Managing Construction Change Orders
“Change order” is a technical term that refers to any alteration of a construction contract. These deviations from the contract are issued for a variety of reasons, including changes to the work, deadlines or costs of the project. They serve as a necessary and useful tool in successfully managing the modifications that occur throughout the duration of a project.
Change orders are an unavoidable part of working within the construction industry. If they are not managed effectively, it can lead to increased costs and projects delays, leading to missing deadlines and lost revenue. But if they are managed effectively, they can increase the profit from your project. This can often be intimidating when the responsibility falls on you to successfully manage these change orders. Fortunately, the process can be quite simple if you prepare yourself and take the right approach.
Tip 1: Review the contract carefully
Before you sign a contract, it is important that you review it carefully. Note any specific questions, concerns or discrepancies that you have so that you can discuss them with other parties involved. Look for vague language and errors in the contract, as this could cause confusion and disagreements later in the project. It is also imperative to search for any missing information, regarding specifications for the project, that may have been forgotten or left out.
Tip 2: Discuss any contract concerns with all parties involved
Once you have thoroughly reviewed the contract, meet with everyone that is involved in the project including the client/GC, architects, and engineers. This serves as an important opportunity to receive clarification and review any disagreements or concerns you have about the contract. Communication helps to eliminate any unnecessary change orders later in the project. Double check that everyone on the team is on the same page. Extra verification never hurts!
Tip 3: Require written documentation for all changes
Make sure that the contract includes a clause requiring written documentation for all change orders. This means that the client must also provide written documentation before requesting any changes. When a provision requiring written documentation is left out, it can cause confusion as to how the process should be handled when a change order arises. Requiring unanimous agreement before moving forward with change orders keeps everyone involved and on the same page.
Tip 4: Consider the impact on the project
Once your project is in motion, it is important to consider the impact of the change orders before moving forward. Think about how it will alter the course of your project and how it will affect the different people working on your project. Sit down and discuss what these changes would look like so that you can see the scope of cost and schedule deferments. Ask yourself, is this change absolutely necessary? If you come to the conclusion that a change order is the best option for the project and team, you will be prepared to tackle the task!
Although the change order process requires extra preparation and constant communication, it can be easily and effectively managed with a game plan. Do the extra prep work, and you will master the change order process in no time!