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Can change orders cause disputes during a construction project?

On Behalf of | Dec 20, 2023 | Construction Disputes

If you’ve been in the construction industry for a while, you are likely aware that change orders are unavoidable and are often the source of disputes. Also known as variation orders, these sometimes inevitable changes to a construction project should, therefore, be well managed to avoid disputes and lost profit.

When amending an original construction contract, a developer, contractor, architect, investor and even an owner can end up in a mess due to poor communication. It’s, therefore, imperative that the changes in the scope of work be clearly articulated to help ensure the successful completion of the project.

The significance of change orders in construction

Change orders encompass alterations in design, materials or execution. They can arise due to client preferences, unforeseen challenges or evolving project requirements. While change orders can contribute positively to a project’s adaptability, they may also harbor the potential for conflict.

Change orders can disrupt the established workflow by introducing a dynamic element to a project. Delays, cost overruns and strained relationships among project stakeholders are common concerns.

Unpacking the causes of disputes

One primary cause of disputes is the ambiguity present in original contracts. Vague language and loosely defined terms create fertile ground for disagreements when change orders come into play. Clear and precise contract language is the cornerstone of dispute prevention.

Smooth communication is paramount in the construction industry. Disputes often arise when there is a breakdown in conveying change order details among project stakeholders. Establishing robust communication channels can significantly mitigate this risk.

Change orders frequently involve cost adjustments, and disputes often stem from disagreements over these financial implications. Contractors may face challenges in accurately estimating the financial implications of changes, leading to disagreements with clients or subcontractors. Rigorous cost estimation methodologies and transparent communication about budget alterations can curtail disputes related to financial concerns.

Change orders are an inherent aspect of construction projects, but their potential to sow discord can be mitigated through strategic planning and proactive measures. By addressing the root causes of disputes, establishing robust communication channels and implementing comprehensive project management practices, construction project owners can more effectively navigate the challenges of change orders.