Simply put, the construction change directive is a means by which an owner can direct a contractor to perform additional work that was not originally included in his/her contract when there is a time and/or cost issue between them. Though the construction change directive is just one means by which an owner can accomplish this, it is important to fully understand this mechanism and what it could mean for you. Here at Smiley Law, we try to familiarize our clients with the legal ramifications of the construction change directive. Louisiana law is not settled on this area of the law, therefore contractors and owners should tread lightly.
What is the Construction Change Directive?
Though a construction change directive sounds similar to the change order, it entails entirely different legal implications. A construction change directive is a written order directing a change to the contract terms and states the adjustments, if any, to the contract sum and/or time. As its name already implies, a construction change directive is a “directive” and not a request. Unlike a change order, the owner and contractor do not need to agree on timing/price for a construction change directive to be put into use.
When is it applied?
There are several circumstances in which one may want to use a construction change directive. For instance, a construction change directive is useful when changes are needed but the parties don’t have the necessary time to prepare a change order proposal and complete the official review process. A construction change directive is also useful in case changes to the project are necessary, but the value cannot be determined at the time. A construction change directive may also be useful when the owner gives permission for the contractor to proceed without first determining the cost/timing.
How is it applied?
A construction change directive is applied upon delivery to the contractor. It is a single document that has the following four basic sections:
- A section summarizing the relevant project information, including a brief description of the change that is being directed;
- A section with the proposed price adjustment;
- A section with the proposed time adjustment; and
- A section for the signature blocks of the Architect and Owner. There may also be a signature block for the Contractor (though this is not required).
If you would like to issue a construction change directive on your project, it is important to understand the risks/rewards you may be exposed to by directing additional and/or different work.We recommend speaking to a knowledgeable attorney. Here at Smiley Law, we are ready to take on all your construction change directive questions.