©2020, Ontario Association of Architects (OAA). Lessons Learned may be reproduced and distributed, with appropriate credit included, for non-commercial use only. Commercial use requires prior written permission from the OAA. The OAA reserves all other rights. 

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Context 

The owner already had a working relationship with the contractor and didn’t want the cost/delay of having the architect prepare and issue the usual change documents. Instead, the contractor and owner would negotiate changes in scope or extras due to site conditions and come to an agreement.

It sounds simple and time saving, and probably would have been, except that the owner still wanted the consultant to certify payment. When I got involved, the project manager had spent several days trying to get the owner and contractor to acknowledge which changes had been agreed to, the scope of the changes and the cost.
The contractor lumped work done under two separate contracts into one application for payment even though the consultant had no role in the second project. In addition, to keep the project cost changes from exceeding the value of the cash allowance, the contractor lumped credits to base contract amounts in with extras expended from the cash allowance rather than crediting the base contract and charging the true costs to the cash allowance.

The Lesson 

We spent far more time trying to determine what the current scope and cost of work is in preparing each certificate for payment than we would have spent preparing the standard change documents for the whole project. The owner saved money and we paid twice. We gave up fees for preparing the change documents and we did extra work because there were no change documents.

What was Learned

Beware of the impact of changes to the normal scope of services on other services being provided. In this case, the owner probably saved time and fees at significant increase in costs to the consultant. In the future, if a client doesn’t want us to prepare change documents, we will decline payment certification. If a client insists or is required to have the consultant certify payment, we will insist on preparing change documents (and on getting paid to do so).

A good relationship between owner and contractor can be of great benefit to a project, but if the normal processes of the project are circumvented, there can be additional unidentified costs to other parties.

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The lessons do not represent OAA policy or guidance but rather are actual experiences from construction contract administration that taught the author a valuable lesson from which others may benefit.

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