Richard Granados

FMGT 4860
Fall 2019
Professor Humphrey

Homework 8

Page 324, Question 1

Why are changes in work a common source of dispute?

The biggest reason why change orders are a common source of dispute is because although
they used to require both parties (owner and contractor) and the architect to have mutual
agreement and consent to said changes wherein one party couldn’t force the other to approve
change orders and, as such, both parties had to come to an agreement, this is no longer the
case. When you have an arrangement where, by law, the issue must be resolved and mutually
accepted and the issue at hand occasions to be in regards to costs that go beyond the original
scope of the contract sum, disputes naturally arise and can be reasonably addressed. However,
this paradigm has gone away and eagers contractors can inflate change order costs to widen
their profit margins if a bid of an analysis is absent. Conversely, an owner can use CCDs to
compensate for this fact. Both parties should use common sense in regards to change order
conflict resolution and strive for fair and honest business practices. The problem is, not all
parties are like this. As such, a bid of analysis/SOV/SOQ should be more present. Regardless,
this dispute is more common in lump-sum contracts.

Page 324, Question 12