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Change orders and irregular changes

Kortversjonen

Lytt til artikkelen

1. Introduction

There is hardly a single construction project where there will be no changes along the way.

Any project is “tailor-made” and it is virtually impossible to foresee absolutely everything when drawing up a preliminary project. One can characterize a construction contract as a development contract and all parties involved must be prepared for the fact that there will be changes.

Changes can be caused by a variety of reasons.

They can be caused by orders for modified execution, but also rescheduling of work operations or forcing to recoup delays caused by circumstances of the general or general contractor's risk.

In some cases, situations also arise along the way where the subcontractor believes that there is an order or instruction that the subcontractor should perform something that is outside the contract. Often the total or general contractor will not agree, and then we are in the rules on irregular changes.

We will deal with these topics separately in this article.

2. Overview of the rules

Below we have prepared a matrix showing which provisions belong to this topic and where in the three standard contracts one finds them.

The provisions of NS 8417 paragraph 31, in NS 8415 paragraph 22 and NS 8416 paragraph 19 deal with change orders where the total or general contractor himself defines his order to subcontractor as an amendment.

The provisions of NS 8417 paragraph 32, NS 8415 paragraph 23 and NS 8416 paragraph 19.3 deal with the irregular situations in which the general contractor or general contractor has not issued an order for change, but where the subcontractor considers that such an order exists. These are called irregular changes.

Neither regular nor irregular changes need necessarily have consequences for the time available to the subcontractor to carry out his contract work, nor do they have to incur additional costs to the subcontractor.

With that said, most often changes will entail a requirement for a deadline extension and/ or additional compensation.

In experience, it is also the changes, and their consequences, that create the greatest disagreement between the parties to a construction contract.

The purpose of these articles is to provide a good enough overview, but without the topic being too extensive.

We have therefore separated the issues relating to both deadline extension and remuneration adjustment in our own articles.

3. What is a change?

Regardless of whether a change is initiated, it is important to know what is meant by the term “change”.

The definition of we find the standards where it is stated that a change may involve subcontracting a “shall provide something in addition to or in place of the originally agreed, that the nature, quality, nature or performance of the services shall be altered, or of the agreed benefits shall be discontinued”.

We refer in this regard to NS 8417 paragraph 31.1, second paragraph, NS 8415 paragraph 22.1, second paragraph, and NS 8416 paragraph 19.1, second paragraph.

At the same time, it follows from the standards that the change “must be in the context of what the contract includes”, see the third paragraph of the provisions.

In addition, there is a condition that the new or alternative performance is not “of a substantially different nature than the originally contracted work”.

Most of the time, none of this presents any challenges in practice.

With that said, in the case of quantities to be settled at unit prices, a change in the quantity relative to what was originally assumed would not be regarded as a change. An exception is made if the change in quantity is significant, but it takes a lot more. We are therefore not going into this here.

4. Limitation — 15% net of contract amount

In all three standard contracts, there is a limitation on the extent to which changes the subcontractor is obliged to undertake.

From these, it is clear that the main/general contractor cannot impose a subcontractor “changes in excess of 15% net addition to the contract amount”, cf NS 8417 paragraph 31.1 third paragraph, NS 8415 paragraph 22.1, third paragraph and NS 8416 paragraph 19.1, third paragraph.

“Net” addition means that one must also subtract any negative changes to determine if the limit of 15% of the contract amount has been reached. Consequently, it is not immediately possible to determine whether a claim for a positive change causes the threshold of 15% of the contract amount to be exceeded. In a number of cases, it will not be doubtful that the limit has been reached. while it may be more doubtful in others.

Here as otherwise, each party must take the risk of their own judgments.

Often, however, there will be no doubt that the modification expertise has been exhausted - even early in a project. This was the situation in a construction contract where the builder decided early on that the road body should be built from light masses (Glasopor) rather than blast stones from the plant. The reason for this was fear of sentences. In addition to the cost reduction for light landfills, additional costs were incurred for transporting and depositing the rock masses from the blasting works on the rock cutting. The additional cost of this order alone was substantially higher than 15% of the contract amount.

When the builder's modification skills are exhausted, the builder receives a challenge. It is certain right that the contractor may refuse to undertake modification works beyond 15% of the contract sum. If he refuses, the builder can engage another contractor to carry out the work, but that is rarely practical. Such an option will also entail significant additional costs. A new contractor will price the works according to current prices, costs for mobilization, rigging and operation will be added and the contractor will presumably calculate risks since the works will be carried out in parallel with others, etc.

In practice, therefore, the situation is most often solved by the contractor making an offer for new prices for modification works beyond the 15% limit. The developer may accept, refuse and/ or initiate negotiations. If the parties do not agree on new prices, the contractor will be entitled to the “gang price”. The consequence will therefore be that further changes will be priced according to current market prices.

This was established in a judgment of the Agder Court of Appeal of 11.9.2017, and reiterated in the judgment of the Borgarting Court of Appeal of 23.4.2024 (Nye Jordal Amfi).

In addition, it is often found that the limit of 15% net surcharge is increased to 25-30% net addition to the contract amount in the special contract terms.

5. Who can issue an amendment order?

In the case of ordinary amendments, this is given in the form of a written amendment order, and the person issuing the order must be either a representative of the main/general contractor or another person with written authorization to issue change orders, cf. NS 8417 paragraph 31.3, NS 8415 paragraph 22.3 and NS 8416 paragraph 19.2.

Other persons with a power of attorney may be, for example, a construction manager who has been authorized in writing to order changes within specified amount limits.

6. Briefly about change in the form of temporal rearrangement and consolidation

In all standard contracts there is a separate provision that the subcontractor is obliged to coordinate its progress and execution with others involved in the project.

The condition is that such coordination was foreseeable based on “the contract specifies the nature, scope and progress of the work”, the number of lateral contractors, etc., cf. NS 8417 paragraph 21.4, NS 8415 paragraph 18 and NS 8416 paragraph 17.

If the main/general contractor makes demands for coordination beyond the foreseeable, or a situation arises as a result of amending orders that make the subcontractor entitled to an extension of the deadline, a change may nevertheless be that the deadlines laid down by day are maintained.

This is further described in NS 8417 paragraph 31.2, NS 8415 paragraph 22.2 and NS 8416 paragraph 19.1.

In such cases, the subcontractor is forced to continue his work with the consequences that it has in terms of cost use.

Increased costs give the subcontractor the right to a remuneration adjustment and this is discussed in more detail in the article on “Remuneration adjustment”.

7. Especially about irregular changes

Normally, no particular challenges arise when the main/general contractor follows the general rule of the standard contracts regarding the issuance of change orders. At least not compared to the situation when subcontractors apply the rules on irregular changes.

The rules on irregular changes can be found in NS 8417 paragraphs 32.1-32.3, NS 8415 paragraphs 23.1-23.3 and NS 8416 paragraphs 19.3.

The essence of irregular change orders is that the subcontractor considers the main/general contractor to have given him a “injunction” to perform a work not covered by his contract worker, and where the order is not given as a “change order”.

Typically, it appears from, for example, a work drawing received from one of the general contractor's advisors, that the construction manager has given an instruction to carry out a specific work in a different way or at a different time than what the subcontractor had planned, or that the general contractor's representative has expressed something that a subcontractor perceives to be an order.

The various situations are described in more detail in NS 8417 paragraph 32.1, NS 8415 paragraph 23.1 and NS 8416 paragraph 19.3, first paragraph.

There are no formal requirements as to how such an order or instruction is made.

By contrast, the standards set out requirements for what the subcontractor should do when, or if, he believes to have received such an injunction that one perceives to represent a change.

This is particularly the case where the conditions for proper handling are substantially stricter in NS 8415 and NS 8417 than those stated in NS 8416.

It follows from NS 8417 paragraph 32.2 and NS 8415 paragraph 23.2 that the subcontractor must notify the main/general contractor “without undue residence” stating that he considers the injunction to represent an amendment.

This notice must be in writing, and it must be sent to the representative of the main/general contractor at any other, agreed address. We refer in this regard to NS 8417 point 5 “Notifications and requirements”, NS 8415 paragraph 8 “Notifications and requirements” and our article on this topic, read here.

We are often asked what is meant by “unjustified stay”.

The point is the subcontractor is granted a certain amount of time to undertake the investigations necessary to check whether what one believes is imposed deviates from the contract.

As you know, construction contracts are often very extensive, they can be complicated to understand and there may be a need to obtain expert assessments.

