Notes on Changes in Construction Projects
Context and purpose
The module focuses on what happens during a construction project when changes must be adapted or altered.
Few projects go exactly as planned; especially as projects become more sophisticated, numerous changes arise.
Changes can stem from owner decisions, design deficiencies, contractor defects, or regulatory/official changes, among others.
A mechanism is needed to allow changes without invalidating the contract while preventing owners from overburdening contractors with unagreed work.
Goal: understand the basic methods to effectuate changes and their limitations; recognize the roles of architects in modifications during construction; and appreciate practical, ethical boundaries.
Key concepts and motivation
Changes in scope can originate from:
Owner changes mind on location or features (e.g., counters, windows).
Design deficiencies identified by the architect.
Construction defects by the contractor requiring different execution.
Building official changes to meet code requirements.
All such changes require modification to the original design concept incorporated into the contract.
The contract framework must provide a mechanism to modify the work (flexibility) and limit excessive, unilateral changes by any party.
AIA, consensus, and other model documents embed three mechanisms; manuscript contracts should include all three to avoid gaps when changes arise.
The three contract modification mechanisms (architect’s tools)
Written directive
A small modification to the contract.
Does not change contract time or contract sum.
No approval required from owner or contractor because there is no impact on cost or schedule.
Commonly issued by the architect under AIA B-series documents (e.g., B101, B104) and corresponding consensus/general conditions.
Change order
A modification that increases either contract cost, contract time, or both.
Example: move a window two to three feet; framing and scheduling implications lead to cost and schedule impact.
Process: architect proposes change; owner approves; under AIA, the architect typically prepares the change order; in consensus documents, the contractor can generate a change order.
Often the most common path for modifying work.
Issue to watch: sometimes the time impact is unknown at the time of the change order; engineers/contractors may reserve time for later; owners should push to define time impact at the point of adjustment.
Construction change directive (CCD)
Used when changes are needed but an agreement on price and time cannot be reached quickly.
Architect issues a directive to proceed with the change to keep the project moving.
Carries risk because price and time are not yet negotiated; relies on contract-based pricing mechanisms (see 7.3.3 and 7.3.4).
Purpose: balance the contractor’s bargaining power by ensuring work continues even when agreement on cost/time isn’t reached yet.
When modifications are needed: contract sum and contract time implications
Modifications depend on whether there is a change in contract cost or contract time (or both).
The contract typically defines: what is to be done, how long it should take, and how much it should cost.
Changes to scope affect one or both of these factors and thus determine which modification mechanism should apply.
Practical guidance on contract types and inclusions
Most standard documents include the three elements (written directive, change order, CCD).
Manuscript contracts often omit one or more mechanisms; ensure all three are included to avoid gaps when changes occur.
If you encounter only a change order in a manuscript contract, you risk a gap if a CCD or written directive would be more appropriate.
Written directive details
Definition: a minor modification that does not increase contract time or contract sum.
Approval requirements: no owner or contractor approval is required since there is no impact on time or cost.
Applicability: allowed under AIA B-series documents and corresponding general conditions; can be issued by the architect to direct the contractor to make a change.
Change order details and examples
Definition: a change that increases contract cost, time, or both.
Example: move a window over 3 feet; extra framing cost; delay for re-framing and drywall preparation; potential two-day schedule impact.
Process nuance: under AIA, the architect typically issues the change order; under consensus documents, the contractor can initiate.
Documentation and cost/time clarity: include both cost impact and time impact in the change order when known; avoid reserving time without a defined limit.
Reservation of time risk: contractors sometimes reserve a time impact when the exact effect is unknown, but owners should require a time limit and a prompt follow-up notice after performing the work.
Warning: many change orders with time reservations can culminate in large, unresolved time impacts at project end if not clarified early.
Owner caution: push to quantify time impact at or soon after the change; otherwise, consider a time-limited reservation (e.g., two weeks) after which the contractor must provide a time impact estimate.
Impasse situations and the need for CCD:
If owner and contractor cannot agree on price and time, starting the work before agreement may be necessary due to project schedule constraints.
Large pricing gaps or scope ambiguity can give one party outsized leverage; CCD provides a controlled mechanism to proceed while negotiations continue.
