To ensure that construction costs are well managed, thorough planning and budgeting are implemented. However, some things will need to be changed down the road. It is where change orders come in.
Change orders do not always result from poor budgeting and planning or construction errors. Sometimes they are caused by events beyond the stakeholders’ control. These are examples of market conditions, labor costs, weather, and other unforeseen events.
Do not fear changing orders if they are properly managed. A change order process will enable you to identify and manage their needs as they arise on a project. Sharing the changing orders with clients and subcontractors, so everyone is on the same page.
Here are some issues that may arise, as well as potential solutions, when developing an effective change order process:
Problems with order changes
Change is an unavoidable occurrence. A more appropriate statement for construction projects might be that change orders are unavoidable. While not all change orders are detrimental to the project, the most common issues are the effects on project timelines and budgets.
Disagreements about what constitutes a change order are common because they affect the parties involved differently. Clearing up any disparity in the scope of work, plans, and specifications can help reduce the need to change orders later.
The construction contract should specify how the cost of work from changing orders. It includes the costs of equipment, overhead, and materials. The contract should also specify how change orders affect schedule changes and delays.
Make sure the contract includes a written change order form and avoid conflicting clauses regarding change orders. Suppose the contract states that the contractor cannot begin work on any changes without a written change order. In that case, there should be no language stating that the owner has the authority to order additional work without a compensation agreement.
At this point, i
t should be made clear that no changes are made without a written change order signed by all stakeholders involved. There are times when a change order will not affect the cost or timeline of a project, but this is not always the case. That is why the contract must specify every detail.
Preparing for change orders
Owners may try to be proactive by requiring a pre-site inspection to get a sense of the scope of work and the site conditions. It is where change orders can become contentious.
Change orders should protect you as a contractor from feeling pressured to perform work that exceeds the project’s scope and budget.
The most important aspect of the change order process is managing expectations. Discuss process always with your clients, so they know that additional work will incur additional costs. It will prevent them from feeling surprised when they request a change, and you ask for more money.
Change orders are being reduced.
A realistic estimate of the project’s total cost, including not only the construction work but all associated costs, should be performed. While there is no “magic bullet” for reducing change orders, some approaches can help.
They include establishing quality control processes, increasing coordination and collaboration, establishing an initial change order process, meeting directly with the stakeholders regularly, and including more detail in the project design.
Regarding change orders in construction, get ahead of potential issues before they become a problem. Anticipating changes, implementing a process, and working to reduce those changes will keep your project on track.
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