Owner — "Well, the designer said the building would look good in green, but I think that blue would be better."

Contractor — "We are scheduled to paint on Friday. We can change the color for an extra $15,000 to the contract price."

Owner — "But you have not ordered the paint yet."

Contractor — "Well, you know, blue is more expensive than green..."

Change is not easy. Change on a construction project can be expensive, too. Think of any dispute between an owner and a contractor on a construction project and you will probably find its root cause in a change — whether an owner request, an alleged design deficiency, a differing site condition, or some other unforeseen impact. The effect of a change to the circumstances of a construction contract is the primary cause of disputes between the owner and the contractor. The ability to work together to absorb the effect of the change is directly linked to the likelihood that the dispute will end up in arbitration or litigation.

The irony is that changes are expected in every construction project. In fact, the unique legal difference between a construction contract and any other commercial contract is that with very few exceptions, one party can unilaterally change the terms of the construction contract without breaching it. It would therefore be logical to assume that changes in a construction project would be easily resolved and not a source of friction between the parties. But this is construction, and one cannot assume anything in construction.

Attempts to avoid disputes over changes have driven many innovations in construction contracting and delivery. Relatively new delivery methods such as design/build, construction management, etc., find their birth in the goal to quickly and easily resolve changes without significantly altering the cost and/or the schedule of construction. Project dispute resolution techniques such as partnering, DRBs (dispute review boards), project appointed arbitrators and the European concept of adjudication seek to simply and quickly resolve construction disputes "on the fly," so as to keep construction projects from being stymied. In some states the problems arising from construction change orders have caught the eye of government officials and legislatures.

For instance, in Nevada, the state legislature responding to complaints from construction industry groups that change order requests were not being fairly resolved amended its laws to force prompt resolution of change order requests and payment therefore. Under a 2005 law, change order requests in Nevada automatically become part of the construction contract if they are not definitively accepted or rejected within 30 days of their issuance. Once part of the contract, they must be paid or the affected contractor may stop work on the owner's construction project with impunity. While such laws can be reasonably questioned as unfair to one party or the other, the point is still made that resolution of changes must be dealt with reasonably and the hunt for effective solutions remains elusive.

Laws such as these must be well known to those charged with drafting construction contracts generally and change clauses and dispute resolution procedures specifically. Project managers and owner representatives must thoroughly review their contracts and also be aware of what legal obligations they must abide by in order to protect their companies. When changes occur on the project, the front line management must be prepared to work through those issues within the guidelines of their contract dispute resolution procedures and the legal requirements. Clear and direct documentation of the problem is the best legal defense to disputes arising from construction changes. While these are critical components that must be respected and acted upon to protect the owner's and/or contractor's position, they are not the most productive means to resolve the dispute. In addition to being quality document creators on projects, project personnel must also be effective communicators to reduce the possibility of legal action.

The most effective change resolution technique is communication. Effective and honest communication between the owner and the contractor can achieve much that any other resolution technique can only hope to render. But communication must also be coupled with responsibility and professional integrity. By identifying problems early on in a construction project, parties who have established mutual respect and integrity with each other can easily compromise to find a workable solution. When mutual respect and integrity breaks down, communication becomes guarded and limited. The opportunity to handle changes effectively and efficiently diminishes substantially.

Reducing changes can and will significantly reduce disputes between owners and contractors. Creating methods for resolving disputes can help but oftentimes lead to further disputes over notifications and timing of claims. Ultimately, the most effective resolution technique will involve identifying and resolving the change and its implications in the construction trailer onsite rather than in the courtroom years after the fact.

Leon Mead II is a partner in the law firm of Snell & Wilmer and practices construction law in the firm's Las Vegas office.