Contract Surety

Before The Shovel Hits The Dirt…



With disputes–and the cost of resolving them–rising, construction pros urge making an agreement about how to handle the project changes that will inevitably crop up before any work begins. Be careful though: contract lingo is getting ever thicker, so be sure you understand what your contract says. Talking helps too!


Scope Change Disputes

Though certainly nothing new for contractors, disputes arising from scope changes are worsening and tend to drain time and money from running a successful business. Dan Feinblum of HKA Global points out that a first step toward warding off conflicts over change orders is to simply acknowledge up front that no matter how diligent the planning process was, changes are a given on building projects: “One of the most important things about change management, and change controls, is acknowledging that change happens on every project….I don’t think I know any project that hasn’t had some kind of change … if you aren’t willing to acknowledge change, you aren’t going to take…measures to protect yourself.”  


In addition to pausing between projects to harness and apply lessons learned, it’s essential for contractors and their teams to take time up front to deeply understand the contract, including the scope, milestones, and change and notice provisions and plan accordingly 


Sometimes, there’s a miscommunication between the people negotiating the contract and the people who are going to be executing the project…and that can lead to unrealistic expectations being put into the agreement and frustration later on. Having better communication and coordination between that contract execution phase with the actual execution team could prove very valuable.


Next, create a robust change management plan that clearly defines how to process a change or address unforeseen conditions. Project or process manuals are one tool for this: They can include key contract clauses regarding changes and workflows that break down exactly what to do when a change arises, i.e. who to email and how to document.


Ideally, clarity about change orders and solid processes for carrying out the agreed upon protocols prevent severe conflicts from interfering with the success of a build. Nonetheless, disputes may still rear their head, and before they get ugly and expensive, keep in mind that conversation is often the best solution: “Contracts are getting more complicated, but the best-written agreement is no substitute for communication. Attorneys are trying to write the smartest contract they can, and in doing so they just put more and more restrictions on, as opposed to the two parties just getting together and talking it out, and figuring out how to resolve a change…”.


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