Governing a Major Capital Project: The Owner's Representative, the Decision Log, Change Orders and Closeout

Jason Hamilton Mikes, JD, MBA
Founder & Managing Shareholder

• Published September 25, 2026
• Reviewed by Jason Hamilton Mikes, JD, MBA, September 26, 2026
• Florida Statutes as of July 1, 2026
• Applies to: Condominiums · HOAs · Cooperatives

A large capital project is the biggest thing most boards will ever do, and it is the one where the gap between governing and managing causes the most damage. The board's job is to decide what gets built, what it costs, who bears the risk, and when to stop. Someone with a license and a fee decides how the work gets done. A project fails when those two roles blur, or when nobody wrote down who held which one.

Decide what the board is actually governing

Before the first committee meeting, write down the three documents that define the project: the contract, the budget with its contingency, and the schedule with its milestones. Every decision for the next eighteen months changes one of those three or holds it.

The board's authority runs to scope, money and risk. Directors approve the design, the contract, the payments, the change orders and the closeout. They do not sequence the work, staff the crew, or tell a foreman how to flash a parapet. Means and methods belong to the contractor, and a director giving site instructions can shift responsibility for the outcome onto the association.

Where the project arises from a milestone inspection or a structural integrity reserve study, the scope is partly set for you. Our guides to milestone inspection requirements and major repair projects cover how those obligations become a scope of work.

The owner's representative and the project committee

Most associations end up with both, and they are different animals. The owner's representative is a paid professional, often the engineer of record, whose job is to protect the association's interests against the contractor's. The project committee is volunteers, and its job is to do the reading the full board cannot.

Both need a written charter, adopted by the board at a noticed meeting, answering five questions:

1. What may the committee do? Almost always: review, investigate, meet with the engineer, recommend. Almost never: approve spending.
2. What is its dollar authority? Zero is a defensible answer and the easiest to administer.
3. Who speaks to the contractor? One person. Four directors calling the superintendent produce four answers and one change order claim.
4. How and how often does it report to the board, and in what form?
5. What records does it keep, and who holds them? Committee minutes and working files are association records.

Whether a committee meeting must be noticed and open to owners differs by chapter, and it catches boards every time. See our guide to committee authority before the first committee meeting.

One note on the engineer. If the engineer of record also serves as owner's representative, one firm is certifying work performed under its own design. That is common and often sensible, but decide it rather than back into it.

The decision log

Minutes record what the board voted on. They rarely record why, what the alternatives were, what the engineer recommended, or what the decision cost in time and money. On a two-year project that matters, because the people asking in year three will be a different board and different owners.

Keep one decision log as a running table, maintained by the manager or the owner's representative and reviewed at each board meeting.

The log earns its ten minutes a week three ways. It stops the board relitigating settled questions. It gives the next board the reasoning rather than the result. And if a delay or defect claim arrives, a contemporaneous record of what the association knew and when is the most useful thing in the file. Keep the underlying documents with it.

The payment chain, and who certifies the work

Money should move through the same sequence every month, with no exceptions and no emergency checks.

1. The contractor submits a payment application showing the schedule of values, percentage complete by line, amounts previously paid, and retainage held.
2. The engineer or owner's representative inspects and certifies the percentage of work actually in place. Not the manager, and not a director with a camera.
3. The manager reconciles it against the contract, the approved change orders and prior payments, and confirms the lien releases for the previous payment arrived.
4. The board approves the payment, or the treasurer approves it under a written delegation adopted in advance for amounts already inside the approved contract.
5. The check issues with two signatures, and the release for this payment is collected before the next application is considered.

Retainage is the association's remaining protection. Ten percent is typical. Do not release it early because the contractor's cash flow is tight; that is a financing problem, not a contract problem.

Section 715.12 applies to written contracts to improve real property for which a construction lien is authorized under Part I of Chapter 713. Late payments bear interest at the rate in section 55.03 plus 12 percent per year from the fourteenth day after payment is due, and unless the contract specifically provides otherwise, a dispute does not allow the association to withhold payment for work not subject to or affected by the dispute. § 715.12(5)(a), (6)(e).

The lien statutes set the other half of the calendar.

Keep a notice to owner log from day one and reconcile it against the lien releases at every payment. A notice to owner is not a complaint; it is a supplier protecting its rights. Trouble comes from paying the contractor in full while a supplier who served a notice has not been paid, because the association can pay twice. A payment bond under section 713.23 moves that exposure off the property.

Change order authority and thresholds

Every large project generates change orders. The question is who may approve them and out of what money. Decide both before signing, and state them in the contract and the committee charter.

A workable structure: the owner's representative may approve a change up to a stated dollar amount, drawn only from the identified contingency, with written notice to the board within 48 hours. Anything larger, anything consuming more than a set share of the remaining contingency, and anything changing scope, schedule or structure returns to the board. No verbal change orders, and none approved after the fact unless it was a documented emergency.

Distinguish the allowance from the contingency. An allowance is money already inside the contract price for an item not yet specified; spending it is not a change order. The contingency is the association's money for the unknown, and every dollar of it belongs in the decision log with a reason.

