Change Orders 101: How to get paid for unplanned costs

What are different types of change orders and how do you make sure you get paid for the change? Watch and learn more today.
Read more about change orders: www.levelset.com/blog/change-...
FAQs: www.levelset.com/payment-help...
Related videos:
How to fill out the AIA G701 Change Order Form: • How to fill out the AI... .
How to fill out the AIA G702 Application and Certificate for Payment: • How to fill out the AI... .
How to fill out the AIA G703 Continuation Sheet: • How to fill out the AI... .
-Why are change orders necessary?
On a construction project, external events will require that the contractor's work be changed in one respect or another. Most contracts permit, in the changes clause, the owner to unilaterally change the scope of work that is add, delete or modify without invalidating the contract.
-What are different types of change orders?
1. Actual changes. Actual changes exist when the owner issues a written change order or a directive to change something in either the plans or the specs.
2. Constructive changes
Some constructive changes can be an owner's directive to correct, "Defective specifications." In other words, the specs are somehow contradictory and the owner puts it on the contractor to work that out.
3. Cardinal changes.
Essentially what a cardinal change is, is that by virtue of the nature or total quantity of the changes, the project constructed is fundamentally different from what the contractor bid. In other words, this project can look just like at the end of the day, what the plans portrayed it to be, but there were so many disruptions, so many tiny little changes on the job that the contractor didn't end up constructing that which he anticipated.
-What should I know about change order documents?
What you want to see is something that looks like an AIA G701 change order. Make sure your change order includes the waiver language that says, "The compensation (time and costs) set forth in the change order comprises the total compensation due to the contractor, all subcontractors, all suppliers for the worker change defined in the change order. By signing the change order, the contractor acknowledges and agrees, on behalf of himself and everybody below him that the stipulated compensation includes payment for all work contained in the change order plus all payment for interruption schedules, extended overhead, delay, all impact, ripple or cumulative impact on the work of this contract.”
-How can I make sure I get paid on my change orders?
If the owner's issued a change order, you just sign that under the terms that you've found to be appropriate and you just build in your next progress payment application.
In the case of a constructive change, what you have to do is document the record, so that you've preserved your claim here.
-What should I know about different impact claims?
Impact claims generally fall into one of three categories, delay, disruption, and acceleration.
-Delay claims
There are two delays driving the job at the same time, one of them being your fault, one of them being somebody else's fault. So, you have to look at the way in that framework if you will.
-Disruption claims
If you can prove as a contractor,
that you bid the job reasonably,
that you had a reasonable plan for carrying out the job, and
that a bunch of changes interrupted your sequence and therefore your productivity units,
then you have an impact claim that you should work into the cost of the change or file a separate claim form.
-Acceleration claims
Acceleration can be either directed or constructive. A constructive acceleration will happen where the owner, for instance, delays the project but doesn't give you extra time. In that case, the contractor can work to their original schedule, or they can accommodate that delay. If the contractor incurs extra costs accommodate delay, that’ll be a constructive acceleration.
Levelset’s mission is to empower contractors to always get what they earn. Levelset’s products help millions in the construction industry each year to make payment paperwork and compliance easier, get cash faster, monitor the risk on jobs and contractors, and better understand payment processes and rules. The results are faster payments, access to capital, and fewer surprises. Backed by investors like Horizons Ventures, S3 Ventures, Altos Ventures, Operating Venture Capital, and Brick & Mortar Ventures, Levelset is headquartered in New Orleans, Louisiana, with offices in Austin, Texas, and Cairo, Egypt, and is over 200 employees strong. Learn more at www.levelset.com.
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[@Runforcake]

Thank you so much for this , I’m starting as a construction PM after many years as an assistant PM , and this has and will help me by leaps and bounds , I’m looking for a mentor as well , if anyone reads this I’m a young starting PM and want a mentor so bad !

[@successprinciples5107]

This is so great!

[@Levelset]

Hey Elizabeth, so glad we could help.