There is no one-size-fits-all construction contract, and no contract can fully eliminate the potential for litigation. According to the Construction Industry Institute, issues with change clauses are among the most likely to cause a dispute.
Construction Dive points out that the contract’s notification provision may create issues that nullify the benefits of a change clause. Contractors and subcontractors should pay particular attention to how many days they will have to make a change request. In some cases, the contract may provide only a few days, and rarely more than 21 days. This time limitation may cause particular problems for general contractors if they do not receive the notification from a subcontractor in time to make the request to the owner. Therefore, they should ensure that their contract provides them with a few days more than the contracts they have with their subcontractors.
Another issue that may come about with a change clause is when a contractor begins working on the changes before submitting the written request. When contractors have already established a relationship with the owner and feel confident of the outcome, this may not be a problem. But, an owner who does not always pay promptly or seeks to negotiate costs down may cause delays or difficulties covering the full cost of the changes. It is important to receive the guarantee that the owner will pay before taking on the expenses of the work.
Assessing the risk of delays and extra costs is one of the keys to preventing change clause disputes. Contractors may benefit from careful analysis and subsequent discussions with the owners during initial contract negotiations to eliminate the potential for surprises that derail an agreement.