Therefore, the subcontractor is not supposed to investigate the possible consequences.

Besides the fact that the stay must be justified in this type of clarification, the subcontractor must react relatively quickly in terms of time.

A commonly used formulation is that with “without undue residence” It means that you have a few days at your disposal, but not weeks or months.

In other words, the subcontractor cannot leave it long before a notification is sent.

In this regard, it is also important to remember that claims for which the irregular change provides a basis are lost if the subcontractor does not comply with the notification requirement in respect of “without undue residence”. In this case, it follows from NS 8417 paragraph 32.2, first paragraph and NS 8415 paragraph 32.2 that the work in question is to be considered part of the subcontractor's contractual obligation.

The requirement of “without undue residence” is due to several conditions.

Perhaps the most important reason is that the main/general contractor needs to know that the subcontractor considers something to be an order for a change.

Changes usually have consequences for construction time, for the severance pay and so the work in question can cause the final result to differ from the originally agreed.

It is therefore important that the main/general contractor is informed about this so that he can clear up any misunderstandings. Another option is for him to change his mind.

A third option is for the main/general contractor to admit that an injunction was granted, but disputes that it represents a change.

The main/general contractor may believe that he has done nothing other than to ensure that the subcontractor performed the work in accordance with the contract.

When the general contractor receives a notification from the subcontractor, he must also respond to the subcontractor “without undue residence” if he disputes the notice.

The answer must be sent in writing to the representative of the subcontractor.

If this is not done, the work in question will be considered a change.

It is these rules that we call preclusive, since rights are lost if one does not follow them. We find these provisions in NS 8415 and NS 8417, but not in NS 8416.

8. What to do if you think the other person has notified or responded too late?

By “Notifications and requirements” in NS 8415 paragraph 8, third paragraph and NS 8417 paragraph 6, third paragraph, it is stated that if one “wish to make the case that the other party has notified or responded too late, must” one notifying the other of this “in writing without undue delay after receiving notice or reply”.

If one does not notify the other within the time limit, the original notification or reply shall “deemed to be given on time”.

By the way, we refer to the article on Notifications and Claims”.

9. Lawsuit Deadline

It follows from NS 8417 paragraph 35.2 that if the general subcontractor wants to maintain his claim that there is a change, or his claim for a remuneration adjustment or deadline extension where this is (also) in dispute, he must “take the necessary steps to initiate ordinary proceedings or arbitration” no later than 8 months after the takeover.

In a judgment of the Supreme Court of 24 April 2023 (HR-2023-00766-A), it was established that where the time limit for a settlement appeal is interrupted, and where the settlement proceedings are suspended, a subpoena must be issued within one year after the case was brought to the Conciliation Council. We have commented on the verdict here.

The same applies to execution conversions, see NS 8415 paragraph 26.3.

‍

Tilbake

Change orders and irregular changes

Kortversjonen

Lytt til artikkelen

1. Introduction

There is hardly a single construction project where there will be no changes along the way.

Any project is “tailor-made” and it is virtually impossible to foresee absolutely everything when drawing up a preliminary project. One can characterize a construction contract as a development contract and all parties involved must be prepared for the fact that there will be changes.

Changes can be caused by a variety of reasons.

They can be caused by orders for modified execution, but also rescheduling of work operations or forcing to recoup delays caused by circumstances of the general or general contractor's risk.

In some cases, situations also arise along the way where the subcontractor believes that there is an order or instruction that the subcontractor should perform something that is outside the contract. Often the total or general contractor will not agree, and then we are in the rules on irregular changes.

We will deal with these topics separately in this article.

2. Overview of the rules

Below we have prepared a matrix showing which provisions belong to this topic and where in the three standard contracts one finds them.

The provisions of NS 8417 paragraph 31, in NS 8415 paragraph 22 and NS 8416 paragraph 19 deal with change orders where the total or general contractor himself defines his order to subcontractor as an amendment.

The provisions of NS 8417 paragraph 32, NS 8415 paragraph 23 and NS 8416 paragraph 19.3 deal with the irregular situations in which the general contractor or general contractor has not issued an order for change, but where the subcontractor considers that such an order exists. These are called irregular changes.

Neither regular nor irregular changes need necessarily have consequences for the time available to the subcontractor to carry out his contract work, nor do they have to incur additional costs to the subcontractor.

With that said, most often changes will entail a requirement for a deadline extension and/ or additional compensation.

In experience, it is also the changes, and their consequences, that create the greatest disagreement between the parties to a construction contract.

The purpose of these articles is to provide a good enough overview, but without the topic being too extensive.

We have therefore separated the issues relating to both deadline extension and remuneration adjustment in our own articles.

3. What is a change?

Regardless of whether a change is initiated, it is important to know what is meant by the term “change”.

The definition of we find the standards where it is stated that a change may involve subcontracting a “shall provide something in addition to or in place of the originally agreed, that the nature, quality, nature or performance of the services shall be altered, or of the agreed benefits shall be discontinued”.

We refer in this regard to NS 8417 paragraph 31.1, second paragraph, NS 8415 paragraph 22.1, second paragraph, and NS 8416 paragraph 19.1, second paragraph.

At the same time, it follows from the standards that the change “must be in the context of what the contract includes”, see the third paragraph of the provisions.

In addition, there is a condition that the new or alternative performance is not “of a substantially different nature than the originally contracted work”.

Most of the time, none of this presents any challenges in practice.

With that said, in the case of quantities to be settled at unit prices, a change in the quantity relative to what was originally assumed would not be regarded as a change. An exception is made if the change in quantity is significant, but it takes a lot more. We are therefore not going into this here.

4. Limitation — 15% net of contract amount

In all three standard contracts, there is a limitation on the extent to which changes the subcontractor is obliged to undertake.

From these, it is clear that the main/general contractor cannot impose a subcontractor “changes in excess of 15% net addition to the contract amount”, cf NS 8417 paragraph 31.1 third paragraph, NS 8415 paragraph 22.1, third paragraph and NS 8416 paragraph 19.1, third paragraph.

“Net” addition means that one must also subtract any negative changes to determine if the limit of 15% of the contract amount has been reached. Consequently, it is not immediately possible to determine whether a claim for a positive change causes the threshold of 15% of the contract amount to be exceeded. In a number of cases, it will not be doubtful that the limit has been reached. while it may be more doubtful in others.

Here as otherwise, each party must take the risk of their own judgments.

Often, however, there will be no doubt that the modification expertise has been exhausted - even early in a project. This was the situation in a construction contract where the builder decided early on that the road body should be built from light masses (Glasopor) rather than blast stones from the plant. The reason for this was fear of sentences. In addition to the cost reduction for light landfills, additional costs were incurred for transporting and depositing the rock masses from the blasting works on the rock cutting. The additional cost of this order alone was substantially higher than 15% of the contract amount.

When the builder's modification skills are exhausted, the builder receives a challenge. It is certain right that the contractor may refuse to undertake modification works beyond 15% of the contract sum. If he refuses, the builder can engage another contractor to carry out the work, but that is rarely practical. Such an option will also entail significant additional costs. A new contractor will price the works according to current prices, costs for mobilization, rigging and operation will be added and the contractor will presumably calculate risks since the works will be carried out in parallel with others, etc.

In practice, therefore, the situation is most often solved by the contractor making an offer for new prices for modification works beyond the 15% limit. The developer may accept, refuse and/ or initiate negotiations. If the parties do not agree on new prices, the contractor will be entitled to the “gang price”. The consequence will therefore be that further changes will be priced according to current market prices.

This was established in a judgment of the Agder Court of Appeal of 11.9.2017, and reiterated in the judgment of the Borgarting Court of Appeal of 23.4.2024 (Nye Jordal Amfi).

In addition, it is often found that the limit of 15% net surcharge is increased to 25-30% net addition to the contract amount in the special contract terms.

5. Who can issue an amendment order?

In the case of ordinary amendments, this is given in the form of a written amendment order, and the person issuing the order must be either a representative of the main/general contractor or another person with written authorization to issue change orders, cf. NS 8417 paragraph 31.3, NS 8415 paragraph 22.3 and NS 8416 paragraph 19.2.

Other persons with a power of attorney may be, for example, a construction manager who has been authorized in writing to order changes within specified amount limits.

6. Briefly about change in the form of temporal rearrangement and consolidation

In all standard contracts there is a separate provision that the subcontractor is obliged to coordinate its progress and execution with others involved in the project.

