Change Orders: Initiation, Pricing, Negotiation, Owner Approval, and Documentation Under G701

Covers the change order process from initiation through execution, including the roles of the architect, owner, and contractor. Addresses pricing methods, negotiation procedures, owner approval requirements, documentation using AIA G701, and the relationship between change orders and other change instruments under A201-2017.

ARE · Construction & Evaluation

Overview

A change order is a written instrument prepared by the architect and signed by the owner, contractor, and architect, documenting their agreement on a change in the work, the adjustment to the contract sum, and the adjustment to the contract time. Under AIA A201-2017 Section 7.2, a change order is the only contract modification that requires all three parties to agree.

Change orders are the primary formal mechanism for modifying the construction contract after execution. They address changes that affect the contract sum, contract time, or both. Common triggers include owner-requested scope additions or deletions, design errors or omissions discovered during construction, unforeseen site conditions requiring design modifications, code requirement changes, and value engineering proposals.

The standard AIA form for change orders is G701-2017. This form documents the change description, the adjustment to the contract sum (increase or decrease), the adjustment to the contract time (extension or compression), and the signatures of all three parties. Once executed, the change order becomes part of the contract documents.

The architect's role in the change order process is to prepare the change order document, not to authorize the expenditure. The owner authorizes the financial commitment by signing the change order. The contractor agrees to the scope, cost, and time by signing. The architect's signature confirms that the change is documented and will be used to determine conformance of the work going forward.

Change orders are distinguished from construction change directives (CCDs), which do not require the contractor's agreement, and from minor changes (ASIs), which do not affect cost or time. When all three parties agree on the change, a change order is the appropriate instrument.

Essential

The change order process follows a structured path that protects all parties and creates a clear record of contract modifications. Understanding each step is essential for the CE exam. Initiation Changes can be initiated by any party but are most commonly triggered by the architect identifying a design issue, the owner requesting a scope modification, or the contractor encountering unforeseen conditions. Regardless of the trigger, the architect is responsible for preparing the change order documentation under A201. The architect's first step is to define the scope of the change through a bulletin (revised drawings and specifications) and to solicit the contractor's pricing through a proposal request (G709). This pre-change order process was covered in the previous topic. Pricing Methods A201 Section 7.3.4 describes four methods for determining the cost of a change.

Professional

Change order management is one of the highest-risk activities in construction administration. The architect operates at the intersection of owner expectations, contractor entitlements, and contractual obligations, with professional liability exposure on multiple fronts. The Architect's Signature Qualification Because the architect's signature appears on every change order, there is a risk that the owner or a third party will interpret the signature as the architect's approval of the change order cost. AIA Trust guidance recommends adding a qualification statement to the change order form. A typical qualification reads: "The architect's signature is for the limited purpose of acknowledging that the project scope is changed as described. The architect's signature does not represent approval of the cost of the change." This qualification should be reviewed with legal counsel and customized for each project.

TLDR

A change order (G701) modifies the contract sum, time, or both, and requires three signatures: owner, contractor, architect. The architect prepares it but does not authorize the cost; that is the owner's decision. Pricing methods: lump sum (most common), unit prices, cost-plus markup, or architect determination. Overhead and profit percentages should be specified in the supplementary conditions (A503). Deductive change orders reduce the contract sum when scope is deleted. The architect's signature acknowledges the scope change but does not approve the cost. Add a qualification statement to clarify this. Monitor cumulative change order impact on schedule. Changes are normal in construction; set owner expectations early.

ELI5

Imagine you are building a custom home. You signed a contract with the builder for $500,000 to build exactly what is on the plans. Two months into construction, you decide you want a bigger garage. The bigger garage will cost an extra $25,000 and add two weeks to the schedule. A change order is the official paper that says: "We all agree that the garage is getting bigger, the price is going up by $25,000, and the schedule is extending by two weeks." You sign it. The builder signs it. The architect signs it. Now the new total is $525,000 and the completion date is two weeks later. Everyone is on the same page. Why do all three people have to sign? Because each one has a different stake. You, the owner, are agreeing to pay more. The builder is agreeing to do the extra work at the agreed price.

Overview

Essential

Professional

TLDR

ELI5

AREConstruction & Evaluation

Change Orders: Initiation, Pricing, Negotiation, Owner Approval, and Documentation Under G701

2 min read272 words

Change Orders as the Primary Contract Modification Instrument

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