Final answer:
Deductive change orders are contract adjustments where a contractor's actions cause another to incur extra costs, leading to a reduction in the contract value to address financial imbalances.
Step-by-step explanation:
Deductive change orders are adjustments to a contract that result in a decrease of the contract value, caused when actions by one contractor lead to additional costs being incurred by another. When a contractor is responsible for delays or other issues that negatively impact another contractor's work, the project owner or general contractor may issue a deductive change order to resolve the financial imbalances created.
Effective management of change orders is essential to maintaining project budget and timelines. A clear understanding of contract terms and proper communication among contractors are important to minimize the occurrence and impact of deductive changes. In case of disputes, documentation and evidence of causation will be key in enforcing or defending against a deductive change order.