How to Write a Contract
Last month, we discussed provisions that should be included in your written contract with an owner or builder. (The article is available at www.customretailer.net if you haven’t read it.)
This month, we’ll discuss provisions that generally address the major steps an A/V installer can take when negotiating an agreement to minimize the opportunity for disputes to escalate, reduce the cost of such disputes when they do arise, and maximize the opportunity to salvage the relationship with the customer.
Change Order Provision. Changes requested by the owner or builder during the course of work are one of the primary areas of disputes between parties in a construction contract. Unless clearly documented, you may find yourself paying out-of-pocket for time and materials you never contemplated when you bid the job. Owners may not realize that their “simple requests” may end up being quite expensive.
If you don’t have an agreed-upon procedure for handling change orders as they arise, you may find yourself in the unenviable position of presenting a large bill to the owner. If the owner wasn’t expecting it, or if project costs are already higher than the owner expected, you could find yourself either eating the charges or forced to litigation.
A change order provision delineates how changes in the scope of work and materials will be made if they become necessary, including costs and payment. A change order is like a mini-contract and should include a comprehensive “scope of work” provision, the time it will take to do the requested work, the cost of such work, and the payment terms. Change orders should always be made in writing and signed by all parties before they are acted on. Additionally, if the change order will affect the primary agreement as to any significant term (time of completion, materials used or finished product), the change order should modify the original agreement accordingly.