Construction terminology is essential to understand. Not only do construction managers need to be well versed in terms such as site instruction vs. change order, but everyone in the construction industry, including, but not limited to, the general contractor, designers, and engineers should be familiar with basic construction terms.
— Defining Site instructions and Change orders
— Site instruction vs. Change order
— How to manage and adequately document changes on the job site
Understanding construction terminology and correct documentation are crucial for keeping production and projects on schedule, especially when dealing with changes to the original contract. There are CONSTANT changes on the job site. If you deal with variations on a project, it’s expected to know the different types of changes that can occur and how to properly document them. Two important kinds of changes that occur on a job site are site instructions and change orders. Understanding the difference between a site instruction vs. change order will help everyone working on a project know how to proceed when changes occur.
What is a Site Instruction?
A site instruction is a formal instruction typically issued by a general contractor with directives to other contractors or subcontractors. Site instructions fall outside the scope of the original contract and require further directions for crews to complete. General contractors delegate site instructions to subcontractors to expand the scope of work, purchase or test new material, or to address defect issues and rework.
We all know that no project is perfect; therefore, GCs typically issue site instructions at one point or another throughout a construction project. Site instructions usually:
— Point to an issue with the initial agreed-upon work
— Relate to a delay or hold up with an element of the project that needs rework
— Fall outside the scope of the original contract (which calls for additional documentation)
Site instructions come down through the chain of command from GC to subcontractor. This flow of communication MUST be formalized to ensure that subcontractors are aware and adequately paid out for this change. Construction Industry professionals advise that subcontractors should not start work on any amendments to a contract unless they sign a formal document.
What is a Change Order?
A change order is a document used to record an amendment to your original contract. Change orders include any additional work completed that is not part of the contract. Contractors typically break down change orders into two components: the scope of work and the price.
The scope of work is necessary to define the exact amount of labor, materials, and time adjustments needed for the additional updates to the project. The basis of payment in a contract defines commodity, duration of the agreement, and specific requirements. Therefore, when subcontractors perform additional work, compensation should adjust, as does the basis of payment. Subcontractors should list pricing adjustments in an itemized list to show the work done at each price.
Implementing a change order process doesn’t have to be difficult and starts by establishing a relationship with your general contractor. Maintaining a good relationship can help manage expectations and set clear guidelines for a change order process. Letting your GC know ahead of time that your company uses change orders helps sets their expectations for future changes. When it’s time for both parties to sit down and sign the change order, everyone will feel like they were part of the process, and things will go over more smoothly.
How are they different?
A construction change order is not synonymous with site instructions. The difference between a site instruction vs. change order is found in the way they are communicated. Where change orders are written documents of the change signed by the general contractor and the subcontractor, a site instruction is purely given by the GC. GCs can give site instructions verbally, allowing the message to get lost in translation. A formal amendment to a contract such as a change order provides a legal document that both parties refer to if needed.
Verbal instructions are dangerous to both subs and GCs. While site instructions provide essential information regarding a new scope of work, subcontractors must document instructions BEFORE anyone starts working on changes to the original contract. Documented site instructions should include the same vital information that change orders use, additional work needed, the price at which the subcontractor is willing to complete the work, and time adjustments to the projected timeline.
If subs do not document site instructions and the scope of work or the proper payment goes into question, claims and disputes can arise. Subcontractors and general contractors are now in a grey area, and it’s a battle of what he said vs. she said. The solution to this? Document everything. Documenting your work, whether it’s your daily activities, RFIs, submittals, change orders, or even site instructions is key to making sure construction projects finish on time. When you document your work, it takes away the grey area and provides facts.
Documenting work also increases productivity and will save your team time when going back, trying to find something. Keeping your documents organized in a central location is the second part of keeping records of everything. Using a project management software to digitize your documents and manage resources will not only result in better communication within your team but also with outside vendors such as GCs. In other words, subcontractor software encourages better communication between the GC and subcontractor. With better communication, both parties will resolve issues more quickly. Documenting change orders and site instructions won’t be so painful with the ease of exchanging information.
Site instructions and change orders are, most of the time, unavoidable. However, changes to the original contract can stay manageable through proper documentation. The critical part of the conversation remains the same, document everything. Whether your GC prefers site instructions or change orders, documentation provides communication and clarity. Proper communication sets the foundation for successful construction projects. Take away the grey area and suggest to your manager that your company uses project management software to stay organized.