Is there any phrase in the construction world more likely to trigger panic, budget blowouts, and a frantic call to a lawyer than “change order”? That’s the barefaced question. For owners and builders alike, the seemingly simple process of making an alteration to the original plans is where projects most often spiral into costly disputes. They truly do.
Here’s the controversial truth I’ve observed: Most people, even seasoned developers, treat variations in construction contracts as a casual agreement. They greenlight a material change or a scope alteration with a handshake or a quick text message. Big mistake. Your legal rights, your budget, and your project timeline all hinge on how strictly you follow the contract’s protocol for variations. Ignore the procedure, and you essentially hand over the legal leverage to the other side.
My goal here is to clarify the legal landscape surrounding change orders and scope variations. This process, governed by specific clauses, is your shield against unexpected bills and endless delays.
The Foundation: Defining Contract Variations
First, we need to clarify what we’re talking about. A “variation” is simply any change, addition, or deletion that alters the work described in the original contract documents, including the drawings and specifications.
- Change Order: This is the most formal type of variation. It is a written agreement, signed by both parties, detailing the new work, the cost adjustment (up or down), and the impact on the project completion date. It essentially modifies the original contract.
- Constructive Change: This is a tricky one. This occurs when the owner’s actions, or inactions, indirectly cause the contractor to perform extra work or incur additional costs, even without a formal written order. Think confusing plans, site access delays, or misinterpretation of specifications.
Knowing the difference is vital. Always push for the formal Change Order. Always.
Your Right to Notice: Stop the Verbal Agreements
If you are the owner, you have the right to a clear, documented explanation before any additional work starts. If you are the builder, you have the right to claim for extra costs if the owner’s instruction caused the variation.
The Golden Rule of Variations
Look at the Variations in Construction Contracts clause. It dictates the process. It will almost certainly require:
- A written instruction from the owner or architect.
- A written quotation from the builder detailing the cost and time impact.
- Formal, written acceptance from the owner before the work commences.
If your builder tells you, “We found bad wiring, it’ll be an extra five thousand,” and you just say, “Go ahead,” you’ve seriously compromised your position later if you want to dispute the cost. You gave a verbal green light. Always demand the numbers first. That is a seriously important, important step.
Who Bears the Cost? Unforeseen Site Conditions
This is where the disputes get messy, fast. Variations in Construction Contracts often arise due to things no one could foresee, such as unexpected soil conditions, hidden utilities, or existing structural issues that weren’t obvious during the initial inspection.
- The Contractor’s Burden: Generally, if the issue should have been discoverable by the contractor through a reasonable site inspection, the contractor bears the time and cost burden.
- The Owner’s Burden: If the issue is a genuine “unknown condition” that neither party could reasonably foresee (like striking an unmapped Roman ruin or finding an oil slick, I once had a tangential aside with a client about a fossil discovery), the cost often falls back to the owner, but the process must still follow the Change Order protocol. The builder is entitled to compensation for the unexpected extra work.
I get genuinely angry when owners refuse to accept legitimate change orders for truly unforeseen conditions. It’s an unavoidable project risk.
Avoiding Disputes: Documentation and Timelines
Both parties have obligations regarding variations. If the builder is claiming extra time or money, they must provide notice within the contractual timeframe sometimes as little as seven days from when the variation was discovered. If they fail to give notice, they may lose their right to claim the extension. That’s harsh. But that’s contract law.
- Owner’s Duty: To respond to change order requests promptly. Delaying your approval or rejection is a passive form of breach that can expose you to a delay claim from the builder.
- Builder’s Duty: To clearly substantiate the costs using actual material quotes and labor hours, not just a padded estimate.
The best way to protect your legal rights regarding variations in construction contracts is to treat every single change as a mini-contract negotiation, regardless of how minor the change seems.
The Finality of the Signed Change Order
Once a Change Order is properly signed, it becomes part of the original contract. It is final and legally binding. You cannot legally change your mind a week later and say you want the original tile back, or that you won’t pay the agreed-upon price. This document locks in the price, the scope, and the time extension, providing stability for both parties.
Final advice? If your project is facing numerous variations, hire a lawyer to review the process before you start signing dozens of Change Orders. An experienced lawyer can spot patterns of abuse or simply ensure your documentation is airtight, protecting you from a much larger, more expensive dispute down the line. Don’t risk your entire budget on a handshake.