The condition is that such coordination was foreseeable based on “the contract specifies the nature, scope and progress of the work”, the number of lateral contractors, etc., cf. NS 8417 paragraph 21.4, NS 8415 paragraph 18 and NS 8416 paragraph 17.

If the main/general contractor makes demands for coordination beyond the foreseeable, or a situation arises as a result of amending orders that make the subcontractor entitled to an extension of the deadline, a change may nevertheless be that the deadlines laid down by day are maintained.

This is further described in NS 8417 paragraph 31.2, NS 8415 paragraph 22.2 and NS 8416 paragraph 19.1.

In such cases, the subcontractor is forced to continue his work with the consequences that it has in terms of cost use.

Increased costs give the subcontractor the right to a remuneration adjustment and this is discussed in more detail in the article on “Remuneration adjustment”.

7. Especially about irregular changes

Normally, no particular challenges arise when the main/general contractor follows the general rule of the standard contracts regarding the issuance of change orders. At least not compared to the situation when subcontractors apply the rules on irregular changes.

The rules on irregular changes can be found in NS 8417 paragraphs 32.1-32.3, NS 8415 paragraphs 23.1-23.3 and NS 8416 paragraphs 19.3.

The essence of irregular change orders is that the subcontractor considers the main/general contractor to have given him a “injunction” to perform a work not covered by his contract worker, and where the order is not given as a “change order”.

Typically, it appears from, for example, a work drawing received from one of the general contractor's advisors, that the construction manager has given an instruction to carry out a specific work in a different way or at a different time than what the subcontractor had planned, or that the general contractor's representative has expressed something that a subcontractor perceives to be an order.

The various situations are described in more detail in NS 8417 paragraph 32.1, NS 8415 paragraph 23.1 and NS 8416 paragraph 19.3, first paragraph.

There are no formal requirements as to how such an order or instruction is made.

By contrast, the standards set out requirements for what the subcontractor should do when, or if, he believes to have received such an injunction that one perceives to represent a change.

This is particularly the case where the conditions for proper handling are substantially stricter in NS 8415 and NS 8417 than those stated in NS 8416.

It follows from NS 8417 paragraph 32.2 and NS 8415 paragraph 23.2 that the subcontractor must notify the main/general contractor “without undue residence” stating that he considers the injunction to represent an amendment.

This notice must be in writing, and it must be sent to the representative of the main/general contractor at any other, agreed address. We refer in this regard to NS 8417 point 5 “Notifications and requirements”, NS 8415 paragraph 8 “Notifications and requirements” and our article on this topic, read here.

We are often asked what is meant by “unjustified stay”.

The point is the subcontractor is granted a certain amount of time to undertake the investigations necessary to check whether what one believes is imposed deviates from the contract.

As you know, construction contracts are often very extensive, they can be complicated to understand and there may be a need to obtain expert assessments.

Therefore, the subcontractor is not supposed to investigate the possible consequences.

Besides the fact that the stay must be justified in this type of clarification, the subcontractor must react relatively quickly in terms of time.

A commonly used formulation is that with “without undue residence” It means that you have a few days at your disposal, but not weeks or months.

In other words, the subcontractor cannot leave it long before a notification is sent.

In this regard, it is also important to remember that claims for which the irregular change provides a basis are lost if the subcontractor does not comply with the notification requirement in respect of “without undue residence”. In this case, it follows from NS 8417 paragraph 32.2, first paragraph and NS 8415 paragraph 32.2 that the work in question is to be considered part of the subcontractor's contractual obligation.

The requirement of “without undue residence” is due to several conditions.

Perhaps the most important reason is that the main/general contractor needs to know that the subcontractor considers something to be an order for a change.

Changes usually have consequences for construction time, for the severance pay and so the work in question can cause the final result to differ from the originally agreed.

It is therefore important that the main/general contractor is informed about this so that he can clear up any misunderstandings. Another option is for him to change his mind.

A third option is for the main/general contractor to admit that an injunction was granted, but disputes that it represents a change.

The main/general contractor may believe that he has done nothing other than to ensure that the subcontractor performed the work in accordance with the contract.

When the general contractor receives a notification from the subcontractor, he must also respond to the subcontractor “without undue residence” if he disputes the notice.

The answer must be sent in writing to the representative of the subcontractor.

If this is not done, the work in question will be considered a change.

It is these rules that we call preclusive, since rights are lost if one does not follow them. We find these provisions in NS 8415 and NS 8417, but not in NS 8416.

8. What to do if you think the other person has notified or responded too late?

By “Notifications and requirements” in NS 8415 paragraph 8, third paragraph and NS 8417 paragraph 6, third paragraph, it is stated that if one “wish to make the case that the other party has notified or responded too late, must” one notifying the other of this “in writing without undue delay after receiving notice or reply”.

If one does not notify the other within the time limit, the original notification or reply shall “deemed to be given on time”.

By the way, we refer to the article on Notifications and Claims”.

9. Lawsuit Deadline

It follows from NS 8417 paragraph 35.2 that if the general subcontractor wants to maintain his claim that there is a change, or his claim for a remuneration adjustment or deadline extension where this is (also) in dispute, he must “take the necessary steps to initiate ordinary proceedings or arbitration” no later than 8 months after the takeover.

In a judgment of the Supreme Court of 24 April 2023 (HR-2023-00766-A), it was established that where the time limit for a settlement appeal is interrupted, and where the settlement proceedings are suspended, a subpoena must be issued within one year after the case was brought to the Conciliation Council. We have commented on the verdict here.

The same applies to execution conversions, see NS 8415 paragraph 26.3.

‍

Tilbake

Change orders and irregular changes

Kortversjonen

Lytt til artikkelen

1. Introduction

There is hardly a single construction project where there will be no changes along the way.

Any project is “tailor-made” and it is virtually impossible to foresee absolutely everything when drawing up a preliminary project. One can characterize a construction contract as a development contract and all parties involved must be prepared for the fact that there will be changes.

Changes can be caused by a variety of reasons.

They can be caused by orders for modified execution, but also rescheduling of work operations or forcing to recoup delays caused by circumstances of the general or general contractor's risk.

In some cases, situations also arise along the way where the subcontractor believes that there is an order or instruction that the subcontractor should perform something that is outside the contract. Often the total or general contractor will not agree, and then we are in the rules on irregular changes.

We will deal with these topics separately in this article.

2. Overview of the rules

Below we have prepared a matrix showing which provisions belong to this topic and where in the three standard contracts one finds them.

The provisions of NS 8417 paragraph 31, in NS 8415 paragraph 22 and NS 8416 paragraph 19 deal with change orders where the total or general contractor himself defines his order to subcontractor as an amendment.

The provisions of NS 8417 paragraph 32, NS 8415 paragraph 23 and NS 8416 paragraph 19.3 deal with the irregular situations in which the general contractor or general contractor has not issued an order for change, but where the subcontractor considers that such an order exists. These are called irregular changes.

Neither regular nor irregular changes need necessarily have consequences for the time available to the subcontractor to carry out his contract work, nor do they have to incur additional costs to the subcontractor.

With that said, most often changes will entail a requirement for a deadline extension and/ or additional compensation.

In experience, it is also the changes, and their consequences, that create the greatest disagreement between the parties to a construction contract.

The purpose of these articles is to provide a good enough overview, but without the topic being too extensive.

We have therefore separated the issues relating to both deadline extension and remuneration adjustment in our own articles.

3. What is a change?

Regardless of whether a change is initiated, it is important to know what is meant by the term “change”.

The definition of we find the standards where it is stated that a change may involve subcontracting a “shall provide something in addition to or in place of the originally agreed, that the nature, quality, nature or performance of the services shall be altered, or of the agreed benefits shall be discontinued”.

We refer in this regard to NS 8417 paragraph 31.1, second paragraph, NS 8415 paragraph 22.1, second paragraph, and NS 8416 paragraph 19.1, second paragraph.

At the same time, it follows from the standards that the change “must be in the context of what the contract includes”, see the third paragraph of the provisions.

In addition, there is a condition that the new or alternative performance is not “of a substantially different nature than the originally contracted work”.

Most of the time, none of this presents any challenges in practice.

With that said, in the case of quantities to be settled at unit prices, a change in the quantity relative to what was originally assumed would not be regarded as a change. An exception is made if the change in quantity is significant, but it takes a lot more. We are therefore not going into this here.

