Question:
I know that change orders are modifications to a contract. I also know
that there are change orders that are agreed apon by both parties, and
then those that the contractor has no right to a negotiation.
I've heard that a contractor was making a lot of money on a project
because of all the change ordgers. Is that possible because he is
charging more than what he would have charged if it was agreed apon in
the contract? If so, it seems like a contractor would enjoy change
orders? Why then have I also heard that contractors try to avoid change
orders. Can you give an example of a change order that would work
against the contractor?
Are change orders a form of a "claim," or do claims have to go through
court (or some type of arbitration)?
Answer:
Nobody I know in this business anjoys the extra paperwork involved.
Contractors like to get a contract and complete the work in a timely
fashion. Change orders often slow things down and create more paperwork than
they're worth. There's also the prospects of conflict, which nobody likes.
Only if the terms are not adequate. For example, on a job with liquidated
damages where a change order does not allow for more time. Also, a change
order could conceivably change the scope enough to where the job may not be
worth doing -- in other words, had the scope been that way in the first
place, the contractor may not have bid at all.
Only if the work is performed prior to getting a signed agreement for the
change. That's a whole different can of worms and contractors should avoid
doing any extra work without pre-approval, however, it cannot always be
avoided.
I was in CB's for many years and we saw allot of civilian contractors
getting rich from change orders to the government. It was the governments
fault because the people writing the contracts did not know that much about
construction. However, that was changing when I left in 1990. The government
was trying to write the job to spec's so there could be no changes. So I saw
where the contractor made money then I saw where the contractor was
penalized. Every job has changes, but now I think there are legitimate
changes and not fraud.
When you talk about fraud, are you talking about government employees approving
the change orders knowing that they were just handing money to the
contractor--and not caring because it wasn't their money?
