By: Expert No. 169205

Abstract
Trusting contractors often complete additional work without written approval and then don’t get paid for it. They know they are required to get change orders signed and approved prior to doing the work…but, why don’t they?

Introduction

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Contractor Change Order Excuses:

#1: “I’m too busy to get the signature.” (But never too busy to go to court!)

#2: “I trust my customer.” (How much work will they have to do to pay for unpaid change orders?)

#3: “This customer is my friend.” (Friends sign for change orders, enemies don’t.)

#4: “I don’t want to rock the boat this early in the job.” (I’ll let them kick me out of the boat later!)

#5: “We’ve got to keep the job moving. I’ll get the signature later. (When we have no leverage!)

#6: “We’ll work out all the extras at the end of the job.” (When the customer is out of money!)

When are Contractors WIMPs?

Out on the jobsite, construction customers ask their contractors, “Hey, would you mind moving that wall 4 feet and adding a door?” “No problem, we’ll get started right away and work it out later.” Contractors know their contract requires them to get change orders approved in writing, but they don’t want to put pressure on their customer. So they hope and pray they’ll get extra work approved and paid for later. Contractors who handle change orders like this are WIMPs:

Train Your Customers

Wimps don’t get signatures, wimps beg after the fact, and wimps aren’t tough. Customers treat wimpy contractors without respect and walk all over them. Contractors who want to get paid for extra work must use their contract and project management procedures to train their customers. If contractors are firm but fair, right from the start, they’ll will get what they want. Successful contractors tell their customers at the beginning of every job exactly what the contract says and how change orders will be handled. They explain that if extra work is not in the contract or on the plans, they won’t proceed without a written authorization. No exceptions!

If It’s Not In Writing, It Didn’t Happen! Nothing’s perfect in the construction field. Even if contractors have an absolutely legitimate claim for extra work, they must be able to prove it to collect. To insure they get paid for all their work, they must document potential claims as soon as the problem becomes known, or at least within the maximum number of days allowed by contract.

I have served as an expert witness on many construction litigation cases and as an arbitrator for the American Arbitration Association on a number of construction lawsuits. In most contract disputes I’ve evaluated, the real problem wouldn’t have happened if the contractor had notified their customer and gotten approval to move ahead in a timely manner. Most disputes occur when contractors try to request money for extra work done weeks or months later, without timely documentation to back up their request. Some examples of situations needing prompt documentation include:

A plumbing contractor proceeds and installs underground sewer using plans which don’t give exact dimensions of the pipe. The plumber has now accepted responsibility for incomplete plans by installing pipe in the wrong location. Proper documentation as it occurred, including specific references to the conflicts or omissions in the plans, would have put this problem back on the project owner’s shoulders.
A contractor digs a footing, discovers an unforeseen condition, fixes it, then several weeks later notifies the owner they hit an underground structure, spent additional money to remedy the problem, and now expects to get paid for additional work. The owner does not have any contractual liability to pay for extra work performed, installed or completed without proper notice, documentation, and authorization per the contract.

Most contracts specify how much notice is required upon discovery of a differing condition. The key factor is for contractors to document with written proof and photos, show how they mitigated or intend to mitigate the damages, and submit a claim for change orders within the number of days specified by contract!

Some Things Never Change . . .

. . . including the realities of change orders in construction. Change orders are not “extras”. They are additions, changes and deletions from the contract scope of work. Somebody changed the scope of work, not the contractor! The project owner, architect or engineer didn’t prepare complete plans or specifications or asked for additional work. Contractors must never give work away. Maintain the right to collect for additional work and extended time when somebody else changes or modifies the scope of work or schedule.

The typical scenario, goes like this: a subcontractor walks into the general contractor’s office with a list of change orders that occurred 2 or 4 months prior and asks to get paid for them. “If it’s news, you lose!” Sometimes the general contractor or developer might be soft-hearted and approve some of the items requested. However, by contract, no monies are owed. Once in court, some judges or juries also might be lenient, but contractors shouldn’t have to count on mercy to win their case and get paid.

On every project, review the general conditions, specifications and contract to look for the timeframe allowed to request additional monies and time extensions for change orders. While you are required to give proper notice for change orders, the work typically proceeds while final change order negotiations ensue. Follow procedures established in the contract and establish your own management procedures to track these incidents carefully and completely.

Only the strong survive

At the beginning of every project, contractors must tell their customers exactly how they want to do business. Tell them up front and in advance they will require signatures in order to proceed with extra work. Expect customers to abide by the terms of the contract, and stick to it. Play hardball and be strong. Customers will then respect and treat you professionally. When you don’t require customers to honor their contracts and then go ahead without signatures; customers will continue to take advantage of your weakness.

To request and track changes during a project, contractors must submit timely field change memos documenting each item of extra work before the work is started or within 24 hours after discovering the problem. Outline the additional work, time required, and the terms (lump sum, detailed estimate, or cost plus) to be submitted to customers per the contract requirements. Then, make sure you get it signed before it’s too late to benefit your bottom-line. Don’t be a WIMP – get it in writing, or forever hold your peace!


 

 

ABOUT THE AUTHOR

Expert offers professional construction expert witness, consulting and litigation support services throughout California. He is the founder and President of a construction & development company, a General Contractor and commercial Real Estate Developer.

Since 1977, Expert has built more than 1,000 projects totaling over 15 million square feet, costing over $700 million. He has been listed numerous times in the top 20 largest general contractors located in Orange County.

Expert Witness Services include:

Construction Practices

Cost Estimating

Defect Analysis

Replacement Costs

Change Order Analysis

Standard Business Practices

Contract Claims & Disputes

Plans & Specifications Review

Field & Project Management

Project Site Inspection &

Reports

Project Completion &

Scheduling