In what situation would a change order be necessary?

A change order becomes necessary when there are modifications to original construction contracts. This typically occurs when there are adjustments in the work scope, changes in project specifications, unforeseen conditions that affect the contract terms, or necessary additions to the original project. The change order serves as a formal agreement that outlines the modifications, their impact on costs and timelines, and ensures both parties have a clear understanding of the updated obligations.

The other scenarios presented do not directly involve modifications to existing construction contracts. Initiating a new project is a separate process from managing changes in an ongoing project. Terminating a contractor involves contract termination procedures rather than modifications to the existing contract's terms. Similarly, a decrease in project funding may lead to budgetary adjustments or a reevaluation of project scope but does not inherently require a change order as it does not specifically involve contract modifications. Thus, the correct situation for a change order is clearly when there is a need to modify the original construction contracts.