Construction Contracts Administration
– Addenda, Change
Orders, and Claims
Addenda
• Addendum: An addition to bidding documents
issued to the bidders (plural: Addenda)
• A change in the specifications or one of the
contract documents during the bidding phase
requires an addendum
• Reasons for issuing addenda include the
following:
– To correct errors
– To add owner-initiated changes
– To furnish clarifications
– To add or delete products
– To change stated requirements
Addenda II
• Guidelines to go by when issuing addenda
– No addendum should be issued later than
5 days prior to the bidding due date
– Addenda should be issued only in proper
written form
– A procedure should be established that
requires acknowledgment of the receipt of
all addenda
Change Orders
• Change Order: An order issued by an owner
and agent of the owner according to the
terms and conditions of a construction
contract to the contractor to make a specific
change in the work that may result in a
change in the scope of the contract's work,
the contract sum, or the contract time,
depending on the change order’s purpose
and substance
Change Orders II
• Change Order is After Contract
– Addenda is pre-bid
• Impact
– Cost = +/-
– Time = Schedule
– Quality
– Scope
Change Orders III
• Reasons for issuing change orders:
– Owner has secured additional financing
– Emergence of unforeseen conditions
during construction
– Material nonconformance with original
specifications
– Correct errors or omissions in the original
documents
– Changes requested by the owner,
contractor, or design professional
Change Orders IV
• Reasons for issuing change orders
(Continued):
– Over/Under runs in quantities beyond
limits
– Changes instituted by regulatory agencies
– Impossibility/Impracticability of
performance
Change Orders V
• The change order clause provides:
– Means by which the owner can adjust
plans and specifications
– Means by which the contractor may
incorporate suggestions
– An outline for organizing and presenting
claims for additional compensation
Change Orders VI
• Initiation of Change Orders
– Owner
– Engineer
– Contractor
• Change Order Preparation
– Clear, Concise, and Explicit
– Standard Forms
– Drawing and Specifications
Change Orders VII
• Information required on change orders
– Name and title of the project
– Date of the change order
– Number of change order
– Reason for Change
– Changes required under this order
– Change in the contract price
– Change in time of completion
– Required signatures
Change Orders VIII
• Problems of change orders
– Does it fall within the scope of the
project?
– Who has the authority to make the
change?
– Is the time requirement appropriate?
– Are markups properly applied to ensure
contractors will not lose money?
Change Orders IX
• Contract changes do more than alter the
scope of the work, they:
– Disrupt orderly sequences
– Change prior coordination
– Change schedule logic
– Change methods for work not otherwise
addressed by the change
– Cause a contractor to remain mobilized
on site longer than originally planned
– Continue to add administrative costs
resulting from rework
Claims
• Potential claims applies to any differences
arising out of the performance of the work
that might reasonably lead to the later
filling of a claim by the contractor if the
differences cannot be resolved in the field
Claim’s Tree
Contract
Disagreement
Potential claim
Review: Facts, Timeliness of submission
Claim has merit Disagreement Resolved no issue
Becomes a File claim
change order
Settle claim
Claims
• Settlement of claims
– Some contracts encourage settlements
of claims through:
• Mediation
• Arbitration
– Both methods are considered better
alternates over litigation
