Change Order Fairness for Maryland Contractors

The number one downfall for small and disadvantaged businesses is the inability to collect on change orders, especially at their full amount. For example, on a large project that can take upwards of three years, any subcontractor performing work early in the process may find the approval timeline for change orders unbearable; as a consequence of the change order, retention on the project is at a standstill – even after the work has been performed. The risk increases if the prime contractor or project owner declares bankruptcy and the job is not bonded. And even if it is a bonded project, the time frame for filing suit against the payment bond can expire due to the lengthy process.

Until change orders are approved, they appear as stagnant underbillings on a company’s balance sheet. Once the surety gets wind that the change order costs are not billable, they become omitted assets that can directly impact bond capacity and banking ability. This example or similar scenarios can quickly submerge a small business contractor that simply needs to get paid on time for work that is completed.

Karen Barbour, founder and president of The Barbour Group