CHANGE ORDERS & PAYMENTS

Question 1

When he change order is agreed to by both owner and contractor, it becomes a…

Answer 1

Contract modification

Question 2

What happens in the absence of total agreement on the terms of a change order?

Answer 2

A construction change directive

Question 3

Construction change directive can only be in the general…

Answer 3

Scope of the contract documents

Question 4

Four ways to agree upon the contract some for a construction change directive adjustment

Answer 4

1. Mutual acceptance of a lump sum
2. Unit prices stated in the contract documents or subsequently agreed-upon
3. Cost TBD in a matter agreed upon by parties at a mutually acceptable fixed or percentage fee
4. The architect determines the cost by monitoring the contractors actual expenditures of time, materials, and overhead.

Question 5

When the contractor discovers a deficiency in the contract documents, the architect is obligated… But not obligated…

Answer 5

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)

Question 6

A change cannot be so great that it would…

Answer 6

Impede the contractors ability to perform the work of the construction contract

Question 7

If the owner hires another contractor to perform remedial work, the original construction contract can be…

Answer 7

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!!

Question 8

What is the document used by the architect to outline the work anticipated for a change order?

Answer 8

A proposal request – document G709

Question 9

Examples of minor modifications that would not involve a change order (change in sum or time)… 3

Answer 9

1. Issuance of color schedule
2. Revisions to ceiling layout
3. Interpretations of the contract documents (how many treads in the stair)

Question 10

The AIA general conditions require the contractor to claim time extensions within how many days after the event which caused the claim?

Answer 10

21

Question 11

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…

Answer 11

Refusing to perform work that could’ve been done by change order construction change directiv

Question 12

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…

Answer 12

1. Change in the work
2. Amount of the adjustment, if any, in the Contract Sum
3. Extent of the adjustment, if any, in the Contract Time

Question 13

Change orders usually have what kind of effect on performance and labor and material payment bonds for the project?

Answer 13

No effect… However the surety must be notified when change orders are issued

Question 14

What is the number of the change order form? Who prepares it?

Answer 14

G701… The architect, with info from the contractor

Question 15

Who approves the contractors payments by issuing certificates for payment?

Answer 15

The architect

Question 16

Which is more common: stipulated sum contracts or cost plus fee contract?

Answer 16

Stipulated sum

Question 17

Why is it the architect that issues a contractors certificates of payment?

Answer 17

He is unbiased

Question 18

What is the incentive for the contractor to do the work for less than the guaranteed maximum price?

Answer 18

Usually the owner will incentivize that by sharing the savings, for instance 25%, with the contractor

Question 19

What is different for the architects with a cost plus fee arrangement for the contractor?

Answer 19

The architect has to verify actual labor and material invoices… And is therefore usually entitled to more compensation for added time and liability.

Question 20

Document a 101 assumes the contractor will apply for and receive payment how often?

Answer 20

Monthly basis

Question 21

Prior to substantial completion, the architect ______ the work, but at substantial completion, the architect must ____ the work.

Answer 21

Observes…. Inspect

Question 22

The certificate of substantial completion, document G704, establishes the time limit for…

Answer 22

Final completion

Question 23

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?

Answer 23

1. The owner loses the retainage and the use of those funds
2. Incomplete work will appear on the punch list
3. 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.

Question 24

How many days does the owner have to pay the contractor after the architect makes a final certificate for payment?

Answer 24

30 days

Question 25

What do you call a draft of the application for payment for the architects review? And why do you make it?

Answer 25

A “pencil copy” is used to resolve disagreements to prevent an architect from rejecting the application

Question 26

7 reasons and architect can decline to certify payment in whole or in part.

Answer 26

1. Defective work not remedied
2. Third-party claims filed or reasonable evidence
3. Failure of the contractor to pay his subs
4. Reasonable evidence that the work can’t be completed for the unpaid balance of the contract sum
5. Damage to the owner or other contractor
6. 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)
7. Persistent failure to carry out the work in accordance with the contract documents
   6.

Question 27

Two reasons why it can be good for an owner to pay a contractor for material stored on site.

Answer 27

1. It can be cheaper because the contractor doesn’t have to add the cost of financing materials
2. It can benefit the owner if the contractor can purchase materials before prices increase because of inflation

Question 28

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.

Answer 28

Retainage

Question 29

Who prepares the punch list?

Answer 29

The contractor

Question 30

When the owner and contractor cannot agree on the additional cost resulting from a change in the work, who decides?

Answer 30

The architect