Legal Definitions - change order

A change order is a formal document or agreement that modifies an existing contract, typically for goods, services, or construction projects. It outlines alterations to the original scope of work, specifications, price, or timeline, requiring agreement from all parties involved to become a binding part of the contract.

• Example 1: Residential Construction Project

  Imagine a homeowner hires a contractor to build a new garage based on a detailed set of blueprints and an agreed-upon price. Halfway through the construction, the homeowner decides they want to add a skylight and upgrade the garage door to an insulated model, neither of which was in the original plan.

  This illustrates a change order because the contractor would issue a formal document outlining the cost of the skylight and the upgraded garage door, any impact on the project timeline, and the revised total contract price. Both the homeowner and the contractor would sign this change order, formally amending their initial agreement and making the new specifications legally binding.

• Example 2: Software Development Project

  Consider a small business that contracts a software development firm to create a custom inventory management system with specific features. After the initial design phase, the business realizes they also need a new module for tracking customer returns, a feature not included in the original project scope.

  This illustrates a change order because the software firm would prepare a document detailing the additional work required for the customer returns module, the associated development costs, and any adjustments to the project's delivery schedule. Once approved and signed by both parties, this change order becomes an official amendment to the original software development contract.

• Example 3: Government Procurement

  A manufacturing company has a contract with a government agency to produce 5,000 specialized communication devices according to precise technical specifications. Before the production run is complete, the government agency discovers a new technological advancement and directs the manufacturer to incorporate a specific upgraded component into the remaining devices, which will increase the unit cost and require a slight redesign.

  This illustrates a change order because the government agency would issue a formal directive, often called a modification or change order, to the contractor. This document would detail the new component, the revised specifications, the adjusted price per unit, and any impact on the delivery schedule. The manufacturer would then proceed with the updated requirements as per the amended contract.