What Is A Change Order?

Have you ever had a project go perfectly according to plan? It’s ok, us either.

Project changes are common after we create contracts and begin working, and the last thing you want to deal with are surprise fees and legal challenges. There are ways to avoid all of that while ensuring contractors are paid fairly and promptly. One way, is to simply create a change order when a project scope changes; thus informing everyone and recording the new agreement.

The What and Why.

Change notice, variation order, and change orders are all synonyms for a document that acts as a binding agreement if a dispute arises regarding quality, labor, timeline, or materials. To clarify, a change order is a formal process in the industry to make changes to the original contract and promotes transparency throughout the entire project. 

Generally, contractors are unable to bill for additional work completed unless there is a formal change order summarizing that work. So it’s best to deal with all of the particulars before any of the work is done. If it’s done after the fact, contractors lose leverage and owners lose the right to making informed decisions.

Source: https://www.bigrentz.com/blog/change-order

Are There Different Types of Change Orders?

The industry recognizes four types of change orders including: 

  • Lump-Sum
  • Zero Cost
  • Time and Material 
  • Unitary Cost 

Using the correct type of change order is essential in collaborating with project owners. Here is a blog we think does a good job at explaining the purpose of these different types!

What Does A Change Order Include?

To ensure the change order is official, there are some requirements. For example, they must include information such as:

  • The additional cost for added labor and materials
  • An updated timeline for the project (if necessary)
  • A detailed description of the new work
  • The name, address, and contact info of all stakeholders
  • Signatures from every party involved
Typical Change Order for Unit Price Contracts – Generate on ContractComplete

Creating Change Orders

Most create change orders manually with Word and Excel. This process is time-consuming, tedious, and requires attention to detail. To sign a change order, you have to print, sign and scan the file. This results in people being unable to sign and return the change order until they are in the office and as a result, they often forget about it.

How to Send and Sign Change Orders

It is common to send change notices over email to be printed, signed, and returned. This process requires time and resources which consequently results in further disruption to the project’s timeline. However, working without a signed change order may result in workers being unfairly paid. In addition, if contractors make changes to a project without informing the owner, surprise invoices and fees may leave the client unsatisfied. A lack of innovation has certainly left the industry with inefficient, old-school methods that are costly and time-consuming. 

Change Orders at ContractComplete

At ContractComplete, we recognize this pain point and have created a user-friendly solution to increase efficiency, convenience, and sustainability. Firstly, by adjusting a digital unit price contract, contractors can automatically generate a change order through our software. Secondly, the online signature platform allows customers to sign change orders on a laptop or cellphone. Further, ContractComplete allows you to store the document digitally, thus reducing the need to store a physical copy. Above all, our process reduces inefficiencies and ensures that all parties have a clear understanding at all stages of a project. 

Switch to ContractComplete Today!

Having a consistent and reliable procedure in place allows for simplicity should the need for a change notice arise. We recommend outlining this process from the beginning with project owners. Most importantly, being upfront ensures that everyone is on the same page when changes happen. Being proactive requires deviation from industry norms, which at ContractComplete, we are eager and prepared to provide.

Chloe is a student at Western University who joined ContractComplete for an Intrapreneurship through Venture for Canada. She is currently in her fourth year completing a dual degree with Ivey and Anthropology. Outside of the classroom, you can find her at the dance studio, buying more house plants, or exploring her passion for entrepreneurship.

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