Tag Archives: contracts

Change Orders in Contracts

Disclaimer – this and subsequent articles on this subject are not intended to be legal advice, merely an example for discussions between you and your legal advisor.

Please keep in mind, many of these terms are applicable towards post frame building kits and would require edits for cases where a builder is providing erection services or materials and labor.

George Headley wrote an article for Construction Business Owner, on how contractors can improve their change orders. For those who are curious, this article can be read at: https://www.constructionbusinessowner.com/strategy/business-management/october-2015-improve-your-change-order-requests

An average Hansen Pole Buildings client requests 10-15 quotes before finalizing their pole building design. After all of these tweaks, we assume our client has dialed it in and knows exactly what they are getting. Sadly, there are some who have second (and third or fourth) thoughts and either want or think they want to make changes.

When a client even considers making a change after order, it stops wheels of progress on not only their project, but others as well. Our staff is now taken away from their everyday work – just to get information so you can decide whether you want to make a change or not.

Everyone’s time is the most valuable thing they own.

changeCHANGE ORDERS: Purchaser may request modifications or changes to the building specifications or the scope of work. ALL such requests must be made directly to the Seller’s office. Seller will be unable to honor requests made to any other parties. Any and all modifications or changes requested by Purchaser to the building specifications or the scope of work should be executed only upon a written Change Order, approved by Purchaser on Seller’s approved form(s). 

If the Purchaser is more than an individual, any one person or their authorized representative(s) may execute Change Orders. All Change Orders resulting in added charges are due and payable upon acceptance by Purchaser, unless such Change Orders are executed prior to preparation of finance loan documents and can be included in total loan amount. 

Properly executed and accepted Change Orders take precedence over specifications stated upon this Agreement. Unless a Change Order has been prepared in writing and signed by Purchaser, the cost of processing or completing and Change Order shall be simply calculated on the basis of (1) A labor rate of no less than $xxx per person-hour, or any portion thereof, for all office or administrative time spent on processing a Change Order which is processed by Seller, but which Purchaser elects for any reason not to have performed, (2) a flat labor rate of no less than $xxx per person-hour, or any portion thereof, for all Seller’s or Seller’s agents who work on the Change Order, (3) Two (2) times the cost of all actual material costs invoiced to Seller, including delivery and freight, for Change Orders actually performed and completed by Seller. 

Should Purchaser and Seller be unable to agree on the cost of a Change Order, Purchaser authorizes Seller to charge Purchaser’s account at the above rates.

CONSTRUCTIVE CHANGES: May result from any oral or written act or omission by Purchaser or Purchaser’s authorized representative which causes Seller to perform work beyond the scope of the original Agreement or approved Change Orders, including, but not limited to, changes in the method of performance, misinterpretation of specifications, over inspection, rejection of conforming work, or rejection of “or equal” substitutions. Any such constructive change will be paid by Seller at the rates established in Section xx of this Agreement, “Change Orders”.

Contracts Are Boring…Until You Go To Court

I have one goal – for people to end up with structurally sound buildings they love. Follow these guidelines and you are far more likely to love your new building.

Your work starts before you sign a contract.





Failure to accept these four statements will set you up for grave disappointment.

Buy Materials Yourself

Contractors generally have no qualms about using leftover materials from prior jobs, or purchasing cheaper materials than specified. If you seriously are concerned about material quality, take control yourself. Be aware, when contractors purchase materials for your building, they will mark them up. Paying for materials yourself assures you of not having liens against your property for bills your contractor did not pay.

It is very important you make decisions on exact materials you use for your building. With each type of material, there is a high end product, low end product, and something middle grade. Educate yourself on differences between each type of material, so you can choose based on your needs. If you allow a contractor to make any of these choices for you, they can really screw you over. Picking the right materials can make a huge difference.  If a contractor picks wrong materials, things are bound to go wrong.

Only Use Engineer Sealed Plans Specific to Your Building

Your building provider or contractor may have decades of experience, but unless he or she has initials “P.E.” (Professional Engineer) after his or her name, he or she is not qualified to make structural decisions. Have any deviations from plans reviewed and approved by your building’s engineer.

A building provider or contractor who sluffs off values of a fully engineered building plan does not have your best interests at heart.

Do Not Agree to a “Gentleman’s Agreement”

Always, always, always put your agreement with a building provider and/or contractor in writing. Having everything in writing has nothing to do with trust. It helps ensure everyone remembers what agreed upon terms are.  Months later you do not want to start arguing over what was originally agreed to. Contracts should be very detailed, including all expectations for both parties. 

