A constructive change is a situation when a contractor performs work beyond the contract requirements, without a formal order under the changes clause, either due to an informal order from, or through the fault of, the buyer. This is also a change where the buyer and the seller cannot reach an agreement. These changes could result in claims/disputes. The preferred method to handle such disputes is through negotiations. If that doesn’t work, the buyer or seller can then go through the Alternative Dispute Resolution (ADR) procedures.

In the context of construction contracts and project management, a constructive change is a term used to describe a situation where a change in the project’s scope or requirements occurs without formal written documentation or a formal change order. It typically arises from the actions, requests, or decisions of either the buyer (the client or project owner) or the seller (the contractor or service provider). Here’s a more detailed explanation:

1. Buyer’s Actions or Requests: A constructive change can occur when the buyer, often the client or project owner, verbally or informally requests changes to the project scope, design, or other contractual aspects. These requests may not be documented or formally processed as change orders. However, they still have the potential to affect the project’s execution and may lead to disputes if not managed properly.
2. Seller’s Actions: Similarly, a constructive change can also arise from actions taken by the seller, which is typically the contractor or service provider. For example, if the seller decides to deviate from the project’s original plans, specifications, or agreed-upon methods without formal authorization, it can lead to a constructive change. These changes may not have been explicitly requested by the buyer but are carried out by the seller’s own initiative.
3. Post Hoc Consideration: The term “post hoc” is Latin for “after this” and refers to events or decisions made after the fact. In the context of constructive change, it means that the change is recognized or considered after it has already affected the project, even if it wasn’t documented or formalized at the time it occurred. Parties involved may acknowledge these changes retrospectively, realizing that they have impacted the project’s progress.
4. Undocumented Changes: The key characteristic of constructive changes is that they are undocumented. These changes typically lack the formal paperwork or written change orders that are standard in project management to authorize modifications to the contract or scope.

Constructive changes can lead to disputes between the buyer and seller, as both parties may have different interpretations of what was agreed upon, the impact of the changes, and the associated costs or delays. To avoid such disputes, it’s important for project managers and the parties involved to:

• Maintain clear and open communication throughout the project.
• Document any verbal or informal requests or changes and seek formal approval.
• Establish a formal change order process to manage changes to the project scope or specifications.
• Regularly review the project contract and scope to ensure alignment with the current state of the project.

In summary, a constructive change is an undocumented change in a construction project that occurs due to actions or requests by either the buyer or the seller. These changes may only be recognized after they have impacted the project and can lead to disputes if not properly managed. Proper communication and documentation are essential to prevent and address constructive changes effectively.