need to know how to navigate their way through client changes, and how to make sure the builder is legally protected.

When a change is made to the scope of a project, it is best practice to confirm the change in writing with the homeowner. The writing should contain details about the scope of the change in work and the change in pricing, and should be acknowledged by the homeowner to the builder in writing – a written document signed and acknowledged by the homeowner is preferred.

“Change orders” are written documents that change a project.  These changes may increase or decrease the completion time or cost of a project. The changes are requested by the client after the initial contract is signed. But what is important is that the “change order” be in writing and acknowledged by the homeowner.  Verbal change orders tend to unnecessarily place homeowners and builders at odds with one another.

Something else to consider – insist on up-front payment for work covered by change orders. This way, money is paid immediately for those changes, and the payment shows the homeowner’s agreement to the change. Many builders use standardized Change Order Forms, which include a description of the change, reason for the change, additional cost, revised schedule, and places for the signatures of the client and builder.

As a builder or contractor, protecting yourself by obtaining written change orders that are signed by the homeowner and the builder, and detailed to include a description of the change, the reason for the change, costs of the change, and a revised schedule, is a crucial way to help avoid disputes, unexpected costs, claims, and legal issues.