A subcontractor discovers a significant unforeseen condition that will require additional work costing $15,000 and delay completion by 5 days. The general contractor has already notified the owner and received approval for the change. What is the proper sequence for documenting this change?
Correct Answer
A) Issue change order, then process subcontract change order
Since the owner has already approved the change, the proper sequence is to issue the change order to formalize the agreement with the owner, then process the corresponding subcontract change order with the affected subcontractor.
Why This Is the Correct Answer
When the owner has already approved a change, the general contractor must first formalize this approval with a change order to establish the contractual modification with the owner. This creates the legal framework and funding authorization for the additional work. Only after securing this formal agreement with the owner should the general contractor then process the subcontract change order to implement the work at the subcontractor level. This sequence protects the general contractor by ensuring payment authorization before committing to additional costs with subcontractors.
Why the Other Options Are Wrong
Option B: Process subcontract change order, then issue change order to owner
This sequence is backwards and creates unnecessary risk for the general contractor. Processing the subcontract change order first would commit the general contractor to additional costs and time extensions before formalizing the payment mechanism with the owner. This could leave the general contractor financially exposed if any issues arise with the owner's change order.
Option C: Issue change directive first, then follow with change orders
A change directive is used when immediate work must proceed before full agreement on terms, but the question states the owner has already approved the change. Since approval is already obtained, there's no need for a directive - the process can move directly to formal change orders. Using a directive would add unnecessary steps and delay.
Option D: Document with field work order only
A field work order alone is insufficient documentation for a $15,000 change with schedule impact. Field work orders are typically used for minor adjustments or daily work coordination, not significant contract modifications. Proper change orders are required to modify the contract terms, pricing, and schedule formally.
Memory Technique
Think 'Money flows DOWN' - secure funding from above (owner) before spending below (subcontractor). O-C-O: Owner, Contractor, Others.
Reference Hint
Florida Building Construction Standards - Chapter on Change Orders and Contract Modifications, or AIA Document A201 General Conditions regarding Changes in the Work
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