Building Flexibility: Crafting a Comprehensive Change Order Procedure in EPC Contracts
ŇEPC contracts excel in streamlined project execution. However, unforeseen circumstances or project refinements often necessitate changes. A well-defined “change order procedure” clarifies how these adjustments are handled, fostering collaboration and minimizing disputes.
Here’s a breakdown of key elements to include:
Initiating Change: A Collaborative Approach
- Contractor’s Right to Propose: The procedure should explicitly grant the contractor the express right to initiate “reasonable” changes to the project program or specifications. “Reasonable” implies changes that don’t significantly alter the project’s core objectives.
- Cost Recovery Mechanism: The procedure should clearly state that the contractor has the right to recover any additional costs associated with approved changes. This cost recovery mechanism should be integrated seamlessly with existing contract clauses, potentially through extension of time or force majeure events.
The Roadmap to Change Orders:
A clear roadmap ensures all parties understand the change order process:
- Submitting and Approvals: Outline the process for submitting a change order request, including who can initiate it (owner or contractor) and the required approval hierarchy depending on the change’s significance.
- Notice Periods: Define clear timelines for submitting and approving change orders to avoid delays and ensure timely resolutions.
- Documentation Requirements: Specify the type of documentation required to support a change order request.This could include detailed technical descriptions, cost breakdowns, impact assessments, and justifications for the proposed change.
Detailed Documentation is Key:
- Scope Changes: Clearly outline the specific changes proposed, ensuring everyone involved understands the modifications to the project scope.
- Cost Estimates: Require detailed cost estimates for the proposed change, ensuring transparency and facilitating fair negotiations.
- Supporting Information: Include any other relevant information that strengthens the justification for the change order, such as technical drawings, industry standards, or safety considerations.
Beyond Approvals:
A comprehensive procedure addresses more than just approvals:
- Permits and Approvals: Specify who is responsible for obtaining any necessary permits or approvals required to implement the change order.
- Schedule Adjustments: Outline the process for incorporating any necessary changes to the project schedule or delivery timeline. This includes how these changes will be communicated to all stakeholders involved.
- Testing and Validation: Define the requirement for any necessary testing or validation of the changed work and who will be responsible for conducting these tests.
- Risk and Liability Allocation: Clearly define the allocation of risk and liability associated with the change order.This includes any warranty or guarantee obligations arising from the implemented changes.
Remember: Consulting a construction lawyer is highly recommended. They can ensure your change order procedure is legally sound, promotes collaboration, and protects your interests throughout the project lifecycle.
Created by iax, Enhanced by AI
Proudly powered by WordPress