A Beginner's Guide to AIA G701 Change Orders
An Introduction to the AIA-StyleG701 Change Order
If you’re in the construction industry, you already know about change orders. Basically, during a construction project, there may be times when contractors need to make changes. Unfortunately, these changes may fall outside the terms of the contract. As a result, a change may include a new scope of work or materials. In this situation, you submit a change order. Unsurprisingly, one of the most common ways to do this is through the AIA G701 Change Order Form. Like other AIA forms, the G701 is complicated. Every construction project contract includes:
- A detailed contract that outlines the scope of the work
- Costs of materials and labor
- Other details about how to complete the job
These contracts ensure that both the landowner and contractors will uphold the agreed-upon terms of the job. Still, creating such a contract requires considerable guesswork for everyone involved. There are a variety of reasons why things might not go as planned during a construction project. This situation is where change orders come in.This guide will help you understand how to fill out the AIA G701 form and ways to avoid submission errors that could lead to delayed payments
Understanding the AIA G701 Change Order Form
Learning about each part of the AIA G701 change order form can help you avoid common errors. Errors cause change orders not to be approved.
The header of the AIA G701 covers basic information about the project. You will find that it includes the same information required for other AIA documents.
- Project: Enter the name of the project and the address or parcel number.
- Contract Information: Describe the services or materials you're providing and enter the date the project began.
- Change Order Information: Enter the change order number (consecutively follows last project change order) and the date of the change order.
- Owner: Enter the name and address of the project owner.
- Architect: Enter the name and address of the architect. If an architect isn't part of the project, list the project manager or GC.
- Contractor: Enter your name and address here.
Contract Changes of the Change Order Form
This section will describe the proposed changes to the original contract. Unlike other parts of AIA forms, this section of the change order form leaves a blank field for the details of changes to the agreement. Furthermore, you need to describe in detail the changes to the original contract. Fill in this information. Next, estimate the cost for each change in the space beneath that reads: “THE CONTRACT IS CHANGED AS FOLLOWS.” Provide as much detail as possible in this section and include any relevant attachments.
Calculating Contract Changes
Beneath your description of proposed changes, the contract changes section of the AIA G701 continues with a series of spaces. These spaces are for the accounting details related to the changes in question. Filling out this section has the most room for error. You’ll note that some areas of the change order form include multiple options. Cross out those that don’t apply.
- Original (Contract Sum) (Guaranteed Maximum Price): This refers to the original contract amount for the project.
- Net Change by previously authorized Change Orders: This is the total value of all previous change orders on the project. Since some change orders are deductive, this number could be negative. If it's the first change order, enter a zero.
- (Contract Sum) (Guaranteed Maximum Price) prior to this Change Order: This shows how much the contract has changed due to previous change orders. Simply add the two lines above to calculate this entry.
- The (Contract Sum) (Guaranteed Maximum Price) will be (increased) (decreased), or (unchanged) by this Change Order in the amount of: Enter the amount this change order will affect the project. It can be a positive or negative number. You may put zero if the amount is unchanged by the order.
- The New (Contract Sum) (Guaranteed Maximum Price) including this Change Order: Add the two lines above to calculate the new total that includes this change order.
- The Contract Time will be (increased) (decreased) (unchanged) by: You must enter the required number of days for the changes. Will the project take longer? Shall it finish sooner? Will it affect the timeline?
- The date of Substantial Completion as of the date of this Change Order therefore is: Add or subtract the number of days listed in the line above from your contract's date of substantial completion to calculate the new completion date for the project.
Signatures for Approval
All parties involved should sign the G701 change order form for approval to be valid. All relevant parties should sign each change order to be considered an amendment to the contract. Appropriate parties include the contractor, owner, and even the architect. Additionally, make additional copies, so each party has a copy of the agreed-upon changes.
How AIA G702 Change Orders Affect Payment
Pay apps exist because documenting completed work on a construction project is crucial to payment. Change orders work in the same fashion. Calculation errors or failure to include a new timeline for the changes can cost you money. Errors or improper submission methods can result in a denial. As a result, this leads to late payments and project delays. There is no guarantee of payment without the proper submission and approval process for a change order. For general contractors collecting multiple change orders from several subcontractors, the process is even more complex.
You Can Automate Change Orders to Avoid Errors
Using standardized change orders like the AIA G701 is only the first step in eliminating errors. Unfortunately, traditional channels of communicating about change orders may mean you approve old change orders. Now there are better, newer ways to manage AIA documents. Multiple pending AIA G701 change orders can make for a confusing approvals and denials process. Be sure everyone is on the same page when you manage change order forms through Flashtract.