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E. Change Order Negotiation Issues

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Standard construction contracts typically include procedures to address the scenario where the contractor and the owner cannot agree to the terms of a change order. Here, there is no dispute over whether or not the contractor is entitled to a change order, it is just a dispute over the cost or time impacts of the change. Such provisions typically include an owner directive that mandates that the contractor perform the work, and then notes how the contractor can resolve the cost and time impact issues. If the cost and time negotiations remain unresolved after this process, the contractor can proceed with dispute resolution. The underlined text below represents specific pre-claim requirements.

 AIA A201 – Section 7.3: If the contractor and the owner cannot reach an agreement on the change to the contract sum or contract time relating to a change order, the owner can issue a construction change directive that forces the contractor to proceed with the change-related work. Per Section 7.3.6, the contractor is to advise the architect if it disagrees with the method, if any, provided in the construction change directive for determining the proposed adjustment in the contract sum or con tract time. The contractor can then move to issue a claim per Article 15.

 ConsensusDocs 200: Per Section 8.2, if the contractor and the owner cannot agree to the terms of a change order, the owner can issue an interim directive to the contractor that requires the contractor to perform the subject work. At that point the contractor can move directly to dispute resolution per Article 12. Hence, no pre-claim notifications are required.

 EJCDC C-700 – Section 11.03: If the contractor and the owner cannot agree upon the cost and time impacts relating to a change order, the owner can issue a work change directive to the contractor and the contractor shall proceed with the work. Per Section 11.03.B, the contractor shall issue a change proposal to the engineer no later than 30 days after the completion of the work set out in the work change directive. The engineer shall complete its review of the contractor's change proposal within 30 days of receipt. The contractor can then appeal the engineer's decision by filing a claim under Article 12.

Fundamentals of Construction Claims

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