The construction industry, just as any other industry has its own terminology or lingo. There are many examples such as “punch-list,” “lien” and “substantial completion” to name a few. No words are more dreaded than change order. Construction change orders are some of the most litigated and disputed documents in all of construction law.
A cousin of the change order, is the construction change directive. Although the names are similar the legal implications are significantly different. The construction change directive may be even more disputed than the construction change order but it is not as widely used. This post will help to familiarize readers with what exactly a construction change directive entails.
Definition of Construction Change Directive
I found a quick definition of construction change directive:
An alternate mechanism for directing the contractor to perform additional work to the contract when time and/or cost of the work is not in agreement between the owner and contractor performing the work.
To break down this definition, one must look to its parts. First, its an alternative mechanism, meaning that there are other way to accomplish the goal of the owner/architect. Second, it directs the “contractor” to perform additional work. Its not a request but rather a directive. Lastly, its a directive given by the owner when time and/or cost are not in agreement. This is vastly different from the change order, which has to be agreed to by the contractor and owner.
Basically this is an order to do something even though there is no agreement as to timing and/or price. This type of authoritarian mechanism is prone for heavy dispute.
Application of the Construction Change Directive
The application of the construction change directive is less complicated than its definition. The AIA G714 is a single page document that basically has four sections.
- A section containing all of the project information which is standard on any contract document which includes a brief description of the change that is being directed;
- The proposed adjustment with regards to price;
- The proposed adjustment with regards to time; and
- The signature blocks for the Architect, Owner (required) and Contractor (no signature required for contractor).
Once this document is filled out and signed by the owner and architect, it needs delivery to the contractor for effectiveness. This is a bold and powerful document.
Construction Change Directive: Risks and Rewards
As with any document, whether it be an agreed upon change order or a construction change directive, there are inherent risks involved with taking on new work. The owner has to weigh the risks and rewards with taking such bold move in order to get what it wants. This move could backfire and be costly for the owner and/or negate any damages for delay that the owner may have against the general contractor because of the forced additional work.
Its important to speak with an experienced attorney when dealing with complex procedures on a construction project. Click here or call 504-894-9653 for more information.