4. Limitation — 15% net of contract amount

In all three standard contracts, there is a limitation on the extent to which changes the subcontractor is obliged to undertake.

From these, it is clear that the main/general contractor cannot impose a subcontractor “changes in excess of 15% net addition to the contract amount”, cf NS 8417 paragraph 31.1 third paragraph, NS 8415 paragraph 22.1, third paragraph and NS 8416 paragraph 19.1, third paragraph.

“Net” addition means that one must also subtract any negative changes to determine if the limit of 15% of the contract amount has been reached. Consequently, it is not immediately possible to determine whether a claim for a positive change causes the threshold of 15% of the contract amount to be exceeded. In a number of cases, it will not be doubtful that the limit has been reached. while it may be more doubtful in others.

Here as otherwise, each party must take the risk of their own judgments.

Often, however, there will be no doubt that the modification expertise has been exhausted - even early in a project. This was the situation in a construction contract where the builder decided early on that the road body should be built from light masses (Glasopor) rather than blast stones from the plant. The reason for this was fear of sentences. In addition to the cost reduction for light landfills, additional costs were incurred for transporting and depositing the rock masses from the blasting works on the rock cutting. The additional cost of this order alone was substantially higher than 15% of the contract amount.

When the builder's modification skills are exhausted, the builder receives a challenge. It is certain right that the contractor may refuse to undertake modification works beyond 15% of the contract sum. If he refuses, the builder can engage another contractor to carry out the work, but that is rarely practical. Such an option will also entail significant additional costs. A new contractor will price the works according to current prices, costs for mobilization, rigging and operation will be added and the contractor will presumably calculate risks since the works will be carried out in parallel with others, etc.

In practice, therefore, the situation is most often solved by the contractor making an offer for new prices for modification works beyond the 15% limit. The developer may accept, refuse and/ or initiate negotiations. If the parties do not agree on new prices, the contractor will be entitled to the “gang price”. The consequence will therefore be that further changes will be priced according to current market prices.

This was established in a judgment of the Agder Court of Appeal of 11.9.2017, and reiterated in the judgment of the Borgarting Court of Appeal of 23.4.2024 (Nye Jordal Amfi).

In addition, it is often found that the limit of 15% net surcharge is increased to 25-30% net addition to the contract amount in the special contract terms.

5. Who can issue an amendment order?

In the case of ordinary amendments, this is given in the form of a written amendment order, and the person issuing the order must be either a representative of the main/general contractor or another person with written authorization to issue change orders, cf. NS 8417 paragraph 31.3, NS 8415 paragraph 22.3 and NS 8416 paragraph 19.2.

Other persons with a power of attorney may be, for example, a construction manager who has been authorized in writing to order changes within specified amount limits.

6. Briefly about change in the form of temporal rearrangement and consolidation

In all standard contracts there is a separate provision that the subcontractor is obliged to coordinate its progress and execution with others involved in the project.

The condition is that such coordination was foreseeable based on “the contract specifies the nature, scope and progress of the work”, the number of lateral contractors, etc., cf. NS 8417 paragraph 21.4, NS 8415 paragraph 18 and NS 8416 paragraph 17.

If the main/general contractor makes demands for coordination beyond the foreseeable, or a situation arises as a result of amending orders that make the subcontractor entitled to an extension of the deadline, a change may nevertheless be that the deadlines laid down by day are maintained.

This is further described in NS 8417 paragraph 31.2, NS 8415 paragraph 22.2 and NS 8416 paragraph 19.1.

In such cases, the subcontractor is forced to continue his work with the consequences that it has in terms of cost use.

Increased costs give the subcontractor the right to a remuneration adjustment and this is discussed in more detail in the article on “Remuneration adjustment”.

7. Especially about irregular changes

Normally, no particular challenges arise when the main/general contractor follows the general rule of the standard contracts regarding the issuance of change orders. At least not compared to the situation when subcontractors apply the rules on irregular changes.

The rules on irregular changes can be found in NS 8417 paragraphs 32.1-32.3, NS 8415 paragraphs 23.1-23.3 and NS 8416 paragraphs 19.3.

The essence of irregular change orders is that the subcontractor considers the main/general contractor to have given him a “injunction” to perform a work not covered by his contract worker, and where the order is not given as a “change order”.

Typically, it appears from, for example, a work drawing received from one of the general contractor's advisors, that the construction manager has given an instruction to carry out a specific work in a different way or at a different time than what the subcontractor had planned, or that the general contractor's representative has expressed something that a subcontractor perceives to be an order.

The various situations are described in more detail in NS 8417 paragraph 32.1, NS 8415 paragraph 23.1 and NS 8416 paragraph 19.3, first paragraph.

There are no formal requirements as to how such an order or instruction is made.

By contrast, the standards set out requirements for what the subcontractor should do when, or if, he believes to have received such an injunction that one perceives to represent a change.

This is particularly the case where the conditions for proper handling are substantially stricter in NS 8415 and NS 8417 than those stated in NS 8416.

It follows from NS 8417 paragraph 32.2 and NS 8415 paragraph 23.2 that the subcontractor must notify the main/general contractor “without undue residence” stating that he considers the injunction to represent an amendment.

This notice must be in writing, and it must be sent to the representative of the main/general contractor at any other, agreed address. We refer in this regard to NS 8417 point 5 “Notifications and requirements”, NS 8415 paragraph 8 “Notifications and requirements” and our article on this topic, read here.

We are often asked what is meant by “unjustified stay”.

The point is the subcontractor is granted a certain amount of time to undertake the investigations necessary to check whether what one believes is imposed deviates from the contract.

As you know, construction contracts are often very extensive, they can be complicated to understand and there may be a need to obtain expert assessments.

Therefore, the subcontractor is not supposed to investigate the possible consequences.

Besides the fact that the stay must be justified in this type of clarification, the subcontractor must react relatively quickly in terms of time.

A commonly used formulation is that with “without undue residence” It means that you have a few days at your disposal, but not weeks or months.

In other words, the subcontractor cannot leave it long before a notification is sent.

In this regard, it is also important to remember that claims for which the irregular change provides a basis are lost if the subcontractor does not comply with the notification requirement in respect of “without undue residence”. In this case, it follows from NS 8417 paragraph 32.2, first paragraph and NS 8415 paragraph 32.2 that the work in question is to be considered part of the subcontractor's contractual obligation.

The requirement of “without undue residence” is due to several conditions.

Perhaps the most important reason is that the main/general contractor needs to know that the subcontractor considers something to be an order for a change.

Changes usually have consequences for construction time, for the severance pay and so the work in question can cause the final result to differ from the originally agreed.

It is therefore important that the main/general contractor is informed about this so that he can clear up any misunderstandings. Another option is for him to change his mind.

A third option is for the main/general contractor to admit that an injunction was granted, but disputes that it represents a change.

The main/general contractor may believe that he has done nothing other than to ensure that the subcontractor performed the work in accordance with the contract.

When the general contractor receives a notification from the subcontractor, he must also respond to the subcontractor “without undue residence” if he disputes the notice.

The answer must be sent in writing to the representative of the subcontractor.

If this is not done, the work in question will be considered a change.

It is these rules that we call preclusive, since rights are lost if one does not follow them. We find these provisions in NS 8415 and NS 8417, but not in NS 8416.

8. What to do if you think the other person has notified or responded too late?

By “Notifications and requirements” in NS 8415 paragraph 8, third paragraph and NS 8417 paragraph 6, third paragraph, it is stated that if one “wish to make the case that the other party has notified or responded too late, must” one notifying the other of this “in writing without undue delay after receiving notice or reply”.

If one does not notify the other within the time limit, the original notification or reply shall “deemed to be given on time”.

By the way, we refer to the article on Notifications and Claims”.

9. Lawsuit Deadline

It follows from NS 8417 paragraph 35.2 that if the general subcontractor wants to maintain his claim that there is a change, or his claim for a remuneration adjustment or deadline extension where this is (also) in dispute, he must “take the necessary steps to initiate ordinary proceedings or arbitration” no later than 8 months after the takeover.

In a judgment of the Supreme Court of 24 April 2023 (HR-2023-00766-A), it was established that where the time limit for a settlement appeal is interrupted, and where the settlement proceedings are suspended, a subpoena must be issued within one year after the case was brought to the Conciliation Council. We have commented on the verdict here.

The same applies to execution conversions, see NS 8415 paragraph 26.3.

