Construction Change Directive: Duty to Proceed, Pricing, and AIA G714

A construction change directive is a written order, signed by the owner and architect, that requires the contractor to begin changed work immediately even though the parties have not yet agreed on the price or schedule impact. It exists so a project does not sit idle while the money argument plays out. The contractor’s duty to perform kicks in on signature; the cost and time questions get resolved on a separate track, with interim payments along the way.

How a CCD Differs From a Change Order

A change order is a trilateral agreement. The owner, contractor, and architect all sign, and the document reflects a shared understanding of the scope change, the cost adjustment, and any time extension. Nobody starts work until all three have signed.¹

A CCD only needs the owner and architect. The contractor may or may not agree, and that disagreement does not delay the start of the work.¹ That is the whole point. When a subsurface condition appears, a design conflict surfaces, or a code issue demands attention, waiting weeks to negotiate a formal change order can stall the critical path and burn more in overhead than the parties are fighting over. The CCD moves the dollars argument off the critical path and keeps crews productive.

A CCD is also distinct from a minor field change. Under standard AIA contracts, the architect can independently issue orders for minor changes that do not affect cost or time. CCDs handle the larger changes where price or schedule is genuinely in dispute.²

The Contractor’s Duty to Proceed

Once the owner and architect sign, the contractor must proceed promptly. AIA A201-2017 Section 7.1.3 states it plainly: the contractor shall proceed promptly with changes in the work, whether those changes come through a change order, a CCD, or a minor change order.¹ The contractor can disagree with the proposed cost or time all day. The disagreement does not pause performance.

When a CCD arrives, the contractor usually signs a portion of it to acknowledge receipt. That signature does not signal agreement with the price or schedule. If the contractor does sign to indicate full agreement with the cost and time adjustments, the CCD converts into a change order at that moment.¹

Refusing to perform directed work is risky. If the change falls within the general scope of the original contract, a contractor who walks off or refuses to mobilize faces exposure for breach. The contractor already consented to this framework when signing the underlying agreement.

When a Contractor Can Push Back

The duty to proceed has limits. Two doctrines, in particular, protect contractors from abuse of the CCD mechanism.

Cardinal Change

When directed changes, singly or cumulatively, become so sweeping that they transform the project into something the parties never contemplated, courts recognize what is called a cardinal change. The doctrine treats such extreme modifications as an abandonment of the original contract, and the party ordering them has committed a breach. A contractor who can show that a CCD or series of CCDs rises to this level may recover damages beyond the overhead and profit the contract would normally allow.

The threshold is deliberately high. Numerous changes to interior finishes on an office building likely do not qualify if the end product is still an office building. Directing a contractor to build something materially different from what they bid can cross the line. Courts look at whether the cumulative effect has altered the essence of the agreement.

Nonpayment and Stop-Work Rights

Under AIA A201-2017 Section 9.7, if the owner fails to pay certified amounts within seven days of the contractual due date, the contractor may give seven additional days’ written notice and then stop work until payment arrives. The contract time extends to account for the shutdown, and the contractor can seek a change order covering the reasonable costs of shutting down and restarting.¹ That protection reaches CCD work the same way it reaches base contract work.

One common trap: threatening to stop work as a negotiating tactic before the stop-work conditions are actually met. Courts can treat premature threats as anticipatory breach, giving the owner grounds to terminate for default.³ The right is real. The timing and documentation have to be precise.

How Price and Time Get Set

If the contractor accepts the proposed adjustment method on the CCD, the resolution is straightforward. If not, A201-2017 lays out a fallback.

When the contractor disagrees with the proposed method or does not respond promptly, the architect determines the adjustment based on reasonable expenditures and savings attributable to the change. For increases to the contract sum, the architect adds overhead and profit at the rate the agreement specifies. The contractor must keep detailed records in whatever form the architect prescribes.¹

The reimbursable cost categories under this fallback method are limited to:

Labor costs, including payroll taxes, fringe benefits, and workers’ compensation insurance.
Materials and equipment, including transportation costs, whether permanently incorporated or consumed during the work.
Rental costs for machinery and equipment, from the contractor or others, excluding hand tools.
Bond premiums, permit fees, and applicable sales taxes related to the changed work.
Field office supervision personnel costs directly attributable to the change.

Interim Payments During the Dispute

Contractors do not wait until the final number is settled to get paid. Section 7.3.6 of A201-2017 lets the contractor include completed CCD work in regular payment applications. The architect makes an interim cost determination and certifies what is reasonably justified. That interim adjustment changes the contract sum on the same basis as a change order, but either party keeps the right to disagree and file a formal claim.¹

This interim mechanism is what makes the whole system workable. Without it, contractors would be financing the owner’s changes indefinitely, and the duty to proceed would turn punitive rather than merely inconvenient.