Read the contract thoroughly, including all terms and conditions.

Keep in mind a good contract is written to provide clear communication between two parties.  It also protects both parties, and should never be “one sided”.  From my years as a general contractor, a well thought and spelled out contract (in writing) made for smoothest projects. 

Before agreeing to any work (as well as making any payment), require a written proposal describing in plain language what materials will be provided and/or work will be done. Do not sign a contract you do not fully understand. If anything makes little or no sense, ask for a written explanation. Still feel dazed and confused, or not getting what you feel are straight answers? Pay a one-time fee so a lawyer can walk you through what, exactly, it says and alert you to vague language. Terms such as “Industry Standard” have no real definition.

A total price should be as inclusive as possible. Any unforeseeable work or unit prices should be clearly addressed (like what happens if holes are difficult to dig). Maintain all paperwork, plans and permits when the job is done, for future reference.

Familiarize yourself with contract terms.

Proposals and contracts should contain specific terms and conditions. As with any contract, such terms spell out obligations of both parties, and should be read carefully. Be wary of extremely short or vaguely worded contracts. A well written contract should address all possibilities and may very well take more than one page.

If hiring a contractor, do not pay in full until all work is completed and lien releases provided from any and all material suppliers.

A statement regarding compliance with applicable Building Codes should be included, as well as what Code and version is being used and all applicable loading criteria. If the contractor is doing building permit acquisition, it should be stated in writing and a permit should be provided prior to work starting.

Hiring a contractor? Then, standards for workmanship should be clearly specified. For post-frame buildings this would be Construction Tolerance Standards for Post-Frame Buildings (ASAE Paper 984002) and Metal Panel and Trim Installation Tolerances (ASAE Paper 054117). Depending upon scope of work, other standards may apply such as ACI (American Concrete Institute) 318, ACI Concrete Manual and APA guidelines (American Plywood Association).

Articles to follow will cover specific terms of contracts and why they are important.

Stay tuned….

Good Fences Make Good Neighbors

Good Fences Make Good Neighbors

Robert Frost’s 1914 poem Mending Wall began this proverb.

Good fences do indeed help make good neighbors. A good fence is a line of mutual respect and understanding with minimal ambiguities. A good fence is a mutually-agreed upon boundary, with implied and explicit responsibilities for both sides to maintain and respect those boundaries. A good fence shows no partiality. And building a good fence creates a sanctity marking every human boundary, physical or psychological, of stones and mortar, or simply an invisible line in the sand.

When it comes to investing in a building (whether a kit or constructed) , a good contract makes for a happy outcome for all involved.

Contracts, when done properly, should simply define those relationships between a business and anyone they work with. A contract documents expectations each party has, and how each party sees this transaction playing out. It does protect a business but also protects the party they are contracting with. Here are five primary objectives for every good contract. 

  1. Be clear. Robert Frost used this saying to represent unnatural separation, in his poem Mending Wall, but separation and clarity of parties in contracts are good. Both parties need to recognize they are separate entities and have their own motivations, considerations, and gains in a contract. By ensuring clarity of each party’s wants, there can be no confusion as to who is to do what in a contract. 

2.   Be certain. In contracts, all parties should be certain of an outcome no matter what direction parties take. Should everything go smoothly and both parties perform, both parties should know exactly what they are getting. If there is an issue with one party’s performance, steps to fix or resolve this issue should be laid out in no uncertain terms.

3.   Be complete, a contract should answer all questions about any transaction and stand by itself (meaning there needs to be no clarification). If there is an unresolvable dispute, a court will only consider what a contract says, not what each party verbally understood or agreed to outside of a written contract. 

4.   Be easily understood. A contract should be drafted so laypeople can clearly            understand expectations and will not lead to confusion. Remember, if there is a dispute, a court or arbitrator with no technical background and no knowledge of this transaction is deciding your fate. 

5.   Like any relationship, contracts open each party up to risk. But also, like any          relationship, a party can gain nothing if they are too afraid of taking a risk of getting hurt. Contracts can attempt to reduce this risk, but a party contracting only to reduce their own risk is not one inspiring confidence. Instead, contracts should foster a trusting relationship. Be open about intentions, clear on requests or needs, and do not make assumptions. By fostering trust, a contract is nothing to fear.

Investing in a building without a contract (or with a minimal one) puts both parties at risk. In following articles I will endeavor to reduce risks for both new building owners as well as their providers/contractors.