‍

Tilbake

Change orders and irregular changes

Kortversjonen

Lytt til artikkelen

1. Introduction

There is hardly a single construction project where there will be no changes along the way.

Any project is “tailor-made” and it is virtually impossible to foresee absolutely everything when drawing up a preliminary project. One can characterize a construction contract as a development contract and all parties involved must be prepared for the fact that there will be changes.

Changes can be caused by a variety of reasons.

They can be caused by orders for modified execution, but also rescheduling of work operations or forcing to recoup delays caused by circumstances of the general or general contractor's risk.

In some cases, situations also arise along the way where the subcontractor believes that there is an order or instruction that the subcontractor should perform something that is outside the contract. Often the total or general contractor will not agree, and then we are in the rules on irregular changes.

We will deal with these topics separately in this article.

2. Overview of the rules

Below we have prepared a matrix showing which provisions belong to this topic and where in the three standard contracts one finds them.

The provisions of NS 8417 paragraph 31, in NS 8415 paragraph 22 and NS 8416 paragraph 19 deal with change orders where the total or general contractor himself defines his order to subcontractor as an amendment.

The provisions of NS 8417 paragraph 32, NS 8415 paragraph 23 and NS 8416 paragraph 19.3 deal with the irregular situations in which the general contractor or general contractor has not issued an order for change, but where the subcontractor considers that such an order exists. These are called irregular changes.

Neither regular nor irregular changes need necessarily have consequences for the time available to the subcontractor to carry out his contract work, nor do they have to incur additional costs to the subcontractor.

With that said, most often changes will entail a requirement for a deadline extension and/ or additional compensation.

In experience, it is also the changes, and their consequences, that create the greatest disagreement between the parties to a construction contract.

The purpose of these articles is to provide a good enough overview, but without the topic being too extensive.

We have therefore separated the issues relating to both deadline extension and remuneration adjustment in our own articles.

3. What is a change?

Regardless of whether a change is initiated, it is important to know what is meant by the term “change”.

The definition of we find the standards where it is stated that a change may involve subcontracting a “shall provide something in addition to or in place of the originally agreed, that the nature, quality, nature or performance of the services shall be altered, or of the agreed benefits shall be discontinued”.

We refer in this regard to NS 8417 paragraph 31.1, second paragraph, NS 8415 paragraph 22.1, second paragraph, and NS 8416 paragraph 19.1, second paragraph.

At the same time, it follows from the standards that the change “must be in the context of what the contract includes”, see the third paragraph of the provisions.

In addition, there is a condition that the new or alternative performance is not “of a substantially different nature than the originally contracted work”.

Most of the time, none of this presents any challenges in practice.

With that said, in the case of quantities to be settled at unit prices, a change in the quantity relative to what was originally assumed would not be regarded as a change. An exception is made if the change in quantity is significant, but it takes a lot more. We are therefore not going into this here.

4. Limitation — 15% net of contract amount

In all three standard contracts, there is a limitation on the extent to which changes the subcontractor is obliged to undertake.

From these, it is clear that the main/general contractor cannot impose a subcontractor “changes in excess of 15% net addition to the contract amount”, cf NS 8417 paragraph 31.1 third paragraph, NS 8415 paragraph 22.1, third paragraph and NS 8416 paragraph 19.1, third paragraph.

“Net” addition means that one must also subtract any negative changes to determine if the limit of 15% of the contract amount has been reached. Consequently, it is not immediately possible to determine whether a claim for a positive change causes the threshold of 15% of the contract amount to be exceeded. In a number of cases, it will not be doubtful that the limit has been reached. while it may be more doubtful in others.

Here as otherwise, each party must take the risk of their own judgments.

Often, however, there will be no doubt that the modification expertise has been exhausted - even early in a project. This was the situation in a construction contract where the builder decided early on that the road body should be built from light masses (Glasopor) rather than blast stones from the plant. The reason for this was fear of sentences. In addition to the cost reduction for light landfills, additional costs were incurred for transporting and depositing the rock masses from the blasting works on the rock cutting. The additional cost of this order alone was substantially higher than 15% of the contract amount.

When the builder's modification skills are exhausted, the builder receives a challenge. It is certain right that the contractor may refuse to undertake modification works beyond 15% of the contract sum. If he refuses, the builder can engage another contractor to carry out the work, but that is rarely practical. Such an option will also entail significant additional costs. A new contractor will price the works according to current prices, costs for mobilization, rigging and operation will be added and the contractor will presumably calculate risks since the works will be carried out in parallel with others, etc.

In practice, therefore, the situation is most often solved by the contractor making an offer for new prices for modification works beyond the 15% limit. The developer may accept, refuse and/ or initiate negotiations. If the parties do not agree on new prices, the contractor will be entitled to the “gang price”. The consequence will therefore be that further changes will be priced according to current market prices.

This was established in a judgment of the Agder Court of Appeal of 11.9.2017, and reiterated in the judgment of the Borgarting Court of Appeal of 23.4.2024 (Nye Jordal Amfi).

In addition, it is often found that the limit of 15% net surcharge is increased to 25-30% net addition to the contract amount in the special contract terms.

5. Who can issue an amendment order?

In the case of ordinary amendments, this is given in the form of a written amendment order, and the person issuing the order must be either a representative of the main/general contractor or another person with written authorization to issue change orders, cf. NS 8417 paragraph 31.3, NS 8415 paragraph 22.3 and NS 8416 paragraph 19.2.

Other persons with a power of attorney may be, for example, a construction manager who has been authorized in writing to order changes within specified amount limits.

6. Briefly about change in the form of temporal rearrangement and consolidation

In all standard contracts there is a separate provision that the subcontractor is obliged to coordinate its progress and execution with others involved in the project.

The condition is that such coordination was foreseeable based on “the contract specifies the nature, scope and progress of the work”, the number of lateral contractors, etc., cf. NS 8417 paragraph 21.4, NS 8415 paragraph 18 and NS 8416 paragraph 17.

If the main/general contractor makes demands for coordination beyond the foreseeable, or a situation arises as a result of amending orders that make the subcontractor entitled to an extension of the deadline, a change may nevertheless be that the deadlines laid down by day are maintained.

This is further described in NS 8417 paragraph 31.2, NS 8415 paragraph 22.2 and NS 8416 paragraph 19.1.

In such cases, the subcontractor is forced to continue his work with the consequences that it has in terms of cost use.

Increased costs give the subcontractor the right to a remuneration adjustment and this is discussed in more detail in the article on “Remuneration adjustment”.

7. Especially about irregular changes

Normally, no particular challenges arise when the main/general contractor follows the general rule of the standard contracts regarding the issuance of change orders. At least not compared to the situation when subcontractors apply the rules on irregular changes.

The rules on irregular changes can be found in NS 8417 paragraphs 32.1-32.3, NS 8415 paragraphs 23.1-23.3 and NS 8416 paragraphs 19.3.

The essence of irregular change orders is that the subcontractor considers the main/general contractor to have given him a “injunction” to perform a work not covered by his contract worker, and where the order is not given as a “change order”.

Typically, it appears from, for example, a work drawing received from one of the general contractor's advisors, that the construction manager has given an instruction to carry out a specific work in a different way or at a different time than what the subcontractor had planned, or that the general contractor's representative has expressed something that a subcontractor perceives to be an order.

The various situations are described in more detail in NS 8417 paragraph 32.1, NS 8415 paragraph 23.1 and NS 8416 paragraph 19.3, first paragraph.

There are no formal requirements as to how such an order or instruction is made.

By contrast, the standards set out requirements for what the subcontractor should do when, or if, he believes to have received such an injunction that one perceives to represent a change.

This is particularly the case where the conditions for proper handling are substantially stricter in NS 8415 and NS 8417 than those stated in NS 8416.

It follows from NS 8417 paragraph 32.2 and NS 8415 paragraph 23.2 that the subcontractor must notify the main/general contractor “without undue residence” stating that he considers the injunction to represent an amendment.

This notice must be in writing, and it must be sent to the representative of the main/general contractor at any other, agreed address. We refer in this regard to NS 8417 point 5 “Notifications and requirements”, NS 8415 paragraph 8 “Notifications and requirements” and our article on this topic, read here.

We are often asked what is meant by “unjustified stay”.

The point is the subcontractor is granted a certain amount of time to undertake the investigations necessary to check whether what one believes is imposed deviates from the contract.

