Why The Change? Who Knows?

Change orders are part of life in the construction industry. Unfortunately, sloppy records pertaining to why a change was made, who signed off on it, and what the “before and after” drawings looked like often contribute to major disputes and even litigation. Pros suggest checking the quality of your documentation by choosing a project that finished up a year ago, and asking someone who did not work on that project to review the records and find: the reason for a significant change, the authorizer, and the related drawings. If answering those questions requires digging through piles of old emails, and doesn’t result in clear answers, you probably need to take record keeping at your business more seriously. 

Recordkeeping Saves The Day

As Carl Veillette of Newforma puts it, “When project decisions live across drawings, email, RFIs, submittals, and chat, you don’t just lose time. You lose the record you need to explain what happened,” and:

Most firms find this out at the worst possible time, in a deposition, an audit, or a handover, staring at a gap they didn’t know was there. The tools you use to design and build aren’t going anywhere, and they shouldn’t. But the record connecting them, who decided what and why, needs to survive longer than any single inbox or app. That’s the job. Everything else is just software.

To ensure you have  the information you need when you most need it, Veillette recommends testing your current approach to record keeping by selecting a few different projects and reviewing the documentation. Does it provide a clear record of  what shifted and why, even to someone who did not work on the project? If you find, as many construction businesses do, that your current record keeping approach leaves a trail of mysteries, it does not mean you have to rip out your tech stack. Instead, Veillette encourages “treating your project record like evidence, not paperwork,” as you work to:

• Write decisions down when you make them, not weeks later from memory.
• Give every approved change a date, a name attached to it, and a stated reason.
• Link RFIs and submittals back to the drawing or spec they touched, not just a status of open or closed. 
• Capture what a meeting decided, not just who showed up.

Change Orders: Contractual Diligence

Spencer Krebs, an attorney in the Cleveland office of Tucker Ellis, acknowledges that  “Divergence from the original plans on construction projects is unavoidable,” but observes that far too frequently changes lead to disputes–which can be avoided. To prevent misunderstandings over changes from escalating into real problems, Krebs discourages informal verbal agreements done “on the fly,” and recommends: 

• Defining the construction project scope clearly and in detail in the design documents…. All entities should agree on a realistic and equitable change order process before signing the contract. Often times, many large general contractors, owners and developers push for one-sided contracts that limit their liability regarding payment for changes, which is why subcontractors should negotiate contract provisions that are equitable and clear….Subcontractors should also include a provision that provides an alternative procedure that permits secondary authorization should the need for a time-sensitive change order arise….

• Instead of relying on good faith, before implementing any change, review the contract and familiarize yourself with all requirements for change orders, including time constraints, format, content and approval process. This may result in pausing the construction project for an hour or two, but a slight delay in the short term can dramatically decrease an expensive change order dispute at the end of the project.

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