Change Order

Definition

A change order is an order to change the work to be performed under a construction contract, usually given by an owner to a prime contractor or by a prime contractor to a subcontractor. It represents a revision in the contract documents after the execution of the owner-contractor contract.

Purpose

The purpose of a change order is to formally document alterations to the original scope of work, budget, or schedule, ensuring that all parties agree to the modifications and any associated costs or time adjustments.

Examples of Use

1. Design Changes: Implementing new architectural features requested by the owner after construction has begun.
2. Unexpected Conditions: Adjusting the contract to address unforeseen site conditions like soil issues or hidden structural damage.
3. Material Substitutions: Changing specified materials due to availability issues or cost savings.

Related Terms

• Contract Amendment: A formal alteration to the terms and conditions of a contract.
• Scope of Work (SOW): A detailed description of the work to be performed under a contract.
• Addendum: Additional information or changes added to the original contract documents before execution.

Notes

• Change orders must be approved by all parties involved to be legally binding.
• Proper documentation and clear communication are essential to managing change orders effectively and avoiding disputes.