As you know, construction contracts are often very extensive, they can be complicated to understand and there may be a need to obtain expert assessments.

Therefore, the subcontractor is not supposed to investigate the possible consequences.

Besides the fact that the stay must be justified in this type of clarification, the subcontractor must react relatively quickly in terms of time.

A commonly used formulation is that with “without undue residence” It means that you have a few days at your disposal, but not weeks or months.

In other words, the subcontractor cannot leave it long before a notification is sent.

In this regard, it is also important to remember that claims for which the irregular change provides a basis are lost if the subcontractor does not comply with the notification requirement in respect of “without undue residence”. In this case, it follows from NS 8417 paragraph 32.2, first paragraph and NS 8415 paragraph 32.2 that the work in question is to be considered part of the subcontractor's contractual obligation.

The requirement of “without undue residence” is due to several conditions.

Perhaps the most important reason is that the main/general contractor needs to know that the subcontractor considers something to be an order for a change.

Changes usually have consequences for construction time, for the severance pay and so the work in question can cause the final result to differ from the originally agreed.

It is therefore important that the main/general contractor is informed about this so that he can clear up any misunderstandings. Another option is for him to change his mind.

A third option is for the main/general contractor to admit that an injunction was granted, but disputes that it represents a change.

The main/general contractor may believe that he has done nothing other than to ensure that the subcontractor performed the work in accordance with the contract.

When the general contractor receives a notification from the subcontractor, he must also respond to the subcontractor “without undue residence” if he disputes the notice.

The answer must be sent in writing to the representative of the subcontractor.

If this is not done, the work in question will be considered a change.

It is these rules that we call preclusive, since rights are lost if one does not follow them. We find these provisions in NS 8415 and NS 8417, but not in NS 8416.

8. What to do if you think the other person has notified or responded too late?

By “Notifications and requirements” in NS 8415 paragraph 8, third paragraph and NS 8417 paragraph 6, third paragraph, it is stated that if one “wish to make the case that the other party has notified or responded too late, must” one notifying the other of this “in writing without undue delay after receiving notice or reply”.

If one does not notify the other within the time limit, the original notification or reply shall “deemed to be given on time”.

By the way, we refer to the article on Notifications and Claims”.

9. Lawsuit Deadline

It follows from NS 8417 paragraph 35.2 that if the general subcontractor wants to maintain his claim that there is a change, or his claim for a remuneration adjustment or deadline extension where this is (also) in dispute, he must “take the necessary steps to initiate ordinary proceedings or arbitration” no later than 8 months after the takeover.

In a judgment of the Supreme Court of 24 April 2023 (HR-2023-00766-A), it was established that where the time limit for a settlement appeal is interrupted, and where the settlement proceedings are suspended, a subpoena must be issued within one year after the case was brought to the Conciliation Council. We have commented on the verdict here.

The same applies to execution conversions, see NS 8415 paragraph 26.3.

‍

Change orders and irregular changes

Kortversjonen

Lytt til artikkelen

1. Introduction

There is hardly a single construction project where there will be no changes along the way.

Any project is “tailor-made” and it is virtually impossible to foresee absolutely everything when drawing up a preliminary project. One can characterize a construction contract as a development contract and all parties involved must be prepared for the fact that there will be changes.

Changes can be caused by a variety of reasons.

They can be caused by orders for modified execution, but also rescheduling of work operations or forcing to recoup delays caused by circumstances of the general or general contractor's risk.

In some cases, situations also arise along the way where the subcontractor believes that there is an order or instruction that the subcontractor should perform something that is outside the contract. Often the total or general contractor will not agree, and then we are in the rules on irregular changes.

We will deal with these topics separately in this article.

2. Overview of the rules

Below we have prepared a matrix showing which provisions belong to this topic and where in the three standard contracts one finds them.

The provisions of NS 8417 paragraph 31, in NS 8415 paragraph 22 and NS 8416 paragraph 19 deal with change orders where the total or general contractor himself defines his order to subcontractor as an amendment.

The provisions of NS 8417 paragraph 32, NS 8415 paragraph 23 and NS 8416 paragraph 19.3 deal with the irregular situations in which the general contractor or general contractor has not issued an order for change, but where the subcontractor considers that such an order exists. These are called irregular changes.

Neither regular nor irregular changes need necessarily have consequences for the time available to the subcontractor to carry out his contract work, nor do they have to incur additional costs to the subcontractor.

With that said, most often changes will entail a requirement for a deadline extension and/ or additional compensation.

In experience, it is also the changes, and their consequences, that create the greatest disagreement between the parties to a construction contract.

The purpose of these articles is to provide a good enough overview, but without the topic being too extensive.

We have therefore separated the issues relating to both deadline extension and remuneration adjustment in our own articles.

3. What is a change?

Regardless of whether a change is initiated, it is important to know what is meant by the term “change”.

The definition of we find the standards where it is stated that a change may involve subcontracting a “shall provide something in addition to or in place of the originally agreed, that the nature, quality, nature or performance of the services shall be altered, or of the agreed benefits shall be discontinued”.

We refer in this regard to NS 8417 paragraph 31.1, second paragraph, NS 8415 paragraph 22.1, second paragraph, and NS 8416 paragraph 19.1, second paragraph.

At the same time, it follows from the standards that the change “must be in the context of what the contract includes”, see the third paragraph of the provisions.

In addition, there is a condition that the new or alternative performance is not “of a substantially different nature than the originally contracted work”.

Most of the time, none of this presents any challenges in practice.

With that said, in the case of quantities to be settled at unit prices, a change in the quantity relative to what was originally assumed would not be regarded as a change. An exception is made if the change in quantity is significant, but it takes a lot more. We are therefore not going into this here.

4. Limitation — 15% net of contract amount

In all three standard contracts, there is a limitation on the extent to which changes the subcontractor is obliged to undertake.

From these, it is clear that the main/general contractor cannot impose a subcontractor “changes in excess of 15% net addition to the contract amount”, cf NS 8417 paragraph 31.1 third paragraph, NS 8415 paragraph 22.1, third paragraph and NS 8416 paragraph 19.1, third paragraph.

“Net” addition means that one must also subtract any negative changes to determine if the limit of 15% of the contract amount has been reached. Consequently, it is not immediately possible to determine whether a claim for a positive change causes the threshold of 15% of the contract amount to be exceeded. In a number of cases, it will not be doubtful that the limit has been reached. while it may be more doubtful in others.

Here as otherwise, each party must take the risk of their own judgments.

Often, however, there will be no doubt that the modification expertise has been exhausted - even early in a project. This was the situation in a construction contract where the builder decided early on that the road body should be built from light masses (Glasopor) rather than blast stones from the plant. The reason for this was fear of sentences. In addition to the cost reduction for light landfills, additional costs were incurred for transporting and depositing the rock masses from the blasting works on the rock cutting. The additional cost of this order alone was substantially higher than 15% of the contract amount.

When the builder's modification skills are exhausted, the builder receives a challenge. It is certain right that the contractor may refuse to undertake modification works beyond 15% of the contract sum. If he refuses, the builder can engage another contractor to carry out the work, but that is rarely practical. Such an option will also entail significant additional costs. A new contractor will price the works according to current prices, costs for mobilization, rigging and operation will be added and the contractor will presumably calculate risks since the works will be carried out in parallel with others, etc.

In practice, therefore, the situation is most often solved by the contractor making an offer for new prices for modification works beyond the 15% limit. The developer may accept, refuse and/ or initiate negotiations. If the parties do not agree on new prices, the contractor will be entitled to the “gang price”. The consequence will therefore be that further changes will be priced according to current market prices.

This was established in a judgment of the Agder Court of Appeal of 11.9.2017, and reiterated in the judgment of the Borgarting Court of Appeal of 23.4.2024 (Nye Jordal Amfi).

In addition, it is often found that the limit of 15% net surcharge is increased to 25-30% net addition to the contract amount in the special contract terms.

5. Who can issue an amendment order?

In the case of ordinary amendments, this is given in the form of a written amendment order, and the person issuing the order must be either a representative of the main/general contractor or another person with written authorization to issue change orders, cf. NS 8417 paragraph 31.3, NS 8415 paragraph 22.3 and NS 8416 paragraph 19.2.

Other persons with a power of attorney may be, for example, a construction manager who has been authorized in writing to order changes within specified amount limits.

