1.  What Is a “Change Order”?

A change order is a written amendment to the construction contract that revises the scope, price, or completion time. In public contracts the instrument is typically issued by the owner’s representative; in private work it must be executed by the parties designated in the agreement. Although Texas common-law principles sometimes allow recovery for orally-directed extras when the owner clearly waives the writing requirement, the safest course— and, after recent legislation, often the only lawful course— is a fully executed written modification. 

2 . Texas Legal Framework

• HB 3485 (2023) – Texas Prompt Payment Act Amendment
  • Key Rule: A contractor or subcontractor may refuse to perform owner-directed additional work if:
    1. There is no written, fully executed change order, and
    2. Outstanding, unexecuted change orders exceed 10% of the original contract price.
  • Practical Effect: This right is non-waivable and applies to contracts dated September 1, 2023, and forward. It provides strong leverage to halt “design-by-field directive” situations without exposing the contractor to delay damages.
• Prompt Payment Acts – Tex. Prop. Code ch. 28 (private) & Gov’t Code ch. 2251 (public)
  • Key Rule: Owners must pay for approved change-order work within statutory timeframes. Non-payment triggers statutory interest, attorney’s fees, and—after HB 3485—suspension rights.
  • Practical Effect: Contractors should tie payment milestones directly to executed change orders to preserve cash flow and avoid disputes.
• Statute of Frauds – Tex. Bus. & Com. Code § 26.01
  • Key Rule: Contract modifications involving goods valued at more than $500 or an interest in real property must be in writing and signed.
  • Practical Effect: Oral scope increases are often unenforceable unless proven under waiver or estoppel theories. Contractors risk not being paid if they rely on unwritten directives.
• Texas Case Law (e.g., State v. Martin Bros., Buxani v. Nussbaum)
  • Key Rule: Courts may find that a written change-order clause has been impliedly waived when the owner directs and accepts extra work despite the absence of formal written approval.
  • Practical Effect: While waiver arguments exist, they are uncertain and usually resolved only in litigation. The safer course is to document every change order in writing rather than relying on waiver.

3. Federal Contracts (FAR)

• FAR Part 43 governs modifications; clause FAR 52.243-4 “Changes” authorises the Contracting Officer to issue unilateral written change orders. Contractors must notify within 30 days (unless extended) to preserve an equitable adjustment.  
• Cost/time impacts are resolved under the Contract Disputes Act if agreement is not reached.
• Oral directives from a Contracting Officer’s Representative can qualify as change orders only if confirmed in writing or promptly noticed in writing by the contractor.

4. Typical Triggers for Change Orders

1. Design revisions initiated by the owner or architect.
2. Unforeseen conditions (sub-surface obstructions, hazardous materials).
3. Regulatory updates (code revisions, OSHA directives).
4. Material substitutions due to availability or value-engineering.
5. Scope growth driven by owner upgrades or tenant changes.

5. Best-Practice Checklist

For Contractors & Subcontractors

• Insist on written directives. Tie field work to a signed change order or, at minimum, a construction-change directive that captures price/time reservation.
• Price and schedule contemporaneously. Provide a detailed cost/time proposal before work proceeds where feasible.
• Track the 10 % rule. On Texas projects started after 9-1-2023, suspend performance of additional work when unexecuted change orders exceed the statutory threshold.
• Diary notice deadlines (30 days under FAR; as-agreed in private contracts).
• Maintain audit-ready records—labor cards, delivery tickets, photos, and correspondence.

For Owners & Developers

• Respond quickly. Execute change orders before directing extra work; delay now equals schedule risk later.
• Align funding approvals so internal finance or council processes do not stall the 10 % threshold.
• Verify statutory clauses. Ensure HB 3485 language is mirrored in your contracts and project manuals.
• Monitor cumulative impact. Small changes compound; track aggregate additions against contingency and critical path.

Connect With Us

Change orders are the legal pressure-valve that lets projects adapt without detonating into claims. Texas has tightened the valve with HB 3485, giving builders statutory teeth to demand written authorization, while federal work remains governed by the FAR’s disciplined notice-and-equitable-adjustment regime. Treat every scope shift as a potential contract amendment: memorialize it, price it, schedule it, and keep building—lawfully and profitably.

Questions about a thorny change-order dispute or drafting robust change-order clauses? Our firm is ready to help.

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