change orders. co proposals initiated by owner or gc –owner requests estimate for work proposed...

Change Orders

CO Proposals

• Initiated by owner or GC– Owner requests estimate for work proposed– GC CO results from changed site condition or

response to field question– F 19-2 go thru note fees and overhead

Pricing COs

• Goal is to get paid– Need to be realistic about prices– Need to mark up items to recover indirect

costs– Everyone marks up so the final price can be

double direct cost

Documentation

• Change Order– Owner and PM have agreed on $ and time

• Construction Change Directive– Owner and PM have not agreed on $ and time– Or change must be implemented before PM

has had time to evaluate $ and time

Claims and Disputes• Sources of Claims

– Constructive acceleration – GC required to perform task at a faster rate than planned

– Constructive Changes where scope is modified by owner

– Cumulative impact of numerous change orders– Delay caused by owner– Site conditions differ from contract documents– Unresponsive contract admin– weather

• Major issues:– What are issues– Who is responsible– What are $ and time impacts

Resolution techniques

• Negotiation– First step in resolving a dispute– Both parties sit down and try to reach an

agreement– Least costly and most efficient– No outside support– Works best if done as soon as possible


• Mediation• Assisted negotiations• Facilitated by a neutral third party• Mediator helps parties reach a concensus• Parties meet together to give their position• Parties then separated and mediator meets with

each party to discuss strength and weakness of position and attempts to craft agreement

• Once agreement reached parties sign

– Both parties must desire to reach a settlement


• Arbitration– Formal alternative to mediation– Both parties present their case to a neutral

third party who makes decision– Can be binding or non-binding– If litigated after arbitration – arbitration award

is evidence admissible in trial– Arbitrators have more expertise than judges in

construction matters


• Minitrial• Private, non-binding, structured settlement process • Blends mediation, negotiation’ and litigation together• Only used when both parties agree to its use• Advisor chairs trial• 2 phases

– 1) both sides make abbreviated presentation to senior executives of companies involved

– 2) executives discuss settlement

– If no settlement , advisor makes non binding advisory opinion


• Minitrial• Flexible procedure – can be tailored by parties in

dispute• Process:• Exchange key exhibits and evidence• Select neutral advisor• Select executives from each company• Informal hearing


• Dispute Review Board– Organized before construction starts

• 3 industry experts – one nominated by owner, GC, and third by other two members

• Generally Owner decides to use DRB• Board members are given contract and specs and

make site visits to see progress• Meet monthly or 1/4ly to resolve disputes• Board writes recommendation which is either

accepted or not


• Litigation– Court resolves matter– Time consuming and expensive

change orders. co proposals initiated by owner or gc –owner requests estimate for work proposed...

Documents