During the course of a construction project, various modifications are commonly made to the project specifications. Usually, these modifications are implemented through change orders. Nevertheless, in cases where there is a dispute regarding project changes, an owner may have the authority to supersede a contractor using construction change directives.
Table of contents
- 1 What are the Construction Change Directives (CCD)?
- 2 Construction Change Directives vs. Change Orders: What’s the Distinction?
- 3 Can an owner legitimately modify the contract without mutual agreement?
- 4 How contractors can respond to a change directive
- 5 Payment for work under a change directive
- 6 Optimal Approaches for Owners and Contractors
- 7 How to Avoid Construction Construction Change Directives
- 8 Asia Pacific Projects: Your Premier Partner in Construction Management
What are the Construction Change Directives (CCD)?
Construction Change Directives (CCD) essentially serve as the instruction to a contractor to modify their work on the project. When a contractor receives a change directive, it functions as a directive, and the contractor is obligated to implement the changes without providing input. Change directives are also commonly referred to as “force account work.”
The American Institute of Architects (AIA) offers a designated form for this purpose, known as the G714 Construction Change Directive.
Construction Change Directives vs. Change Orders: What’s the Distinction?
Contrary to its name, a change order is typically executed through mutual agreement between the owner and the contractor. In the case of change orders, one party proposes a change, and both the owner and contractor reach an agreement on how to implement the change, along with any necessary adjustments to the price and schedule.
Construction Change Directives, on the other hand, do not involve mutual agreement; they are mandatory. A change directive is a clear direction from the owner that the contractor must adhere to. These directives often arise following a disagreement between the owner and the contractor.
Architects also have a means of altering project work without contractor consent: the Architect’s Supplemental Instruction (ASI). However, an ASI is not permitted if the change impacts the schedule or cost, so its impact differs from that of a change directive.
Can an owner legitimately modify the contract without mutual agreement?
Construction Change Directives are permissible only if explicitly allowed in the original construction agreement. Thus, if the contract does not expressly permit the owner to issue change directives, a contractor is not obligated to comply with the owner’s unilateral request to alter the project.
Furthermore, even when change directives are permitted, there are limitations on how extensively an owner can modify the contract. This is where the cardinal change rule becomes relevant.
If a change directive (or a change order) alters the contract to the extent that it results in an abandonment of the original agreement, that change directive cannot be implemented. Technically, it can be issued, but a contractor may not be required to adhere to it. If a change directive fundamentally transforms the original contract in a manner that constitutes a cardinal change, it could be deemed a breach of contract.
How contractors can respond to a change directive
When confronted with a change directive, contractors typically have several options, including:
- Agreeing to the proposed change, price, and schedule outlined by the owner.
- Proposing modifications to the change directive, whether for the work itself, the price, or the schedule.
- Contesting an issue with the change directive after completing the additional work.
- Walking away from the project, albeit facing the risk of a breach of contract.
If a contractor disputes the adjustment, they should submit a written statement, declaring that they are proceeding under protest and reserving the right to make a payment claim after performance.
Payment for work under a change directive
Determining a price for changes in contracts like time and material contracts may be straightforward. However, when the contract price cannot be easily and fairly adjusted for new or additional work, determining the owed amount may require more effort.
Ideally, reaching a mutual understanding about the owed amount is preferable, especially if good relationships have been established on the project.
Billing a change directive similarly to a change order makes logical sense. In the event of an owner disputing the invoice, standard options apply. Open communication and negotiation are preferable to initiating a payment dispute. If these approaches fail, escalating the matter, perhaps with a Notice of Intent to Lien or other payment procurement methods, may be considered. If dialogue or escalation proves ineffective, it may be necessary to file some form of payment claim.
Optimal Approaches for Owners and Contractors
The most effective strategy for handling Construction Change Directives is to prevent their occurrence entirely. When a change directive is issued, it signifies a lack of agreement between the contractor and owner, leading to the imposition of the owner’s will. This imposition can result in relationship complications.
Contractors are averse to being compelled to act against their preferences, especially when such directives aren’t even contractually grounded. The issuance of a change directive undermines the rapport between the owner and the contractor, making future interactions more strained. Moreover, determining the price, schedule adjustments, and implementation of a change directive introduces various opportunities for issues to arise. In essence, Construction Change Directives have the potential to foster a contentious atmosphere that sets the stage for future disputes.
How to Avoid Construction Construction Change Directives
By cultivating an environment of transparent communication from the outset—going beyond basic project and contract discussions—a contractor can gain a better understanding of the owner’s expectations for the project. Moreover, this communication makes it simpler for an owner to identify any potential misunderstandings between the parties.
Furthermore, maintaining documents in a readily accessible, centralized location not only promotes collaboration throughout the entire project but also minimizes the risk of misunderstandings.
By instilling habits of documentation, collaboration, and clear communication, addressing any future issues becomes more straightforward. When both parties feel at ease with each other, proposed changes to a project’s scope or specifications can be deliberated in a constructive manner. This ensures that both sides contribute to how the change will be implemented, and a standard change order can be generated to formalize those modifications.
Asia Pacific Projects: Your Premier Partner in Construction Management
At Asia Pacific Projects, we pride ourselves on being a leading provider of comprehensive construction management services. With a commitment to fostering an environment of open communication, collaboration, and transparency, we bring a wealth of expertise to every project we undertake. Our dedication to understanding the unique needs and expectations of our clients sets us apart.Explore the realm of efficient construction management with us as we leverage innovative practices and proven strategies. Partner with us for a seamless and collaborative construction management experience, where open communication and proactive documentation pave the way for successful project outcomes.
Please send information or requests that you need to consult for Asia Pacific Projects via:
NGUYEN THI HIEU | Local Relations
Mobile phone: +84 918 331 489