6. Briefly about change in the form of temporal rearrangement and consolidation

In all standard contracts there is a separate provision that the subcontractor is obliged to coordinate its progress and execution with others involved in the project.

The condition is that such coordination was foreseeable based on “the contract specifies the nature, scope and progress of the work”, the number of lateral contractors, etc., cf. NS 8417 paragraph 21.4, NS 8415 paragraph 18 and NS 8416 paragraph 17.

If the main/general contractor makes demands for coordination beyond the foreseeable, or a situation arises as a result of amending orders that make the subcontractor entitled to an extension of the deadline, a change may nevertheless be that the deadlines laid down by day are maintained.

This is further described in NS 8417 paragraph 31.2, NS 8415 paragraph 22.2 and NS 8416 paragraph 19.1.

In such cases, the subcontractor is forced to continue his work with the consequences that it has in terms of cost use.

Increased costs give the subcontractor the right to a remuneration adjustment and this is discussed in more detail in the article on “Remuneration adjustment”.

7. Especially about irregular changes

Normally, no particular challenges arise when the main/general contractor follows the general rule of the standard contracts regarding the issuance of change orders. At least not compared to the situation when subcontractors apply the rules on irregular changes.

The rules on irregular changes can be found in NS 8417 paragraphs 32.1-32.3, NS 8415 paragraphs 23.1-23.3 and NS 8416 paragraphs 19.3.

The essence of irregular change orders is that the subcontractor considers the main/general contractor to have given him a “injunction” to perform a work not covered by his contract worker, and where the order is not given as a “change order”.

Typically, it appears from, for example, a work drawing received from one of the general contractor's advisors, that the construction manager has given an instruction to carry out a specific work in a different way or at a different time than what the subcontractor had planned, or that the general contractor's representative has expressed something that a subcontractor perceives to be an order.

The various situations are described in more detail in NS 8417 paragraph 32.1, NS 8415 paragraph 23.1 and NS 8416 paragraph 19.3, first paragraph.

There are no formal requirements as to how such an order or instruction is made.

By contrast, the standards set out requirements for what the subcontractor should do when, or if, he believes to have received such an injunction that one perceives to represent a change.

This is particularly the case where the conditions for proper handling are substantially stricter in NS 8415 and NS 8417 than those stated in NS 8416.

It follows from NS 8417 paragraph 32.2 and NS 8415 paragraph 23.2 that the subcontractor must notify the main/general contractor “without undue residence” stating that he considers the injunction to represent an amendment.

This notice must be in writing, and it must be sent to the representative of the main/general contractor at any other, agreed address. We refer in this regard to NS 8417 point 5 “Notifications and requirements”, NS 8415 paragraph 8 “Notifications and requirements” and our article on this topic, read here.

We are often asked what is meant by “unjustified stay”.

The point is the subcontractor is granted a certain amount of time to undertake the investigations necessary to check whether what one believes is imposed deviates from the contract.

As you know, construction contracts are often very extensive, they can be complicated to understand and there may be a need to obtain expert assessments.

Therefore, the subcontractor is not supposed to investigate the possible consequences.

Besides the fact that the stay must be justified in this type of clarification, the subcontractor must react relatively quickly in terms of time.

A commonly used formulation is that with “without undue residence” It means that you have a few days at your disposal, but not weeks or months.

In other words, the subcontractor cannot leave it long before a notification is sent.

In this regard, it is also important to remember that claims for which the irregular change provides a basis are lost if the subcontractor does not comply with the notification requirement in respect of “without undue residence”. In this case, it follows from NS 8417 paragraph 32.2, first paragraph and NS 8415 paragraph 32.2 that the work in question is to be considered part of the subcontractor's contractual obligation.

The requirement of “without undue residence” is due to several conditions.

Perhaps the most important reason is that the main/general contractor needs to know that the subcontractor considers something to be an order for a change.

Changes usually have consequences for construction time, for the severance pay and so the work in question can cause the final result to differ from the originally agreed.

It is therefore important that the main/general contractor is informed about this so that he can clear up any misunderstandings. Another option is for him to change his mind.

A third option is for the main/general contractor to admit that an injunction was granted, but disputes that it represents a change.

The main/general contractor may believe that he has done nothing other than to ensure that the subcontractor performed the work in accordance with the contract.

When the general contractor receives a notification from the subcontractor, he must also respond to the subcontractor “without undue residence” if he disputes the notice.

The answer must be sent in writing to the representative of the subcontractor.

If this is not done, the work in question will be considered a change.

It is these rules that we call preclusive, since rights are lost if one does not follow them. We find these provisions in NS 8415 and NS 8417, but not in NS 8416.

8. What to do if you think the other person has notified or responded too late?

By “Notifications and requirements” in NS 8415 paragraph 8, third paragraph and NS 8417 paragraph 6, third paragraph, it is stated that if one “wish to make the case that the other party has notified or responded too late, must” one notifying the other of this “in writing without undue delay after receiving notice or reply”.

If one does not notify the other within the time limit, the original notification or reply shall “deemed to be given on time”.

By the way, we refer to the article on Notifications and Claims”.

9. Lawsuit Deadline

It follows from NS 8417 paragraph 35.2 that if the general subcontractor wants to maintain his claim that there is a change, or his claim for a remuneration adjustment or deadline extension where this is (also) in dispute, he must “take the necessary steps to initiate ordinary proceedings or arbitration” no later than 8 months after the takeover.

In a judgment of the Supreme Court of 24 April 2023 (HR-2023-00766-A), it was established that where the time limit for a settlement appeal is interrupted, and where the settlement proceedings are suspended, a subpoena must be issued within one year after the case was brought to the Conciliation Council. We have commented on the verdict here.

The same applies to execution conversions, see NS 8415 paragraph 26.3.

‍

Change orders and irregular changes

Kortversjonen

1. Introduction

There is hardly a single construction project where there will be no changes along the way.

Any project is “tailor-made” and it is virtually impossible to foresee absolutely everything when drawing up a preliminary project. One can characterize a construction contract as a development contract and all parties involved must be prepared for the fact that there will be changes.

Changes can be caused by a variety of reasons.

They can be caused by orders for modified execution, but also rescheduling of work operations or forcing to recoup delays caused by circumstances of the general or general contractor's risk.

In some cases, situations also arise along the way where the subcontractor believes that there is an order or instruction that the subcontractor should perform something that is outside the contract. Often the total or general contractor will not agree, and then we are in the rules on irregular changes.

We will deal with these topics separately in this article.

2. Overview of the rules

Below we have prepared a matrix showing which provisions belong to this topic and where in the three standard contracts one finds them.

The provisions of NS 8417 paragraph 31, in NS 8415 paragraph 22 and NS 8416 paragraph 19 deal with change orders where the total or general contractor himself defines his order to subcontractor as an amendment.

The provisions of NS 8417 paragraph 32, NS 8415 paragraph 23 and NS 8416 paragraph 19.3 deal with the irregular situations in which the general contractor or general contractor has not issued an order for change, but where the subcontractor considers that such an order exists. These are called irregular changes.

Neither regular nor irregular changes need necessarily have consequences for the time available to the subcontractor to carry out his contract work, nor do they have to incur additional costs to the subcontractor.

With that said, most often changes will entail a requirement for a deadline extension and/ or additional compensation.

In experience, it is also the changes, and their consequences, that create the greatest disagreement between the parties to a construction contract.

The purpose of these articles is to provide a good enough overview, but without the topic being too extensive.

We have therefore separated the issues relating to both deadline extension and remuneration adjustment in our own articles.

3. What is a change?

Regardless of whether a change is initiated, it is important to know what is meant by the term “change”.

The definition of we find the standards where it is stated that a change may involve subcontracting a “shall provide something in addition to or in place of the originally agreed, that the nature, quality, nature or performance of the services shall be altered, or of the agreed benefits shall be discontinued”.

We refer in this regard to NS 8417 paragraph 31.1, second paragraph, NS 8415 paragraph 22.1, second paragraph, and NS 8416 paragraph 19.1, second paragraph.

At the same time, it follows from the standards that the change “must be in the context of what the contract includes”, see the third paragraph of the provisions.

In addition, there is a condition that the new or alternative performance is not “of a substantially different nature than the originally contracted work”.

Most of the time, none of this presents any challenges in practice.

With that said, in the case of quantities to be settled at unit prices, a change in the quantity relative to what was originally assumed would not be regarded as a change. An exception is made if the change in quantity is significant, but it takes a lot more. We are therefore not going into this here.

