CHANGE ORDERS & PAYMENTS Flashcards
When he change order is agreed to by both owner and contractor, it becomes a…
Contract modification
What happens in the absence of total agreement on the terms of a change order?
A construction change directive
Construction change directive can only be in the general…
Scope of the contract documents
Four ways to agree upon the contract some for a construction change directive adjustment
- Mutual acceptance of a lump sum
- Unit prices stated in the contract documents or subsequently agreed-upon
- Cost TBD in a matter agreed upon by parties at a mutually acceptable fixed or percentage fee
- The architect determines the cost by monitoring the contractors actual expenditures of time, materials, and overhead.
When the contractor discovers a deficiency in the contract documents, the architect is obligated… But not obligated…
YES: to remedy the deficiency at his expense… By revising drawings and processing the change documents
NO: to pay for the cost of construction caused by the deficiency (unless the owner approves the architect was negligent)
A change cannot be so great that it would…
Impede the contractors ability to perform the work of the construction contract
If the owner hires another contractor to perform remedial work, the original construction contract can be…
Adjusted to deduct the amount of the payments made to the second contractor… The owner can also deduct by change order the cost of the architects services required by the original contractors default!!
What is the document used by the architect to outline the work anticipated for a change order?
A proposal request – document G709
Examples of minor modifications that would not involve a change order (change in sum or time)… 3
- Issuance of color schedule
- Revisions to ceiling layout
- Interpretations of the contract documents (how many treads in the stair)
The AIA general conditions require the contractor to claim time extensions within how many days after the event which caused the claim?
21
If the owner chooses to hire a second contractor to complete work that an original contractor refused to do, claiming it was outside the scope of the contract documents, the first contractor may be liable for…
Refusing to perform work that could’ve been done by change order construction change directiv
A change order is a written instrument prepared by the architect and signed by the owner, contractor, and architect, stating their agreement upon what three things…
- Change in the work
- Amount of the adjustment, if any, in the Contract Sum
- Extent of the adjustment, if any, in the Contract Time
Change orders usually have what kind of effect on performance and labor and material payment bonds for the project?
No effect… However the surety must be notified when change orders are issued
What is the number of the change order form? Who prepares it?
G701… The architect, with info from the contractor
Who approves the contractors payments by issuing certificates for payment?
The architect
Which is more common: stipulated sum contracts or cost plus fee contract?
Stipulated sum
Why is it the architect that issues a contractors certificates of payment?
He is unbiased
What is the incentive for the contractor to do the work for less than the guaranteed maximum price?
Usually the owner will incentivize that by sharing the savings, for instance 25%, with the contractor
What is different for the architects with a cost plus fee arrangement for the contractor?
The architect has to verify actual labor and material invoices… And is therefore usually entitled to more compensation for added time and liability.
Document a 101 assumes the contractor will apply for and receive payment how often?
Monthly basis
Prior to substantial completion, the architect ______ the work, but at substantial completion, the architect must ____ the work.
Observes…. Inspect
The certificate of substantial completion, document G704, establishes the time limit for…
Final completion
What are three reasons the owner would like to delay the date of substantial completion? Why does the contractor want the soonest possible date of substantial completion?
- The owner loses the retainage and the use of those funds
- Incomplete work will appear on the punch list
- The owner will have to assume responsibility for security, maintenance, and utilities
The contractor one substantial completion to receive retainage friends and understand there is a finite period of future liability for deficient work.
How many days does the owner have to pay the contractor after the architect makes a final certificate for payment?
30 days
What do you call a draft of the application for payment for the architects review? And why do you make it?
A “pencil copy” is used to resolve disagreements to prevent an architect from rejecting the application
7 reasons and architect can decline to certify payment in whole or in part.
- Defective work not remedied
- Third-party claims filed or reasonable evidence
- Failure of the contractor to pay his subs
- Reasonable evidence that the work can’t be completed for the unpaid balance of the contract sum
- Damage to the owner or other contractor
- Reasonable evidence the work cannot be completed within the contract time (and that the unpaid sum would not cover actual or liquidated damages for anticipated delay)
- Persistent failure to carry out the work in accordance with the contract documents
6.
Two reasons why it can be good for an owner to pay a contractor for material stored on site.
- It can be cheaper because the contractor doesn’t have to add the cost of financing materials
- It can benefit the owner if the contractor can purchase materials before prices increase because of inflation
What is the process by which the owner withhold money from the contractor is protection against the contractors potential failure to complete the work according to contract.
Retainage
Who prepares the punch list?
The contractor
When the owner and contractor cannot agree on the additional cost resulting from a change in the work, who decides?
The architect
