Understanding Construction Change Directives for Subcontractors

The backbone of a construction contract is the scope of work. Once the agreed-upon scope of work is defined, most construction contracts address both change orders to the scope of work and work outside of the scope of work.  

These provisions are designed to protect (1) the owner from unexpected charges and (2) the contractor from taking a loss on work not originally anticipated in the construction contract. More often than not, unexpected issues on the project are negotiated and reduced to signed change orders. The effect of a mutually signed change order is to modify the original scope of work and, in most cases, change some other terms such as the scope of work, contract price, or the timeframe to complete the work.

What is a Construction Change Directive (CCD)? 

A construction change directive, or CCD, is a command to a contractor to change their work on a project. In essence, the contractor must follow the changes without a say in the matter. 

What Happens When All Parties Cannot Agree on New Circumstances?

However, what happens when the owner, general contractor, or subcontractor cannot come to an agreement on how the new circumstances should change the deal? To handle construction disputes on the job, most construction contracts contain procedures for the owner (or the architect) to keep the work moving by issuing a construction change directive (CCD) to the general contractor and selecting a payment option for the extra work.

What to Know About Construction Change Directives

  1. A valid construction change directive must be in the general scope of your work. In other words, a contractor receiving a constructive change directive should ask themselves: was this a possible change I signed up for when I bid for this job? If not, there may be a basis to terminate the contract while retaining contract earnings up to the issuance of the CCD.
  2. Because the other party has changed the deal beyond what anyone could or should expect, it is possible that they have abandoned the contract. A contractor or subcontractor faced with a CCD should read the CCD carefully to ensure that the scope of the work directed is consistent with the work they intend to perform. Most construction contracts contain strict clauses that prohibit extra work that is not directed in writing by a general owner or the general contractor. Performing work that is not covered by the CCD could open the contractor up to getting stiffed on all extra work outside the scope of the CCD.
  3. Another important consideration is the adjustment to the price or the contract time for completion. Many construction contracts provide strict deadlines for which the contractor must contest the CCD's stated adjustment.
  4. Usually, the process for contesting is spelled out in the notice and claims procedures. Failure to follow the notice and claims procedures may leave a contractor stuck with an unfair CCD.

Therefore, it is always important to send notices disagreeing with a CCD as soon as one is received or send written questions if the scope of the CCD covers less extra work than you believe you are being asked to do by the owner or general contractor.

Do you have a question about a Construction Dispute? Do you have a problem getting straight answers and accurate information?

Please contact us with a question about your problem, even if you are not ready to use our services. Our goal is to help you and make sure you have the information and help you need to solve your construction dispute.

Categories: 
Related Posts
  • Subcontracting Basics – It’s All about Managing Expectations Read More
  • Understanding Notice & Claims Procedures for Subcontractors Read More
  • Understanding Labor & Industries Audits, Reconsideration & Board of Industrial Insurance Appeals Read More
/