Perhaps you are finally doing what you always dreamed of: running your own construction business here in Texas. As a general contractor, you spend a significant amount of time working with an owner to determine exactly what he or she expects and figuring out how to make it happen.
Once you feel as though you have a handle on what the client expects of you on a project, you provide the owner with a cost. After further negotiating, if needed, you sign a contract. Hopefully, in the midst of all of the other agreed-upon terms, you included a detailed description of the scope of the work you will do and the cost for doing it.
What happens if the client wants changes to the plan?
This is the primary reason why you use specificity regarding the scope and price of the work. Your client has the right to make changes, but needs to know that they will cost extra and may take additional time. You use change orders to document the changes requested. They include at least the following elements:
- Any modifications or amendments to the contract needed to make clear how the change affect the project
- Revisions to the scope of the work
- Information regarding cost for the new work
You and the client should sign and date each change order to ensure everyone is on the same page and understands how the changes requested affect the project.
What do change orders do for you?
The most useful part of change orders is that they clearly delineate how the original contract changes. Simply telling a client that a change will cost more in money, time and materials often isn't enough for a client to really understand how his or her new request changes the project. Putting everything in writing helps keep the client from alleging that you never gave him or her all of the relevant information.
The client's signature on the change order provides proof that you were transparent and provided all information to the client. Many disputes arise out of perceived miscommunication. A signed amendment to the contract (a change order) works to remove that possibility.
Treat change orders like any other contract
Change orders may represent amendments to a current project, but they also represent legally binding contracts. In order to protect your construction business, you may benefit from obtaining the appropriate legal advice and assistance in order to help avoid any future complications.