4. Limitation — 15% net of contract amount

In all three standard contracts, there is a limitation on the extent to which changes the subcontractor is obliged to undertake.

From these, it is clear that the main/general contractor cannot impose a subcontractor “changes in excess of 15% net addition to the contract amount”, cf NS 8417 paragraph 31.1 third paragraph, NS 8415 paragraph 22.1, third paragraph and NS 8416 paragraph 19.1, third paragraph.

“Net” addition means that one must also subtract any negative changes to determine if the limit of 15% of the contract amount has been reached. Consequently, it is not immediately possible to determine whether a claim for a positive change causes the threshold of 15% of the contract amount to be exceeded. In a number of cases, it will not be doubtful that the limit has been reached. while it may be more doubtful in others.

Here as otherwise, each party must take the risk of their own judgments.

Often, however, there will be no doubt that the modification expertise has been exhausted - even early in a project. This was the situation in a construction contract where the builder decided early on that the road body should be built from light masses (Glasopor) rather than blast stones from the plant. The reason for this was fear of sentences. In addition to the cost reduction for light landfills, additional costs were incurred for transporting and depositing the rock masses from the blasting works on the rock cutting. The additional cost of this order alone was substantially higher than 15% of the contract amount.

When the builder's modification skills are exhausted, the builder receives a challenge. It is certain right that the contractor may refuse to undertake modification works beyond 15% of the contract sum. If he refuses, the builder can engage another contractor to carry out the work, but that is rarely practical. Such an option will also entail significant additional costs. A new contractor will price the works according to current prices, costs for mobilization, rigging and operation will be added and the contractor will presumably calculate risks since the works will be carried out in parallel with others, etc.

In practice, therefore, the situation is most often solved by the contractor making an offer for new prices for modification works beyond the 15% limit. The developer may accept, refuse and/ or initiate negotiations. If the parties do not agree on new prices, the contractor will be entitled to the “gang price”. The consequence will therefore be that further changes will be priced according to current market prices.

This was established in a judgment of the Agder Court of Appeal of 11.9.2017, and reiterated in the judgment of the Borgarting Court of Appeal of 23.4.2024 (Nye Jordal Amfi).

In addition, it is often found that the limit of 15% net surcharge is increased to 25-30% net addition to the contract amount in the special contract terms.

5. Who can issue an amendment order?

In the case of ordinary amendments, this is given in the form of a written amendment order, and the person issuing the order must be either a representative of the main/general contractor or another person with written authorization to issue change orders, cf. NS 8417 paragraph 31.3, NS 8415 paragraph 22.3 and NS 8416 paragraph 19.2.

Other persons with a power of attorney may be, for example, a construction manager who has been authorized in writing to order changes within specified amount limits.

6. Briefly about change in the form of temporal rearrangement and consolidation

In all standard contracts there is a separate provision that the subcontractor is obliged to coordinate its progress and execution with others involved in the project.

The condition is that such coordination was foreseeable based on “the contract specifies the nature, scope and progress of the work”, the number of lateral contractors, etc., cf. NS 8417 paragraph 21.4, NS 8415 paragraph 18 and NS 8416 paragraph 17.

If the main/general contractor makes demands for coordination beyond the foreseeable, or a situation arises as a result of amending orders that make the subcontractor entitled to an extension of the deadline, a change may nevertheless be that the deadlines laid down by day are maintained.

This is further described in NS 8417 paragraph 31.2, NS 8415 paragraph 22.2 and NS 8416 paragraph 19.1.

In such cases, the subcontractor is forced to continue his work with the consequences that it has in terms of cost use.

Increased costs give the subcontractor the right to a remuneration adjustment and this is discussed in more detail in the article on “Remuneration adjustment”.

7. Especially about irregular changes

Normally, no particular challenges arise when the main/general contractor follows the general rule of the standard contracts regarding the issuance of change orders. At least not compared to the situation when subcontractors apply the rules on irregular changes.

The rules on irregular changes can be found in NS 8417 paragraphs 32.1-32.3, NS 8415 paragraphs 23.1-23.3 and NS 8416 paragraphs 19.3.

The essence of irregular change orders is that the subcontractor considers the main/general contractor to have given him a “injunction” to perform a work not covered by his contract worker, and where the order is not given as a “change order”.

Typically, it appears from, for example, a work drawing received from one of the general contractor's advisors, that the construction manager has given an instruction to carry out a specific work in a different way or at a different time than what the subcontractor had planned, or that the general contractor's representative has expressed something that a subcontractor perceives to be an order.

The various situations are described in more detail in NS 8417 paragraph 32.1, NS 8415 paragraph 23.1 and NS 8416 paragraph 19.3, first paragraph.

There are no formal requirements as to how such an order or instruction is made.

By contrast, the standards set out requirements for what the subcontractor should do when, or if, he believes to have received such an injunction that one perceives to represent a change.

This is particularly the case where the conditions for proper handling are substantially stricter in NS 8415 and NS 8417 than those stated in NS 8416.

It follows from NS 8417 paragraph 32.2 and NS 8415 paragraph 23.2 that the subcontractor must notify the main/general contractor “without undue residence” stating that he considers the injunction to represent an amendment.

This notice must be in writing, and it must be sent to the representative of the main/general contractor at any other, agreed address. We refer in this regard to NS 8417 point 5 “Notifications and requirements”, NS 8415 paragraph 8 “Notifications and requirements” and our article on this topic, read here.

We are often asked what is meant by “unjustified stay”.

The point is the subcontractor is granted a certain amount of time to undertake the investigations necessary to check whether what one believes is imposed deviates from the contract.

As you know, construction contracts are often very extensive, they can be complicated to understand and there may be a need to obtain expert assessments.

Therefore, the subcontractor is not supposed to investigate the possible consequences.

Besides the fact that the stay must be justified in this type of clarification, the subcontractor must react relatively quickly in terms of time.

A commonly used formulation is that with “without undue residence” It means that you have a few days at your disposal, but not weeks or months.

In other words, the subcontractor cannot leave it long before a notification is sent.

In this regard, it is also important to remember that claims for which the irregular change provides a basis are lost if the subcontractor does not comply with the notification requirement in respect of “without undue residence”. In this case, it follows from NS 8417 paragraph 32.2, first paragraph and NS 8415 paragraph 32.2 that the work in question is to be considered part of the subcontractor's contractual obligation.

The requirement of “without undue residence” is due to several conditions.

Perhaps the most important reason is that the main/general contractor needs to know that the subcontractor considers something to be an order for a change.

Changes usually have consequences for construction time, for the severance pay and so the work in question can cause the final result to differ from the originally agreed.

It is therefore important that the main/general contractor is informed about this so that he can clear up any misunderstandings. Another option is for him to change his mind.

A third option is for the main/general contractor to admit that an injunction was granted, but disputes that it represents a change.

The main/general contractor may believe that he has done nothing other than to ensure that the subcontractor performed the work in accordance with the contract.

When the general contractor receives a notification from the subcontractor, he must also respond to the subcontractor “without undue residence” if he disputes the notice.

The answer must be sent in writing to the representative of the subcontractor.

If this is not done, the work in question will be considered a change.

It is these rules that we call preclusive, since rights are lost if one does not follow them. We find these provisions in NS 8415 and NS 8417, but not in NS 8416.

8. What to do if you think the other person has notified or responded too late?

By “Notifications and requirements” in NS 8415 paragraph 8, third paragraph and NS 8417 paragraph 6, third paragraph, it is stated that if one “wish to make the case that the other party has notified or responded too late, must” one notifying the other of this “in writing without undue delay after receiving notice or reply”.

If one does not notify the other within the time limit, the original notification or reply shall “deemed to be given on time”.

By the way, we refer to the article on Notifications and Claims”.

9. Lawsuit Deadline

It follows from NS 8417 paragraph 35.2 that if the general subcontractor wants to maintain his claim that there is a change, or his claim for a remuneration adjustment or deadline extension where this is (also) in dispute, he must “take the necessary steps to initiate ordinary proceedings or arbitration” no later than 8 months after the takeover.

In a judgment of the Supreme Court of 24 April 2023 (HR-2023-00766-A), it was established that where the time limit for a settlement appeal is interrupted, and where the settlement proceedings are suspended, a subpoena must be issued within one year after the case was brought to the Conciliation Council. We have commented on the verdict here.

The same applies to execution conversions, see NS 8415 paragraph 26.3.

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