Electri International Publishes Change Order Guidelines for Electrical and Low Voltage Contractors

Sept 17, 2018

Electri International has developed guidelines that provide a systematic, standardized, fair process for the pricing of change orders for electrical and low voltage contractors. The guidelines explore various costs categories and items, investigate overhead-profit practices, and identify impact factors and methods used to calculate associated consequential costs. The report includes templates and tables that can assist contractors in preparing change orders.

Although the main focus is on electrical contractors, interactions with and/or input from many related industry groups, are also taken into consideration.

Electrical and low voltage contractors are routinely asked to prepare change order proposals on construction projects. The single most common area of dispute in the change order process is its cost. Among cost-related disputes, items related to recoverable direct cost, overhead-profit percentages, and impact factors resulting in consequential costs constitute the vast majority of the disagreements. All types of change orders can have these disagreements but change orders that do not address an agreed upon price are particularly prone to disagreements. Subcontractors presenting change orders face the double task of dealing with GCs/CMs in addition to owners/designers.

Among findings and observations from Electri International’s research are the following:

• a fair amount of contradictory information exists related to change orders in various standard contract documents as well as in other publications

• owners and contractors are unsure about many change order related issues

• when it comes to overhead percentages, contractors should think in terms of a percentage of the total change order amount and not as a percentage of direct costs only

• most impact factors/consequential costs can either be included as part of directly recoverable costs or as a separate category. In either case, the burden is on the contractor to make a professional case with detailed substantiation/calculations

Change orders are an essential part of every construction project. They are issued to accommodate changes to the construction contract, generally by the owner or designers to the general contractor (GC) or the construction manager (CM). In most cases, the GC/CM, in turn, requests the related trades subcontractor to provide a change order proposal. A change order is defined as a written order, agreed upon by the owner, contractor and designer, authorizing changes to the scope of the work, the contract sum, and the contract time (AIA-A201-2007, ConsensusDocs 200-2012).

Read the guideline online on the Canadian Electrical Contractors Association website: www.ceca.org/newsimg/123_F3405achangeorders.pdf