6.3 Construction Change Directives (AIA G714)

6.3 Construction Change Directives (AIA G714)

In an ideal construction project, every modification to the design drawings and specifications would be thoroughly analyzed, estimated by the contractor, reviewed by the architect, and formalized into a bilaterally signed Change Order before any field work commences. In reality, unexpected site conditions, supply chain collapses, building code interpretations, and owner-directed scope revisions frequently demand immediate execution to prevent catastrophic schedule delays.

When the owner and contractor cannot reach agreement on the cost or time required for a change—or when the urgency of the work precludes the time required to negotiate a Change Order—the contract administration framework relies upon the Construction Change Directive (CCD). Standardized under AIA Document G714-2017 and governed by AIA Document A201-2017 Section 7.3, the CCD is one of the most powerful administrative instruments available to the owner and architect.

---

Anatomy and Purpose of the Construction Change Directive: AIA Document G714-2017

AIA Document A201-2017 Section 7.3.1 defines the instrument with precision:

'A Construction Change Directive is a written order prepared by the Architect and signed by the Owner and Architect, directing a change in the Work prior to agreement on adjustment, if any, in the Contract Sum or Contract Time, or both. The Owner and Architect may by Construction Change Directive, without invalidating the Contract, order changes in the Work within the general scope of the Contract consisting of additions, deletions, or other revisions, the Contract Sum and Contract Time being adjusted accordingly.'

The Bipartite Signature Requirement

A defining characteristic of AIA Document G714-2017 is its execution protocol:

• Prepared by: The Architect.
• Signed by: The Owner and the Architect.
• Contractor Signature: NOT REQUIRED for the directive to take legal effect!

This bipartite signature structure (Owner + Architect) distinguishes the CCD from a Change Order (which requires tripartite agreement: Owner + Contractor + Architect). The architect acts as the professional advisor certifying that the directed work falls within the general scope of the original contract and design intent, while the owner exercises ownership authority to mandate the expenditure and assume financial responsibility.

Strategic Purpose: Breaking Schedule Deadlocks

Consider an active jobsite where deep excavation uncovers an unmapped, abandoned municipal storm sewer pipe directly beneath the footprint of the central elevator core. Soil stability is deteriorating, groundwater is filling the pit, and tower crane operations are frozen. The general contractor submits a change order proposal demanding $150,000 and a 30-day schedule extension to bypass the pipe and remediate the subgrade. The owner believes the price is inflated by $70,000 and refuses to sign a Change Order.

Without a CCD, the jobsite would shut down while the parties litigated or negotiated pricing. Every idle day would generate massive delay damages. By issuing an AIA Document G714 CCD signed by owner and architect, the owner commands the contractor to begin immediate pipe removal and soil stabilization, deferring the final pricing and schedule determination until after the work is executed or substantiated.

---

The Contractor's Mandatory Obligation to Proceed

A critical rule tested on the ARE is found in AIA Document A201-2017 Section 7.3.5:

'Upon receipt of a Construction Change Directive, the Contractor shall promptly proceed with the change in the Work involved and advise the Architect of the Contractor’s agreement or disagreement with the method, if any, provided in the Construction Change Directive for determining the proposed adjustment in the Contract Sum or Contract Time.'

Upon receiving a properly executed CCD signed by the Owner and Architect, the contractor cannot strike, stop work, or refuse to perform the directive. The contractor cannot say: 'We will not touch this excavation until the owner signs a Change Order for our $150,000 lump sum.' Refusal to proceed with work directed by a valid CCD constitutes a material breach of contract, subjecting the contractor to termination for cause under AIA A201 Section 14.2.

---

The Four Valuation Methodologies Under AIA A201 Section 7.3.4

When a CCD is issued, the document must state the proposed basis of adjustment in the Contract Sum. AIA Document A201-2017 Section 7.3.4 establishes exactly four contractual methods for determining the cost adjustment:

1. Mutual Acceptance of a Lump Sum: A lump sum properly itemized and supported by sufficient substantiating data to permit evaluation (A201 § 7.3.4.1).
2. Unit Prices: Unit prices stated in the Contract Documents or subsequently agreed upon (A201 § 7.3.4.2). (For example, a contractually established unit price of $65 per cubic yard for mass excavation and backfill).
3. Cost to Be Determined in a Manner Agreed Upon by the Parties and a Mutually Acceptable Fixed or Percentage Fee: (A201 § 7.3.4.3). (For example, negotiated time-and-materials with an agreed 10% fee).
4. Actual Cost Determined by the Architect (A201 § 7.3.4.4): If the contractor does not respond promptly or disagrees with the method of adjustment, the Architect determines the adjustment on the basis of reasonable expenditures and savings of those performing the Work attributable to the change, including an allowance for overhead and profit (O&P).

