Summary: Change orders are inevitable in commercial development, but how you prepare for and handle them can affect project success. Looking for ways to avoid change orders? Learn more here!
Changes may be made to any commercial construction project along the route. Change orders are unavoidable, even with the best strategy and team. In actuality, change orders are issued in over a third (35%) of commercial projects. The objective of every owner and developer should be to reduce them.
As a project develops, changes bring about costs, delays, irritation, and frequent conflict. Any commercial construction project normally has between one and five change orders.
Most Frequent Justifications for Change Orders:
Municipalities may play a significant role in the change required for commercial construction. For instance, a fire alarm system would be needed when building has begun.
Tenant requests are a major factor in alterations, much like municipal adjustments. Although they don’t happen as frequently as modifications relating to municipal requirements, they are nonetheless possible. You frequently have to balance the significance of that tenant to your total project against the expense of making significant adjustments to scope when your tenants decide to change their minds after construction has already started. The cost of granting a corporate tenant’s request might be more, but the danger of doing so might be higher.
You must strike a balance between your short- and long-term objectives and your budget in commercial construction, as in all other aspects.
You can only take steps to avoid change orders by being aware of their probable causes. Here are some of the most important ones:
- Plans that were inaccurately drawn and full of flaws.
- The contractor and property owner are unable to communicate.
- The contractor misdescribed the extent of the work.
- Due to supply issues, which are now frequent, the contractor is forced to use different building materials, which frequently necessitates changing the construction process and timeline.
- Unfavorable weather, which may cause safety issues and labor shortages or delays.
- Changes in scope occurred as a result of financial or other difficulties that the owner or renter experienced.
- Government laws have altered, causing unforeseen changes to plans.
You have no influence over some of these (such as weather, zoning, or regulatory constraints). However, some might be reduced with good planning and process management.
These Are Three Strategies for Reducing Change Orders.
1) Perform a thorough plan review.
Even though it may be tempting to start construction immediately, taking enough time on the plan will ultimately save you time and money. Before starting building, be sure you have all the necessary permissions and approvals. Even while this could occasionally be annoying, as the construction process progresses, you’ll prevent surprises and potential disagreement.
Make sure the general contractor has thoroughly studied the drawings, especially if they will serve as tenant prototypes. Multi-tenant homes can be particularly challenging. Each work letter needs to be carefully reviewed, and you must ensure that your general contractor and architect give each one the right interpretation.
Plans and drawings can now be more exact and comprehensive, thanks to automation. Make sure everyone working on the project makes the most of technology to produce the most precise representations, timetables, and cost estimates.
Before construction starts, a thorough plan review with all team members is essential to ensure that everyone has read and correctly translated the blueprints.
2) Build a buffer into your time and cost projections.
You should plan your contingency budget with additional room to account for change orders. Depending on the project, that might account for 5 to 6 percent of the total budget and should be included in your contingency budget. But be sure to make that clear to your general contractor.
When adjustments are necessary, express them precisely and unambiguously and modify your estimations as necessary.
3) Consider the weather & Other Uncontrollable Instances
Unpredictable weather has grown in importance as a planning consideration for building. The construction industry loses $4 billion annually due to weather-related delays.
Cold spells, snowstorms, and heavy rain can cause delays even when work is done indoors. Workers can experience transportation issues, and material shipments might be postponed by days, weeks, or even months.
Based on your location and professional forecasts, make weather preparations. For instance, you might schedule your outdoor work to be finished before the first snowflake falls if you know that snow is anticipated to fall on the east coast between November and February.
Certain weather-related events may incur significant costs. For instance, in Washington State, torrential rainfall might cause flooding and the need to pump out a construction site.
Make sure you understand the geography of your project and be ready for any surprises Mother Nature may have in store. Although the weather is out of your control, you can lessen its effects.
The COVID-19 outbreak has also impacted the construction sector. Unexpected disruptions may result from problems with the supply chain and sick leave shortages among the workforce. In reality, the pandemic reportedly had a detrimental influence on delivery schedules and performance, according to 70% of business owners in the construction industry.
Establish a Successful Change Order Process
Have a strategy in place that reduces expense, confusion, and hostility as you proceed with construction now that you are aware that change orders in commercial construction are unavoidable and that you have identified three crucial approaches to mitigate them.
Determine the “issue” and the cause of the change first. Avoid pointing fingers and assigning blame.
Then, go over how this modification will affect the project as a whole. Especially if the modification has an effect on other areas of the commercial construction project, make sure all parties are informed of it.
Final step: approve the documentation. Once more, use technology to keep track of change orders so you can clearly describe the impact on costs and schedules and gather knowledge from every project.
Change orders will always be a part of commercial development, but how you approach and manage them can have a huge impact on the long-term success of your project.
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