How To Build A House In Costa Rica: Changes And Change Orders

Construction projects are dynamic endeavors where changes are not uncommon. From unexpected site conditions to client preferences evolving, managing change orders is crucial for the success of any construction or development. In this blog, I will write about the importance of understanding and effectively managing change orders in construction projects.

Let’s start with: What are change orders? change orders are alterations to the original scope of work agreed upon in the contract. They can arise due to unforeseen issues, design modifications, or material availability constraints, fluctuations in material costs or labor availability to mention a few examples.

Commonly, change orders can cause delays, cost overruns, and miscommunication as there is a lot of informality in their documentation and lack of registration in the project log or “bitácora” by the contractors. Because we are sure you want to avoid this when building your dream house or development your project, here are some tips to manage changes during construction:

1. Initial Planning: Thorough planning upfront can minimize the need for changes later on. Anticipating and addressing potential modifications in the planning phase can streamline the construction process. (See our blog How to Build a House in Costa Rica: Private Bidding to Choose the Right Builder here)

2. Documentation: Detailed documentation for every change order is essential. This includes clear descriptions of the change, its impact on the project timeline and budget, and any associated costs. A good practice is to agree on a process, form or slip template that must exist for a change order to be considered accepted. Always keep in mind that a change order can be related to fixtures, furniture, or finishes, but also it could be related to more serious electromechanical problems that could have a significant impact on the construction, its budget and execution timeline. The construction contract should have a clause that defines and regulates change orders and its process and exhibit with the templates could be included as well.

3. Approval Process: Establishing a clear approval process for change orders is crucial. Define who needs to approve changes, whether it is the client, architect, inspector, or project manager, and document these approvals diligently. Ideally, this order should be signed by the parties authorized to approve change orders. Many times changes are approved without the owner’s knowledge causing unwanted surprises.

4. Contingency fund: Because change orders can significantly impact a construction project’s overall budget, we always advise our clients to set aside a contingency fund account for potential changes. This buffer can absorb unexpected costs and prevent budget overruns.

5. Select the right type of contract: Selecting the proper type of construction contract for your build is essential as some types align well with change orders and other do not. For more information on construction contracts, please see our blog: How to Build a House in Costa Rica: Most Common Building Contracts.

By understanding the reasons behind change orders, implementing a structured approach to managing changes, and proactively addressing common challenges, construction teams can navigate the complexities of change while staying on track with timelines and budgets.

For further inquiries or assistance with legal matters related to construction projects, feel free to contact Sonia Elena Aragón Muñoz at sam@quatro.legal.