Two legal traps live inside change orders. The first is material alteration: section 718.113(2)(a) requires approval by 75 percent of the total voting interests before material alterations or substantial additions to the common elements are commenced, unless the declaration provides otherwise. A change order that replaces a railing with a different design, or adds something that was not there, can convert a repair into an alteration the owners never approved. The second is the bidding threshold, where a change order pushes a contract past 5 percent of the total annual budget including reserves in a condominium, or 10 percent in an HOA. Both are questions for counsel before the change order is signed.

Reporting to owners while the work runs

Owners paying a special assessment are entitled to know how the money is being spent, and a board that reports regularly gets fewer records requests and fewer challenges at the annual meeting. Set a cadence and keep it even when there is nothing to report.

A monthly update that works: where the work stands against the schedule, what was paid and what remains in the contract, change orders approved and contingency remaining, what owners will experience in the next thirty days, and the one phone number to call. Publish the same figures every month.

Keep two things out of the updates: anything covered by attorney-client privilege, and the association's position on a potential claim against the contractor or the engineer. Our guide to communicating with owners covers where the line falls.

Contracts and bids remain official records regardless of what the board publishes, and bids must be kept at least one year under section 718.111(12)(a)11.e. and section 720.303(4). Condominium associations of 25 or more units must post specified documents to the association website or application, HOAs of 100 or more parcels have a comparable duty under section 720.303(4)(b), and cooperatives have none.

Delay, hidden conditions and the schedule

On restoration work in Southwest Florida the two reliable sources of delay are what is found inside the structure and the weather. Both should be addressed in the contract; if they are not, they will be addressed in a claim.

Hidden or differing site conditions are the common case: corroded reinforcement, rot behind stucco, an unrecorded slab penetration. A good contract says who bears that risk, requires written notice shortly after discovery, and sets unit prices for the likely conditions so nobody is negotiating from zero mid-job. Unit prices agreed before signing are worth more than any other clause in a restoration agreement.

For weather, decide in advance who pays to secure the site after a named storm, what happens to stored materials, and whether the contractor gets time only or time and money. Coordinate with the association's hurricane preparation plan, because a scaffolded building with open balconies is not the property that plan assumed.

Where the project stems from a milestone inspection there is an external deadline the parties cannot negotiate. Under section 553.899(11), repairs recommended in a phase two report must be commenced within 365 days after receiving the report. Track that date in the decision log and tell the contractor it exists.

Document delay as it happens: daily reports, dated photographs, a written response to every contractor notice. A claim asserted eight months later is nearly impossible to disprove if the file is thin.

When to stop work

Stopping work is expensive, it can itself be a breach, and it is occasionally the only right answer. The grounds are narrow:

• An immediate safety hazard to residents or workers.
• A trade on site that is unlicensed, or whose insurance has lapsed or was never what the certificate said.
• Work proceeding outside the approved scope, or without a required permit or inspection.
• A discovery that the design itself is wrong, where continuing would build the error in.
• Nonpayment that has put the contractor in a position to suspend, which is a reason to fix the payment rather than to stop.

Before issuing a stop-work direction, call counsel and the engineer the same day, then issue it in writing stating the ground, the work affected, and what must happen before work resumes. A verbal stop-work order delivered to a superintendent by a director is the beginning of a delay claim. If the ground is an insurance lapse, the fix is the one that should have prevented it: see our guide to insurance and indemnity in association contracts.

Closing the project out properly

Closeout is a checklist, and the retainage is what gets the checklist completed. Work through it in order, and release final payment only when every line is done.

1. Substantial completion is declared in writing, with a date, because warranty periods and several legal clocks run from it.
2. The punch list is prepared jointly, with a completion date, and signed by the engineer and the contractor.
3. The engineer certifies final completion under the contract documents. On a milestone phase two project, confirm the documentation the building official requires is in hand.
4. Permits are closed and final inspections passed. An open permit surfaces years later, at a resale.
5. As-builts, shop drawings, product data and operation and maintenance manuals are delivered in a form the association can open.
6. Warranties are issued in the association's name, with start dates, durations, exclusions and a phone number. Roofing and coating warranties often require registration and are void without it.
7. Final waivers and releases of lien are collected from the contractor and everyone who served a notice to owner, using the statutory form at section 713.20(5).
8. The contractor's final payment affidavit is obtained under section 713.06(3)(d)1.
9. The notice of commencement is terminated of record.
10. Retainage is released last, and the project file is retained with the association's records.

Two clocks start at closeout, and both are shorter than boards expect. Section 95.11(3)(b) governs an action founded on the design, planning or construction of an improvement to real property: a four-year limitations period, and an outside repose period of seven years running from the earliest of a temporary certificate of occupancy, a certificate of occupancy, a certificate of completion, or abandonment. For a latent defect the limitations period runs from discovery; the repose period waits for no one.

If a defect appears, Chapter 558 requires notice before suit. Section 558.004(1) requires written notice of claim at least 60 days before filing, or 120 days where an association represents more than 20 parcels, and the person served has 45 days to respond, or 75 in the association case. Our guide to construction defect claims explains the process.

Finally, schedule an eleven-month walkthrough. One-year workmanship warranties expire quietly, and a joint inspection a month before expiration is the cheapest repair money the association will spend.

Contact Hamilton Mikes

Hamilton Mikes represents boards in Lee, Collier and Charlotte Counties through the whole arc of a capital project, from the owner's representative agreement and the construction contract to change order disputes, delay claims and closeout. Call 239-594-7227 or visit our Construction page.