Regardless of how much you plan out your work and your contractual arrangements in the construction industry, things are always bound to change. That’s why change orders are so common.
You’ve probably experienced situations where circumstances dictate a change to completion dates, materials used or the scope of the project. When disagreements arise over these change orders, litigation could be on the horizon if you’re not careful. That can put you at risk of not only losing money on the project, but also suffering harm to your business’s reputation, thereby causing you to lose future profits.
So how can you avoid disastrous change order disputes? Let’s look at some effective strategies that might help you steer clear of these legal issues.
Strategies for avoiding change order disputes
The strategy that you implement to avoid a change order dispute is going to rest on the facts at hand. That said, here are some options that you might be able to utilize in your case to avoid litigation, save yourself money, and protect your integrity and reputation:
- Avoid word of mouth agreements: Some small business owners take pride in their ability to strike agreements with nothing more than verbal commitments. Although this might help streamline the process, it can also put you at risk of disagreement. Without a written contract in place, there are no parameters in place that dictate what change orders are supposed to look like. So, be sure to reduce your construction contracts to writing.
- Be as detailed as possible in your contract: When you draft your construction contract, be as detailed as possible when addressing the scope of the project and the details of the project itself. By clarifying these issues upfront, you can reduce the risk of confronting a change order dispute. You’ll also want to clearly specify what the change order process will look like, advocating for something that is fair to all parties involved. This will likely foster a collaborative approach to change orders rather than generating conflict.
- Clearly document everything: When a change order is needed, it’s helpful to have documentation backing up the request. If you don’t have that documentation, then the other parties to the contract are going to be resistant to the change that you propose. Think of this detailed documentation as your way to convince the other side that what you’re requesting is necessary.
- Keep clear lines of communication: A change order request is more likely to face conflict if it’s sprung on the other party without notice. If you stay in good communication with the other parties, though, then they may see the issues at hand before you even formally suggest a change order. This will make them more amenable to the process and less likely to engage you in some sort of legal dispute.
- Be willing to negotiate: If the need for a change order arises, you can reduce your risk of legal action by carefully negotiating what that change order will look like. If you try to ram something through without discussing it with the other parties, then you’re bound to face pushback and potentially legal action.
Are you facing litigation over a change order?
Despite your best efforts, you might still end up facing litigation related to a change order. When this happens, be sure you have strong legal arguments on your side to protect your interests. Don’t wait too long to build your case, though, as doing so could put you at an increased risk of a poor outcome.