Strict lines of formal authority can be detailed in every organization in a straightforward manner. In the construction industry, large networks of informal authority structures can develop if they are allowed to. Those in turn can be further complicated by incorrect perceptions of both formal and informal authority.
Every act, deed, and remark made by a wide range of individuals carries some potential to commit the organization. Examples range from the clear language in a contract executed by a company officer to a remark by any member of the project team made at a job meeting or while touring the site. Clearly defined procedures can be thwarted when the actions of the parties constructively alter the “real” relationships. If, for example, a Change Order is not formally executed but the work is completed—and paid for—it can dramatically alter the legal application of the entire Change Clause and even the Dispute Resolution Clause of the general contract.
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