Issuing the Directive on AIA G714

The standard industry form is AIA Document G714-2017. It captures the project contract number, the issuance date, a detailed description of the changed work, and cross-references to any revised drawings or specifications. Vague scope descriptions on this form create problems later when the parties try to reconcile costs, so experienced architects write the description as if it has to survive a dispute without any supplemental explanation.⁴

The owner and architect select a proposed basis for adjusting the price. Three primary options are available:

Lump sum, used when both sides are likely to agree on a total cost and all associated expenses can be captured in a single figure.
Unit price, when the parties can agree on a rate per unit of measurement but cannot predict total quantity at issuance.
Cost of the work plus a fee, which requires the architect to define reimbursable cost and to propose the contractor’s fee percentage.

The form also includes a field for any proposed change to the contract time. If the changed work will push completion, the number of additional days belongs there. These proposed figures stay proposals until the contractor agrees or the parties work through the dispute process.⁴

Turning the CCD Into a Change Order

Every CCD is meant to be temporary. Once the parties agree on final costs and any schedule extension, the directive is superseded by a formal change order that incorporates the agreed amounts into the contract sum. If the contractor signs the CCD indicating full agreement, that conversion happens on the spot.¹

If the contractor disputes the architect’s interim determination, the disagreement moves into the formal claims process under Article 15 of the AIA general conditions. The CCD stays in effect, the contractor keeps working, and the cost question enters a structured track.

If the Contractor Still Disagrees

Under the AIA framework, the contractor must advise the architect of their disagreement promptly after receiving the CCD.⁵ Other contract families impose specific deadlines; missing them can forfeit the claim entirely, regardless of merit.

Cost disputes that do not resolve informally go to an Initial Decision Maker, often the architect. This step is a condition precedent to any further legal action. The IDM has thirty days to request additional supporting data, reject the claim, or approve it, and the written decision must state reasons and specify any resulting change to the contract sum or time.⁵

If the IDM’s decision does not resolve the matter, the parties proceed to binding dispute resolution. Standard AIA agreements do not pick arbitration or litigation as a default. The parties select the forum when they execute the contract.⁶ If the contract is silent, the forum has to be negotiated after the dispute arises, which adds time and cost.

Side Effects Project Teams Miss

Bonds

When a CCD raises the contract sum, the surety’s exposure grows with it. On federal projects, the contracting officer can require additional bond protection equal to 100 percent of the contract price increase. The contractor may need to increase the penal amount of the existing bond or obtain a supplemental bond.⁷ Private projects often follow similar logic through contract provisions that mirror this structure. Failing to maintain adequate bond coverage can put the contractor in default even when the underlying work is going fine.

Lien Rights

Work performed under a CCD is generally eligible for mechanic’s lien protection even if the final price has not been agreed. Courts have increasingly applied equitable principles to prevent unjust enrichment when contractors perform extra work at the owner’s direction. If the owner directed the work through a CCD, the contractor performed it, and payment has not arrived, the lien right typically attaches. Filing deadlines after completion vary by state, generally ranging from 90 days to eight months.

Permits

A CCD that changes structural elements, building height, egress paths, fire-rated assemblies, or occupancy classification will almost always require an amended building permit. Most jurisdictions require any deviation from approved plans that affects code compliance to go back through permit review before the changed work proceeds. Minor adjustments to non-structural interior partitions or cosmetic items can sometimes be approved by the inspector in the field, but anything touching life safety or structural integrity needs a formal amendment. In practice, experienced teams file the permit amendment at the same time the CCD is issued, to shrink the gap between directive and execution.

Public-Project Caps

Public construction contracts often impose statutory caps on how much the contract price can grow through change orders and CCDs before the remaining work must be rebid. These limits exist to prevent agencies from using serial changes to sidestep competitive bidding. Thresholds vary by jurisdiction but commonly fall in the range of 10 to 25 percent of the original contract amount.⁸ Some states distinguish individual change order caps from cumulative contract increases. Exceeding the limits typically triggers rebidding for the incomplete portions and, at the extreme, can implicate cardinal change. Private contracts do not face these statutory caps, but the cardinal change doctrine still functions as a practical ceiling.

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AIA Contract Documents. AIA Document A201-2017 General Conditions of the Contract for Construction
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AIA Contract Documents. Construction Change Orders vs Construction Change Directives Key Differences Explained
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ConsensusDocs. When Is It OK to Say No The Duty to Proceed and Right to Stop Work
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AIA Contract Documents. Instructions G714-2017 Construction Change Directive
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AIA Contract Documents. AIA Document A201-2017 General Conditions of the Contract for Construction
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AIA Contract Documents. Litigation or Arbitration Highlighting Key Differences in Dispute Resolution Methods
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Acquisition.GOV. 52.228-15 Performance and Payment Bonds Construction
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U.S. Department of Transportation Volpe Center. Understanding Construction Change Orders Report