Executing Change Orders on Unit Price Contracts

The total contract amount of a typical Design-Bid-Build public works contract is typically based either on a lump sum bid or a unit price bid in which the extensions of the unit prices multiplied by the estimated quantities are added together to arrive at a total contract amount.  During the term of the project, the estimated quantities may either increase or decrease from the estimated quantities.  

The Question:  Should a change order or change orders be executed to address changes in the quantities from the estimated quantities to the actual quantities?

Different Practices:  I am aware that some public agencies rely only on the original amount of the contract for a unit price contract and do not execute a change order to reconcile any differences.  However, I think it is important that a reconciling change order be issued, at least at the end of the project.  

Amount Paid and Contract Amount Should Be Consistent:  The reason why it is important to execute a reconciling change order to address changes in quantities is that the total contract amount as amended by change order should be consistent with the actual dollar amount paid to the contractor.  Without such a reconciling change order, the contract may reflect that more money has been paid to the contractor than was authorized with the contract amount.

Audit Risk:  From both a contractual perspective as well as an audit perspective (auditors regularly issue findings if the dollar amount paid under a contract is inconsistent with the amount authorized by the contract), it is important for public agencies to issue reconciling change orders for unit price contracts.

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