Change Order Without Written Authorization
You are the project manager on a 14,000 sq ft commercial tenant build-out contracted at a lump sum of $1.42M with a 120-day schedule. On day 62 the owner's facilities representative verbally directs your superintendent to add six additional floor drains and relocate two electrical panels to accommodate new equipment. Your superintendent relays the instruction and the crew begins work that afternoon. No written directive, RFI response, or change order exists. Two weeks later the owner's project manager disputes the added scope, claiming it was included in the base bid drawings, and refuses to pay the $38,400 you have tracked in labor and materials. The electrical panel relocation has also pushed the rough-in inspection back by nine days, and the general contractor's liquidated damages are $1,500 per day.
1. Identify the contractual and documentation failures in how this change was handled, and explain the practical consequence of each.
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The core failure is that field direction was acted on before it was converted into a contract document. Under virtually every standard form (AIA A201, EJCDC, ConsensusDocs), a change requires written authorization-a change order, a construction change directive, or a written field order-before or contemporaneously with the work. Acting on a verbal directive strips you of the ability to prove entitlement, because the burden of proof shifts to you to demonstrate the work was outside the contract scope and was directed by an authorized party.
Second, there is no paper trail establishing who had authority. The facilities representative may or may not be the owner's designated representative; if the contract names only the owner's project manager as authorized, the facilities rep's direction may not bind the owner at all.
Third, the nine-day schedule impact was never documented with a time impact analysis at the moment the delay occurred. Without a contemporaneous notice (typically required within 7–14 days by the notice provision), you have likely waived any time extension claim and are exposed to the $1,500/day LDs for a delay you could have defended.
Fourth, the cost tracking ($38,400) appears to be a lump figure rather than a documented breakdown of labor hours, material invoices, and equipment. That makes it easy for the owner to attack.
2. Describe the steps you should take now to recover the cost and the time, in the order you would take them.
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Stop and paper the record immediately. Issue a written confirmation of the verbal directive to the owner's PM within 24 hours, describing exactly what was directed, by whom, when, and the crew that mobilized. Do not characterize it as a claim yet-frame it as a confirming record.
Pull the scope evidence. Assemble the base bid drawings, specifications, and any pre-bid RFIs showing the drains and panel locations as originally designed. If the drawings show two panels and no floor drains in that area, the scope argument is strong. If the drawings are ambiguous, you are arguing about interpretation, not entitlement.
Build a cost breakdown. Convert the $38,400 into a line-item backup: labor hours by classification and rate, material invoices, equipment rental, and markup per the contract's change-order provisions. Owners routinely accept documented cost and reject lump sums.
File the notice and time impact analysis. Even though the notice period has likely passed, file a written notice now and argue that the owner had actual knowledge of the direction (the facilities rep gave it) and was not prejudiced. Pair it with a time impact analysis showing the nine days of critical-path delay attributable to the panel relocation.
Escalate formally. Request a meeting with the owner's PM and, if unresolved, follow the contract's dispute-resolution ladder (typically a decision by the architect/engineer, then mediation, then arbitration or litigation). Preserve the liquidated damages argument by documenting that the delay was owner-directed.
Fix the process going forward. Institute a written field directive form: no work outside contract scope proceeds without a signed authorization, and superintendents are trained to say "I need that in writing" rather than mobilizing.