SB 440 starts the clock.

Project Neutral® gets to resolution before it runs out.

California's Private Works Change Order Fair Payment Act took effect January 1, 2026. Disputed change-order claims on private projects now run on a statutory timeline, with mandatory non-binding mediation before any litigation or arbitration. The Project Neutral® Early Neutral Evaluation is a 21-day, mediation-privileged written evaluation built to satisfy that step — or to resolve the dispute before mediation is called.

Once a written claim is served by certified mail, the statutory clock runs whether or not the parties are ready for it.

Day 0

Contractor serves written claim by certified mail.

Day 30

Owner's written response identifying disputed and undisputed amounts.

Day 90

Undisputed amounts paid in full.

Meet & confer

Parties meet and confer on disputed portions.

Mandatory mediation

Non-binding mediation on disputed amounts.

Where the ENE fits.

Litigation / arbitration

For private construction contracts entered into on or after January 1, 2026, California Civil Code §§ 8850–8859 imposes a mandatory, time-bound dispute resolution and payment framework on change-order and time-extension claims.

Owners must conduct a reasonable review and respond in writing within 30 days, identifying which portions of the claim are disputed and which are undisputed. Failure to respond is treated as a denial. Undisputed amounts must be paid within 60 days of the written response. Interest accrues at 2% per month — 24% per year — on late payments.

If the response disputes some or all of the claim, the parties must meet and confer. Disputed amounts that remain unresolved proceed to mandatory non-binding mediation before any litigation or arbitration. If the parties cannot agree on a mediator, the contractor selects one. If the owner refuses to mediate, fails to pay undisputed amounts, or a claim is deemed denied through non-response, the contractor gains stop-work rights after a 30-day payment demand and 10-day stop-work notice.

The core requirements are non-waivable. The statute applies to most private works of improvement but excludes public-owner contracts and small (four stories or fewer, non-mixed-use, Type V) residential projects. Provisions sunset January 1, 2030 unless extended.

Where the Project Neutral® ENE fits

There are two ways the Project Neutral® Early Neutral Evaluation operates inside the SB 440 framework.

The first is as the structured assessment that resolves the dispute before § 8850 mediation is ever called. A senior construction executive runs a 21-day evaluation under mediation privilege. The deliverable assesses the merits, predicts the range of outcomes if the matter proceeds to formal proceedings, and provides draft change-order language clean enough to execute. Settlement terms get drafted as change orders rather than negotiated under time pressure. Schedule preserved. Relationships intact.

The second is as the engagement that satisfies the mandatory mediation requirement directly — on terms the parties propose rather than react to. Independent senior neutral, written record, output that survives the mediation as draft change orders if adopted.

The ENE is not a substitute for SB 440 compliance: the statutory framework runs on its own clock. The ENE is the parallel intervention that gets to settled change orders before the litigation the statute was designed to reduce.

Is this mediation? Arbitration? Something else?

It is an advisory written evaluation. The Project Neutral® Early Neutral Evaluation is not binding unless the parties agree to make it so. It is not a substitute for the statutory mediation step under SB 440, but where structured as a mediation between the parties it can satisfy that step. The deliverable is what distinguishes it — a written evaluation with draft change-order language ready for signature, in 21 days.

Can the ENE satisfy the § 8850 mediation requirement?

Where structured as a mediation between the parties, yes. The methodology is flexible enough to function either as a pre-mediation independent assessment or as the mediation engagement itself. Counsel should confirm the structuring with respect to the specific dispute.

What happens if we don't accept the recommendations?

The parties retain every right to proceed to formal mediation, arbitration, or litigation. The mediation privilege survives delivery. The ENE's analysis and the underlying record are inadmissible in subsequent proceedings under federal and California law.

How is privilege protected?

Privilege is treated as a process, not a clause. Every interview opens with a verbatim privilege confirmation read into the record. Every written deliverable is watermarked with privilege language on every page. Every team member is trained to recognize and protect privilege boundaries. The work product is inadmissible in subsequent proceedings under Federal Rule of Evidence 408 and California Evidence Code §§ 1115–1128.

How is the team selected for our matter?

Project Neutral® Inc. is engaged. Conflict checks are run against the Project Neutral® roster. A primary candidate Lead Project Neutral® is proposed along with two alternates. The Executive Sponsor handles intake and stakeholder relationship management throughout the engagement. The four-person team is constituted around the Lead Project Neutral® and supports the engagement through delivery.

What does the engagement look like contractually?

A standard engagement letter executed via DocuSign, with Terms and Conditions incorporated by reference and a customized Attachment A document request as the operative exhibit. Fee structure: 50% on signing, 50% on delivery. The 21-day clock starts on first document receipt, with a 2-to-4 business day setup window between signing and clock start.