Ch-Ch-Ch-Ch-Change Orders: My Terrible Homage to David Bowie

Ch-ch-ch-ch-change orders

Turn and face the strange

Ch-ch-change orders

Don’t want to be a richer man

Ch-ch-ch-ch-change orders

Turn and face the strange

Ch-ch-change orders

There’s gonna have to be a different man

Time may change me

But I can’t trace time

Change Orders are an obvious reality and often-regarded nemesis for many contractors. There are typically two elements to securing a change order: entitlement and quantum. I was lucky enough to assist with the OCA revised Change Order Protocol in 2022/2023 which may be found here.

This short article however will comment on how you go about negotiating a change order.

The pre-discussion considerations might include: are the parties approaching the interaction with a focus on problem-solving, or are they engaging in a competitive battle for victory? Are they viewing it as a meeting of equals, or is there a perceived difference in status? Are concessions anticipated, or are they interpreted as displays of weakness?

Skilled negotiators will aim to establish or modify the frame early in the process—preferably, prior to delving into the specifics of the contemplated change. Here is one aspect of framing to consider when negotiating change orders.

Your initial pushback might be someone saying something along the lines: “Your price for this change order is more than double what others would price. No one will agree to pay that much.”

The potential mistake lies in apologizing for your price by saying: “I understand it’s expensive, but...” or hastily signaling a willingness to adjust your price.

With proper framing however, you can communicate justification for your price without apologizing for it. When you apologize, you imply that even you doubt the price’s reasonableness, giving the other party room to negotiate. By apologizing, the negotiation frame shifts solely to price, whereas the focus should be on value and the reasons behind the change order.

A more effective response could be, “Don’t look at price but rather look at the value. We both understand that value determines what one is willing to pay. Let’s discuss the value we provide so that you can make an informed decision.” In that manner, you have moved the criteria away from the sole metric of price to other considerations such as quality of work, timing of the work, how the multitude of other considerations can impact how you present a change order including impact factors and other consequential costs. Some of those additional considerations are outlined in the OCA Change Order Protocol as noted above.

Continuing our homage to Bowie… try being a different person… frame your change order negotiations.

This article was written by Dan Leduc, a partner at the law firm of Soloway Wright LLP. He practices construction law exclusively and may be reached at [email protected].

Read More in the March Edition of the Construction Comment here