HPM Construction Audit & Advisory Services: What Did You Just Sign?
By Vince Chapman, HPM VP of Audit & Advisory Services
What Did You Just Sign? Why Owners Must Read Every Page – and Then Some
Auditing happens after the fact. Advising happens before. That simple distinction is the foundation of every ultimately successful construction contract. Yet, time and again, we see Owners sign documents without fully understanding what’s inside. The result? Costly disputes, inflated change orders, and contractual obligations no one intended.
The Hidden Risk in “Routine” Approvals
Consider the common subcontractor approval form. On the surface, it looks harmless – a simple sign-off to allow your Construction Manager (CM) to hire Joe’s Millwork Company. But dig deeper, and you’ll often find language that goes far beyond subcontractor approval. Unit rates for change orders, labor rates, equipment rental terms, even self-performed work clauses – these extras creep in quietly.
Once signed, these forms become part of the contract record. If those added terms contradict your CM agreement, you’ve just given away rights unknowingly. We’ve seen disputes where CMs argued that Owners agreed to inflated change order rates simply by signing what appeared to be a subcontractor approval form.
Why Does This Happen?
Owners trust the heading. If the form says, “Subcontractor Approval,” they assume that’s all it covers. Many believe their CM agreement governs everything else. In theory, it should. In practice, it doesn’t – especially when the CM insists that signed forms override prior terms. Suddenly, the CO language in your CM agreement doesn’t protect you. You’ve signed something that changes the game.
The Advisory Perspective
This is where proactive advisory matters. Our advice, based on years of auditing after the fact, is simple:
- Read every page of every document you agree to.
- Only allow statements specific to the item to be approved. If the form is for subcontractor approval, it should not include change order rates or unrelated clauses.
Real-World Consequences
We’ve audited projects where these overlooked clauses cost Owners hundreds of thousands of dollars. In one case, a CM slipped in labor rates for future change orders during a routine subcontract approval. When change orders hit, the Owner was locked into inflated rates – rates they never negotiated, never intended, and never even noticed. Unfortunately, this isn’t an isolated incident.
How to Protect Yourself
- Establish a Review Protocol: Every document that becomes part of the contract record should go through a formal review process – not just a quick glance.
- Train Your Team: Make sure everyone understands that headings can mislead. If it’s in writing, even really small writing, it matters.
- Push Back on Overreach: If a CM adds unrelated terms, reject the form. Require a clean version limited to the intended approval.
- Audit Early, Not Late: Don’t wait for disputes. Engage advisory services before signing. Prevention is cheaper than correction.
The Bigger Picture
This isn’t about mistrust; it’s about clarity. Construction projects are complex. Ambiguity breeds conflict. By insisting on precision in every document, Owners protect budgets, timelines, and relationships.
Contracts are only as strong as the enforcement behind them. If you’re not enforcing clarity, you’re inviting chaos.
Key Takeaways for Owners
- Never assume a form or an Exhibit is limited to its title.
- Every signature carries weight—sometimes more than you realize.
- Advisory isn’t optional; it’s essential.
Have you ever discovered hidden clauses after signing? Connect with us on Linkedin to start a conversation about how Owners can safeguard their projects through proactive review and advisory.
