Manufacturing construction is booming across Texas in early 2025, with Samsung’s landmark $17 billion semiconductor facility in Taylor, Texas leading the charge as part of a broader trend concentrated along major metro areas and interstate corridors. While these massive projects promise economic transformation through jobs, infrastructure development and technological advancement, they also face significant challenges—most critically, the pressure to accelerate construction schedules for faster revenue generation often leads to substantial unanticipated costs, making effective change order management an essential skill for project success in today’s dynamic manufacturing landscape.
Change Orders
No matter how well an owner and contractor plan a project there are unexpected bumps that delay projects and increase the costs of completion. Many times, owners and contractors can easily agree on the cost and time impact of a changed condition or unanticipated event. Conversely, there is often disagreement. Presumably, change order provisions are present in every construction project of any consequence as they are the mechanism for an owner and contractor to resolve issues related to increased costs and project delays. Carefully drafted change order provisions provide a brightline process to document any changes to the contract price and schedule. They remove ambiguity and reduce conflict when properly implemented and followed.
From the owners’ perspective, any change order provision should include language requiring written notice, through an agreed form attached to the contract as an exhibit, within a prompt period of time related to event necessitating the change order. It should also include language making strict compliance with these terms a condition precedent to any valid change to the contract price and schedule. Each change order requested by either owner or contractor should be issued consecutively and signed by both parties. This provides clarity regarding the rights and obligations of each party respectively thereby reducing the incidents of disputes following the conclusion of a project. In the event change order work is essential to the project but owner and contractor are unable to agree on terms, the contract should either require performance subject to the dispute resolution provision in the contract or provide reasonable terms to equitably compensate contractor for performing the essential work.
Stay Tuned
This is the second of a series of blogs related to what manufacturing owners must consider when protecting their economic interests in regulating construction costs of critical construction projects. Be sure to look out (or subscribe) for my continued discussion of these issues in the interim with any immediate questions.
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