An HVAC company with eighteen employees is three weeks into a retail buildout in Westfield when the architect relocates the rooftop units and adds two zones. The superintendent tells the crew to proceed and says the paperwork will follow. The paperwork does not follow, the extra work appears on the next invoice, and the owner takes the position that the contract price is the contract price. Change orders exist to keep that conversation from happening.
Extra work is ordinary on construction projects and is not evidence that anyone did anything wrong. Conditions behind a wall differ from the drawings, owners revise what they want, and designers issue changes after the work has started. What creates the dispute is the absence of a document showing what was authorized, by whom, at what price, and with what effect on the completion date.
What a change order should contain.
A change order should describe the added or deleted work in terms a stranger could follow two years later, state the price or the agreed method of pricing, state the adjustment to the completion date, and carry the signature of someone with authority to bind the owner. The schedule adjustment is the term most often left out. Language confirming that the agreed amount covers the effect of the change on the remaining work is the second, and its absence produces a later argument about impact costs. Numbering each change order in sequence and reconciling the log against every payment application keeps the contract sum accurate over a long project.
Authority is worth settling at the start of the job rather than in the middle. Architects, construction managers, and owner representatives may be authorized to direct work without being authorized to commit the owner to a price. Ask during the kickoff meeting who signs change orders on the owner’s behalf, and keep the answer in the project file.
Why the time terms in a change order matter.
Delay claims and change order claims tend to arrive together. Indiana courts have allowed a contractor to recover delay damages where the contract was silent as to the procedure for such claims, declining to infer that the parties intended to treat delay claims with the same stringent requirements that applied to claims for additional cost. Indiana courts have also held that an owner who caused substantial delays through its own conduct, including moving into the building before the occupancy permit issued and making late changes to the plans, could not claim damages based on delay of performance. Neither result substitutes for a change order that states the time extension in writing.
Can a contractor get paid for extra work without a signed change order?
Sometimes, though the answer depends on the contract language and on facts a court would have to resolve. Without a signed change order, the dispute becomes an argument about what was authorized and whether the disputed work fell inside the original scope. Contemporaneous records decide those arguments far more often than recollection does.
The argument starts with the contract documents. The drawings and specifications in effect when the work was priced, the daily reports, the field tickets, and the correspondence written at the time are what establish whether the work was extra. Whether a particular contract permits recovery without a signed change order is a question worth taking to a lawyer with the contract in hand, because the answer turns on the language the parties used rather than on a general rule.
What to do while the question is open.
Confirm the direction in writing the same day, identifying who gave it, what was directed, and the anticipated cost and schedule effect. Keep daily reports that separate changed work from base contract work, photograph conditions before and after, and invoice extra work as a separate line item rather than folding it into the base billing. Check the notice provisions in your own contract before doing anything else, because many construction contracts require written notice of a claim for additional cost or time within a short period after the event.
Read the termination and suspension provisions before considering leaving the job. Indiana applies a first material breach rule, under which a party that commits the first material breach cannot enforce the contract against the other party for a later breach. Whether a breach is material is a question of fact, decided on factors including the extent to which the injured party is deprived of the benefit it reasonably expected, whether that party can be adequately compensated, the forfeiture the breaching party would suffer, the likelihood of cure, and whether the conduct comports with good faith and fair dealing. Walking off a job is a decision that gets measured against that standard.
Lien deadlines continue to run while the dispute is open. The period for recording a notice of intention to hold a lien runs from the date the labor was performed or the materials furnished, not from the date payment was refused. That period is ninety days on most projects and sixty days for single and double family dwellings. Indiana courts treat a missed recording deadline as fatal to the lien.
When to call a lawyer about unpaid extra work.
Call when the amount in dispute matters to the year, when the owner is disputing scope rather than price, or when the general contractor and the owner are each pointing at the other. Call before a lien deadline runs and before you stop work, because both decisions have consequences that depend on language you may not have read since signing. Our post on how to resolve a construction contract dispute covers the early options while the project still has to be finished, and our post on what to do when a customer will not pay your Indiana construction company addresses collection. Our Indiana construction lawyers handle both sides of these disputes.
Frequently asked questions about construction change orders in Indiana.
What is a change order in construction?
A change order is a written amendment to the construction contract that adds, deletes, or modifies work and adjusts the contract price and completion date accordingly. Signed by both parties, it becomes part of the contract. Without one, the original scope and price remain the agreement, and extra work becomes a dispute about what was authorized. Most standard construction contracts require change orders to be written and signed before the changed work begins.
Does a change order have to be in writing in Indiana?
Indiana law does not impose a single writing requirement covering every change to every construction contract, though several rules can apply. Agreements that cannot be performed within one year of their making must be in writing under the statute of frauds, and residential home improvement work is subject to a statute requiring a written contract with specified content. More often, the writing requirement comes from the contract itself. Whether an unwritten change is enforceable in a particular case depends on the contract language and the facts.
What should a change order include?
It should identify the project and contract, carry a sequential number, describe the added or deleted work specifically, state the price or the agreed pricing method, state the adjustment to the completion date, and provide signature lines for both parties. Language confirming that the amount covers the effect of the change on the remaining work prevents a later argument about impact costs. Attach the sketch, revised drawing, or specification section the change relies on.
Who has authority to sign a change order?
The contract usually says, and it is worth confirming at the start of the project. An architect, construction manager, or owner representative may be authorized to direct work without being authorized to commit the owner to a price. Superintendents and project engineers frequently lack signing authority even though they direct daily work. Ask for the names in writing during the kickoff meeting.
Can I stop work if I am not paid for extra work?
Only if the contract gives you that right, and only by following the notice procedure it requires. Indiana applies a first material breach rule, under which the party that commits the first material breach cannot enforce the contract against the other party for a later breach. Whether a breach is material is a question of fact decided on several factors, including the benefit lost, the adequacy of compensation, the forfeiture involved, and the likelihood of cure. Stopping work without a contractual basis is a decision to make with counsel.
Can an owner recover delay damages for delays it caused?
Indiana courts have held that an owner who caused substantial delays through its own conduct could not claim damages based on delay of performance. In that case the owner moved into the building before the occupancy permit was issued and made late changes to the plans. Whether the same result follows in another case depends on the facts and on the contract. Contemporaneous documentation of what caused each delay is what makes the argument available.
How long do I have to record a mechanic’s lien for extra work?
The period runs from the date the labor was performed or the materials furnished, not from the date payment was refused. It is ninety days for most projects and sixty days for single and double family dwellings. Separate pre lien notice obligations apply to claimants without a direct contract with the owner on residential work. Because Indiana courts construe these requirements narrowly, the deadline should be calendared as soon as the work ends.
Does a change order automatically extend the completion date?
Not unless it says so. A change order that adds work and adds money while leaving the completion date untouched leaves the contractor responsible for finishing on the original schedule. Where liquidated damages are tied to that date, the omission can be expensive. State the time adjustment in the change order itself rather than relying on an understanding that more work means more time.
If you are holding invoices for extra work that nobody will approve, we can review the contract and the documentation with you. Our attorneys represent contractors, subcontractors, material suppliers, and property owners in Marion County, Hamilton County, and the surrounding central Indiana communities, and we handle these matters from drafting and negotiation through litigation. Call us at 317-829-6797 or reach us through our contact form and we will tell you what we can do.
The information provided in this article is for general informational purposes only and does not constitute legal advice. Reading this article does not create an attorney-client relationship. For legal advice tailored to your situation, please contact our firm directly by calling 317-829-6797 or by filling out our contact form.