CCD pricing mechanisms (7.3.3 in contract documents)
7.3.3 identifies the types of pricing options available for CCDs:
1) Mutually acceptable sum (essentially a rapid change order when timing is critical).
2) Unit price (pre-negotiated unit prices for specific work; common in road work, milling, etc.).
3) Other formula (e.g., percentage of cost, time and materials plus contractor’s fee).
4) If all other options fail, proceed as provided in 7.3.4 (force account).Unit price example:
Milling a road and replacing with new pavement may use a contractually agreed unit price of per square foot.
The architect can order work under the unit price if a negotiated change order isn’t feasible due to time constraints.
Force account / 7.3.4 (default method when other options fail):
Involves calculating an amount based on a contract-defined formula.
Typical cost components include: labor, materials, equipment rental, premiums, supervision, and overhead.
Example generic formulation:
where:L = labor costs
M = materials costs
R = equipment rental costs
P = premiums (insurance, bonds, etc.)
S = supervision costs
O = overhead costs
In some cases, contractor’s fee may be included depending on the contract; local public works specs (e.g., Maricopa Association of Governments) may specify more detailed accounts.
Practice note: force account pricing can be heavily modified by jurisdiction or project-specific specs; ensure manuscript contracts address these details.
Constructive changes (when no formal directive/summary change is issued)
Constructive change definition: modifications that change the contract without using a written directive, change order, or CCD, yet effectively alter scope, cost, or schedule.
Consequence: can produce a large, cumulative impact if many small, informal changes occur; justifications and entitlements should be formally addressed to avoid disputes.
Contractor claims for constructive changes:
The contract usually provides a mechanism (claims process) for equitable adjustment when constructive changes occur (even if not covered by formal directives).
Differing site conditions (hard rock) or design defects that increase costs/delay the project are classic constructive changes.
Notice and time limits:
Most contracts impose time limits for claims (e.g., Section 15.1.2) that require prompt notice after the impact is felt (often a short window like 7–21 days).
Failure to timely submit can waive the claim; strict enforcement varies by jurisdiction but is a common risk in contract practice.
Equitable adjustment concept:
Originates in federal/public projects; aims to reach a fair adjustment when exact pricing is undefined.
Not a fixed formula; negotiated or court-determined, focusing on fairness rather than a rigid numerical method.
Equitable adjustments are increasingly used in private projects as well.
Cardinal change rule and abuse prevention
Cardinal change: a change that affects the very nature of the contract/project (e.g., switching from constructing a parking lot to building a movie theater next to it).
Rule: such a drastic change is not permitted under constructive change directives; it exceeds the reasonable bounds of the original contract and is generally blocked unless within the cardinal change rule’s tolerance.
Purpose: prevent owners from circumventing the contract by dramatic, core alterations to the project through modification directives.
Limitations and governance of changes
Fraud and fraud-related restrictions:
There are federal limits on fraudulent claims; some states have additional restrictions; municipalities may blacklist contractors for meritless claims.
Fraudulent claims can lead to legal action and loss of bidding eligibility.
General principle: avoid improper claims; honesty and reasonableness from owner, architect, and contractor reduces litigation risk.
Practical ethic: be reasonable and fair; maintain good faith to minimize disputes.
Ethical and real-world relevance
The framework exists to balance power: prevent owner holds the contractor hostage, while guarding against contractor overreach or opportunistic pricing.
The architecture of the three mechanisms and the constructive-change framework aims to keep projects moving, avoid standstills, and encourage fair settlements.
The shift toward equitable adjustment language in private projects reflects public policy influence and ongoing evolution of contract practice.
Summary: framework for handling changes on a project
Expect changes; have mechanisms in place to modify scope, time, and cost without invalidating the contract.
Use written directive for small, cost-free, time-free modifications.
Use change orders for changes that affect cost and/or time, with clear owner approval and proper documentation.
Use construction change directives to keep work going when price/time cannot be agreed immediately.
If changes are informal or accumulative (constructive changes), be prepared to pursue equitable adjustments and comply with notice requirements to preserve entitlement.
Be mindful of force-account pricing as a fallback (7.3.4) and the potential for disputes when the price is not pre-negotiated.
Apply cardinal-change principles to avoid drastic alterations to the contract’s nature.
Foster ethical, reasonable behavior among owner, architect, and contractor to minimize litigation and keep projects moving toward completion.