By Steve Rizer
When attempting to resolve an issue that has arisen involving a contract requirement for a construction project, it is a good idea to resist trying to recall from memory what that requirement actually says. This is a key piece of advice that Schiff Hardin LLP Partner Amanda Schermer offered to a group of professionals during “Change Order Management: Best Practices & Strategic Considerations,” a webinar that WPL Publishing held earlier this month.
For all parties, “especially for complex projects that have long contracts and … technical specifications that are hundreds -- if not thousands -- of pages long, it is a best practice to not, when an issue arises, … go from memory of what the contract requirements are” even though it may be “very tempting” to do so, Schermer said, addressing a target audience of architects, engineers, public and private owners, construction managers, contractors, subcontractors, and consultants. “All parties [should] take the time to review what the actual contract says and then come back and have a discussion, and it’s important … to not go into your contract evaluation assuming you know the answer. It’s good to be open-minded in your analysis, and that will help you think clearer about the issue and reach a solution.”
During the conclusion of her webinar presentation, Schermer stressed the importance of understanding what the requirements are in a contract as they relate to scope of work, differing site conditions, permitting and other code requirements, change order provisions, and owner responsibilities.
For owners, it is “definitely important to understand all of the things that you agree to do in the underlying contract because if you don’t do it during the project, the contractor will point that out to you, and if you didn’t do it because you didn’t realize it was an obligation, then midway through the project, [you may] want the contractor to take on that responsibility,” leading to a change order and higher costs, Schermer said.
Also during her discussion on best practices for change order management, Schermer emphasized the significance of understanding that “it is unrealistic to think that a project is not going to have any change orders. I hear … sometimes from owners that it’s their goal to have no change orders on a project. That’s not really a realistic goal.”
Alternatively, it should be acknowledged that there will be “a certain amount of change that is going to be inevitable. A better goal [than striving for zero change orders] would be to put a system in place to deal with change timely and effectively and take that time at the front to define the change-management process and work with the parties involved in the project to know what the steps in that process are going to be and put everybody in the position to prepare and evaluate and execute change orders in a timely way.”
During the webinar, Schermer additionally discussed the advantages of effective change management, different types of change orders, conflicting guidance in contracts, factors that influence change order pricing, change order negotiations, and other areas.
To purchase a recording of the 90-minute webinar, visit http://constructionpronet.com/Products/1089.aspx.