How should you react when you receive a construction change directive (CCD)? Construction change directives can seem forceful. That’s because they are. CCDs are issued when there’s no more room for discussion with a change order. Every contractor must understand the legal obligations attached to receiving a CCD. It’s also important to know that a CCD may not be as airtight as the client delivering it to your desk might think it is! Keep reading to learn what to do when you get a construction change directive.
What Is a Construction Change Directive?
Construction change directives represent conflict between the client and contractor. In an ideal world, you’ll never see one. In the real world, clients are quick to run to this “last resort” for getting a contractor to do what they want.
A construction change directive is a decree passed down to the contractor from the client that instructs the contractor to perform work beyond what’s been agreed to in a contract. Change directives are not friendly requests. A contractor is legally obligated to carry out a change directive once it’s been received. While laws regarding construction contracts vary by state, contractors are generally obligated to complete work based on the specifications of a CCD even if they have not been provided with an updated budget. Contractors can seek compensation for additional work when billing clients.
A constructive change directive can be activated by a client when the contractor and client cannot come to an agreement over how to amend a contract to account for a client’s updated demands. Typically, the process starts when a client submits a change order that alters some element of a project’s scope. The client and contractor may go back and forth to determine the best way to update the budget, timeline, and flow of a project to accommodate the changes. In most cases, both the contractor and client will be happy to sign off on a change that alters the construction contract. However, this doesn’t always happen. A change order dispute that is not resolved often evolves into a construction change directive.
Change Directives vs Change Orders
The biggest difference between a change directive and a change order is the signature requirement. A change order requires the contractor and client to sign off on the document. By contrast, a change directive requires the signatures of the client and architect. This allows the client to bypass the contractor to request a change. The architect is generally allowed to decide what the contractor’s compensation should be for the change requested by a CCD.
A change order in construction refers to any amendment to a construction contract that ultimately changes the scope of work requested. Most change orders could be considered “harmless.” A good example would be a request to change the color of paint used in the kitchen during a home remodel. When this type of order comes through, the contractor will briefly discuss any changes in cost associated with the request before printing out a revised contract for all parties to sign. A more complicated example might be a request to change the style of fireplace being added to a home. The contractor would then bill the client based on any changes for costs tied to materials and labor. What makes a change order a change order is that the client and contractor are both voluntarily signing off on all changes in scope, cost, and timing. A change order can be considered “amicable.”
Important Change Directive Considerations
Are construction change directives always valid? Not necessarily. As a contractor, your ability to “fight” a change directive comes down to how well you protected yourself when creating your original construction contract. Construction contracts should also include sections detailing how changes will be handled. If possible, work with a legal expert to anticipate potential changes and setbacks when drafting a contract. According to the Seattle-based law firm of Tomlinson Bomsztyk Russ, there are some key points to know regarding the legality of construction change directives.
In order to be valid, a construction change directive must be within the general scope of the contractor’s work. A contractor has a right to ask if the updated expectations represent what was conveyed to them when they signed on for a bid. If the work is beyond the scope that was agreed to by the contractor, there may be a legal basis for terminating the contract while also retaining earnings up to the point where the CCD was issued. It may be possible to prove that the client has abandoned the contract by default by altering it beyond what anyone could expect.
How to Respond to a Change Directive
If you receive a construction change directive, it’s important to read the document carefully to confirm that the scope of the work described in the directive is consistent with the original scope of work outlined in your construction contract. Your original contract should ideally contain specific, strict clauses prohibiting work that is not specifically mentioned in writing. This detail alone can save you from the headache of having to contest an unfair directive. What’s more, performing work that is beyond the scope of what you are required to do could actually cause you to do extra work without ever being paid due to the fact that a client isn’t legally obligated to compensate a contractor for out-of-contract work.
If you feel that a directive is outside the bounds of what your contract dictates, it will be necessary to seek legal help to contest the contract without being in breach of contract. If you will be contesting the CCD, it’s important to meet the deadline specified in the document. Most CCDs contain strict deadlines that must be met if a contractor wishes to avoid having to comply with the directive by default. Failing to follow all deadlines and procedures outlined in a CCD could cause you to be stuck with an unfair CCD that ultimately robs you of time and money.
The bottom line is that it’s necessary to send a notice contesting a CCD as soon as the CCD is in your possession. Inactivity is the sure way to be on the hook for the demands being made by your client and their architect. In some cases, it may only be necessary to send written questions regarding the scope covered in the CCD in order to avoid forced compliance. Always seek legal help from experts if you’re unsure about how to move forward with a change directive that you feel violates the contract you’ve created with a client.
The one thing that’s for certain is that protection against unfair CCDs occurs long before a client submits a change request. Contractors need to have all of their ducks in a row when creating work contracts with clearly defined objectives, scopes, and pricing. Workyard users enjoy accurate job costing and construction time tracking that allows them to bring forward the data necessary when negotiating changes with their clients. Start a trial today to discover what smooth, cost-effective project planning looks like for today’s busy contractors.