September 18, 2018 Jason Peter Brown No comments

Exploring Change “Notices”

In construction contract administration the general purpose of a notice is to document the anticipated expansion or contraction of the scope of work of a project. Notices can be used to elicit a quote from the contractor, and should contain language that explicitly forbids or permits the contractor to proceed with any work described therein without subsequent written authorization in the form of an approved Order.

Notices go by a variety of names, including: Change Notice, Contemplated Change Order, Proposed Change, Change Directive, and Bulletin. Despite the diverse nomenclature, there are three commonly issued types of Notices:

TYPE A – Contemplated Change Order, Proposed Change, or Change Notice

The first type of notice is used to declare a change to the contract’s scope of work, and to elicit a quote for said work from the contractor. This type of notice will contain language that expressly forbids the contractor from proceeding with the work unless a quote is submitted and subsequently approved in the form on an order from the architect and owner.

This type of notice is often called a Contemplated Change Order, Proposed Change, or Change Notice.

Example Usage: Imagine that the owner/client wants to change brand and colour of paint for their office renovation. This may or may not result in a change to the contract price (for example, if the new brand is more expensive than the original brand), or a change in the contract time (if the new product is not readily available and requires ordering, for example). Issuing this type of notice will require a quote from the contractor for any changes to the contract price or time, which can then be subsequently reviewed and rejected or approved. Work will not proceed unless an approved change order is subsequently issued to the contractor.

TYPE B – Change Directive

The second type of notice directs the contractor to immediately proceed with the work described therein, in advance of submitting a formal quote and the subsequent issuance of an approved order. Since the impact on the contract is unknown at the time that work begins, these notices must be co-signed by the owner. This type of notice often includes options for calculating costs such lump sum, time and materials, or unit pricing.

Notices of this type are typically called Change Directives.

Example Usage: Imagine that a digger is onsite, but only contracted for a single day of work. Due to unforeseeable circumstances, there’s a delay and the digger is required for another half day. The owner can’t be immediately reached to approve the change to the contract price/time, but it would be more efficient and ultimately cheaper to keep the digger onsite to complete the work rather than have it leave the site and redeployed another day once a signed and approved order can be issued to the contractor. This type of notice should be issued to permit the work to begin expediently without a approved order under the presumption that the price will be subsequently negotiated and agreed upon in good faith.

TYPE C – Bulletin or Site Direction

The third type of notice is most commonly used in Construction Management contracts. Like the first type of notice, these notices also declare the intention to change the contract’s scope of work, but they leave the determination of the effect on the contract to the discretion of the contractor. No quote will be submitted by the contractor, and no further review, approval, or rejection on the part of the architect will be forthcoming.

This type of notice is often called a Bulletin or Site Direction.

EXAMPLE USAGE: When engaged in a contract where the you have no responsibility to review, approve, or reject changes to the contract price or time, you may still be engaged to issue guidance on anticipated changes. In this situation, this type of notice is the appropriate choice of document.

Issuing and Tracking Notices using FIVE by StatsLog

FIVE is award-winning construction contract administration software by StatsLog. Using FIVE, you can quickly, easily, and accurately issue and track the three common Notices described above using the specialized report and document template features available on the Notices tab. You can even back-link any notice to a Request (RFI) or Instruction (SI), and/or forward-link them to a Quote or Order (CO), making it possible to quickly understand the impact of Requests, Instructions, and Notices on your construction contracts. To learn more about FIVE by StatsLog, contact us today!

 

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Photo © Copyright Kenneth Allen and licensed for reuse under this Creative Commons Licence.

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