CONTRACT DOCUMENTS THAT LEAD TO CHANGES, CHANGE ORDERS, AND DISPUTES (PART 2)
This article is Part 2 of Steve Holloway's series describing recurring issues that tend to create changes and affect
See part 1 for more information on change orders.
These issues frequently cause disputes among the owner, contractor, and designer, harming
relations and adversely affecting construction. This material was originally published by Aspen Publishers in Chapter 3 of their 2006 Construction Law Update.
CONTRACT DOCUMENTS THAT CONSISTENTLY PRODUCE CHANGE ORDERS
This article addresses:
- Illegal Restrictions;
- Improvements in Time;
- Incomplete Design;
- Intention of the Contract Documents;
- Lack of Design Discipline Coordination;
- Latent Conditions;
- Owner Changes; and
- Updated Information
Subsequent articles will address pre-bid, bid/award and construction phase sources of changes.
Illegal restrictions arise when the designer either includes requirements
or deletes some option contrary to procedure outlined by law. Errors and
omissions of this type can force a contractor to complete a portion of the work
more expensively than otherwise would be allowed.
A common example of this type of interference is the use of a proprietary
specification on a public project to unreasonably restrict the contractor’s sources
of supply. In such circumstances, the law may provide that several sources of supply
be permitted, and also mandate the flexibility to allow a contractor to propose additional
items as equal to those listed. If a single product is listed on a public project, it
can be an indication that the specification has been unlawfully restricted.
Improvements in Time
Change orders related to improvements in, or changes to, the time of performance
are relatively rare, and are more likely to be initiated by the owner than
by the contractor. Such change orders sometimes result from the owner’s need for
an earlier certificate of occupancy or product production date, and are sometimes
related to the need to accelerate the work to overcome delays. Even where associated
with owner-caused delays, if the proposed change order results in additional
costs, it may be difficult to get the owner to accept responsibility in the absence of a
Incomplete design occurs when a designer fails to identify the project scope
to the level sufficient to allow the contractor to adequately price and execute the
work. Deficiencies of this type are very common and can appear anywhere in the
contract documents; for example, failing to provide a complete finish schedule or
steel connection details, or much more commonly, failing to provide the clear
construction or installation details necessary to perform the work.
The architect’s failure to adequately define and represent the scope of work
in the contract documents is usually unintentional. However, it can also be
intentional, most obviously and commonly when the contract is awarded based
on schematic or design development designs. Cost-plus and guaranteed maximum
price contracts, rather than fixed price contracts, are often used in these circumstances.
Intention of the Contract Documents
General and supplementary conditions often include provisions that refer
to the owner’s intention to have, and/or the contractor’s obligation to provide,
a ‘‘complete project.’’ Technical specifications will often include clauses stating a
similar objective, such as: ‘‘It is the intent to have a complete and operating
system in every respect.’’
Language that can be interpreted to unilaterally place design responsibility
on the contractor can cause problems. It may be the owner’s ‘‘intent’’ to
have a complete and operating system, but it becomes unreasonable when this
kind of wording is intentionally used in an attempt to make up for design
flaws or incomplete design.
On the other hand, certain statements regarding the intent of the documents
can be legitimate. For example, a notation that the piping and instrumentation
diagrams are symbolic and diagrammatic in nature and are only intended to be a
general plant schematic, showing equipment, pipe sizes, and flow would be consistent
with industry custom and practice.
Owners and architects should clearly define the intention of the contract
documents, and contractors should endeavor to understand the documents prior
to contract execution.
Lack of Design Discipline Coordination
The architect typically manages and coordinates the individual designs
necessary to complete the facility. Problems often arise because separate plans
and details are developed independently, by separate and, perhaps, unmanaged
consultants. Designs are often completed without full consideration for the other
disciplines and with false assumptions. Examples from our firm's cases include:
- The civil engineer assumed that the architect would provide the finish
floor elevations and ADA access grades and routes. The architect assumed
the civil engineer would make these same provisions.
- Even though the sanitary line appeared to conflict with the column, the architect
left the drawings unchanged, assuming that it would get resolved in the field
or would be caught during shop drawing reviews.
- The HVAC drawings were issued without adequate regard for structural
- Because the engineer was under contract with the owner, rather than the
architect, the structural engineer’s calculations and final roof design did
not account for the fact that the air handling units were being relocated to the
Such problems arise when the job of coordinating the respective designs
is performed improperly; either complete information is not given to the
design consultants or the individual designs were combined as a package, without
the benefit of proper design coordination.
Latent conditions, or latent defects, are hidden or unknown to the contractor
at bid time, such as:
- Subsurface site conditions that remained undetected due to inadequate soils
- Hidden conditions in an existing facility, such as broken in-wall piping in a
The contractor should try to determine how contract language deals with
latent conditions, because provisions vary from form to form.
Virtually every construction contract contains language that authorizes the
owner to make changes in the work. In many respects, owner-initiated changes are
easier to deal with because they are obvious, as compared to hidden design
defects. Owner changes may be prompted by the desire for additional space,
more luxurious finishes, an upgraded facility, or by negative circumstances,
such as project funding limitations or reduced need that requires a reduction in the
scope of work.
Changes resulting from new or updated technical information may provide
advantages for construction, depending on the timing of updated information in
relation to construction and the contractor’s ability to accommodate the changes.
Improved information may include new or improved methods to achieve a function.
These types of positive information will often result in contract scope
changes that are easily approved and processed by the owner.
See part 3 which addresses consistent sources of changes in the pre-bid phase.