The Force Account / Architect's Determination (§ 7.3.4.4)

When the parties cannot agree on a lump sum or unit price, Section 7.3.4.4 governs. The contractor must keep an itemized, daily open-book accounting of all actual expenditures, substantiated by daily work tickets, material invoices, equipment rental receipts, and certified payroll records signed by the architect's field representative.

Under Sections 7.3.4.1 through 7.3.4.5, allowable costs are strictly limited to:

• Direct Labor: Wages of construction workers directly performing the change, including social security, old age and unemployment insurance, fringe benefits, and workers' compensation insurance.
• Materials & Equipment: Costs of materials, supplies, and equipment incorporated into the work, including transportation and storage.
• Machinery Rental: Rental costs of machinery and equipment rented from third parties (exclusive of hand tools), or contractor-owned equipment at standard industry rates (AED Green Book).
• Bonds, Permits & Taxes: Additional premiums for payment and performance bonds, permit fees, and sales/use taxes directly related to the changed work.
• Supervision: Additional costs of field supervisory personnel directly assigned to the site during the execution of the changed work.
• Overhead and Profit (O&P): A reasonable allowance for overhead and profit as stipulated in the agreement or supplementary conditions.

Net Credit Rule for Deleted Work (§ 7.3.8)

If a CCD results in both additions and deletions of work, the allowance for overhead and profit is calculated based on the net increase, if any. If the change results in a net deletion of scope, the amount of credit allowed to the owner is the actual net cost confirmed by the architect. The contractor does not forfeit their overhead and profit on deleted work; the contractor retains the original anticipated profit on the omitted scope.

Direct Allowable Costs vs. Excluded Overhead under Section 7.3.4

The following table outlines what costs the architect may certify under Section 7.3.4.4 versus costs that must be absorbed within the contractor's overhead allowance:

---

Interim Billing Rights and Payment Certification (A201 § 7.3.9)

A common fear among contractors is that performing work under an unpriced CCD will drain their operating cash flow while disputes linger. AIA Document A201-2017 Section 7.3.9 provides robust financial protection:

'Pending final determination of the total cost of a Construction Change Directive to the Owner, the Contractor may request payment for Work completed under the Construction Change Directive in Applications for Payment. The Architect will make an interim determination for purposes of monthly certification for payment for those costs and certify for payment the amount that the Architect determines, in the Architect’s professional judgment, to be reasonably justified.'

This provision is essential. The contractor does not have to wait until the entire CCD is completed, audited, and converted to a Change Order to get paid. Each month, the contractor submits documented direct expenditures for the CCD on AIA Document G702/G703 (Application and Certificate for Payment). The architect must review the backup tickets, certify the undisputed amounts, and issue the payment certificate. The owner must disburse funds for all certified undisputed work.

---

Resolution Paths: Conversion to Change Order vs. Article 15 Dispute

Once a CCD is issued and work commences, the administrative process follows one of two distinct trajectories depending on whether the contractor agrees with the proposed adjustments.

Path A: Contractor Agreement and Conversion (A201 § 7.3.7)

If the contractor agrees with the adjustments in Contract Sum and Contract Time proposed in the CCD, the contractor signs the designated acceptance line on AIA Document G714 and returns it to the architect. Under Section 7.3.7, such agreement is effective immediately and shall be recorded as a Change Order. The CCD is retired, and an official AIA Document G701 Change Order is executed.

Path B: Contractor Disagreement and IDM Claim (A201 § 7.3.10)

If the contractor objects to the architect's valuation under Section 7.3.4.4 or disputes the time extension, the contractor submits a formal written disagreement. The architect issues an official administrative determination. If the contractor rejects this determination, the contractor must file a Claim under AIA Document A201 Article 15 with the Initial Decision Maker (IDM) within 21 days of the architect's determination (A201 § 15.1.3). The dispute proceeds through IDM ruling, mediation under AIA Document A201 Section 15.3, and binding dispute resolution (arbitration or litigation) under Section 15.4.

Source and application

A201-2017 official sample. Checked October 16, 2026. Apply the cited form edition and the actual project amendments, adopted codes and supplied scenario assumptions. Numerical examples are teaching inputs unless expressly attributed to a requirement.