Change orders on construction projects are inevitable. Many change orders happen for valid reasons while others are the result of poor planning and project management. These avoidable and unnecessary change orders can ruin a construction schedule and send projects over budget.
While you may not be able to avoid all change orders, there are some general practices you can follow to drastically reduce these unanticipated ones. In this guide, you'll learn more about some practical tips for reducing unwanted change orders on your construction project.
A change order is a process of modifying a construction contract's schedule, price, or scope of work. Change orders can happen for a variety of reasons including:
Client-initiated changes are the most common cause of construction change orders. These changes are easy to anticipate and are less difficult to manage. However, changes caused by undetected problems, design issues, or interpretation errors are much more difficult to plan for and manage.
No matter the reason, construction change orders can create massive unplanned expenses, leading to claims, litigation, and ruined relationships.
While it's less than likely you can avoid change orders completely, certain procedures can help reduce their occurrence and mitigate their effect. The goal of these steps is to resolve the root causes of construction change orders and require the commitment of all project stakeholders.
The first step to mitigating the negative effects of change orders is to create a plan to handle them before the project begins. Contract documents should always include the process for initiating, authorizing, performing, and paying for all change order work.
Establishing a process in advance will help prevent unauthorized change orders and other disputes. This will reduce the impact change orders have on the project's schedule and budget. The process should clearly document the steps to follow when a potential change order is identified.
Contractors need to have a clear understanding of exactly what they're supposed to build. When your contract documents don't include sufficient details about the project, the contractor can easily misinterpret the design requirements or their contractual obligations.
These errors are a common cause of change orders. To avoid them, it's critical to ensure your contract documents are clear. This means creating drawings and specifications that both contractors and subcontractors can understand without confusion. All necessary details should be included, the notes must be clear and concise, and all drawings should meet accepted architectural and engineering standards.
Designing a building requires a variety of disciplines. Most design teams consist of an architect, a civil engineer, along with electrical, mechanical, and plumbing engineers. More complex projects may even require the assistance of more specialized disciplines.
The inputs from these disciplines must work together seamlessly for a design to be functional and buildable. Coordination errors such as the drainage engineer's drain pipe and the sanitary engineer's sanitary pipe crossing each other at the same elevation can lead to costly change orders if they go unnoticed during the design process. However, coordination between disciplines can help eliminate such issues.
Contractors and other experienced field professionals are an essential asset during planning and design as they can determine the constructability of a project. Their first-hand experience allows them to easily identify design elements that aren't practical. Having a contractor as a part of the design process (when errors are easier to fix) is a great protection against potential change orders. Waiting until construction to find unbuildable elements will leave you susceptible to more change orders and substantially longer project delays.
Not all construction project delivery methods provide the same opportunity for collaboration between contractors and designers. The traditional Design-Bid-Build method limits contractor involvement to the bidding stage. Other methods such as Design-Build and Integrated Project Delivery are structured to promote the contractor's involvement early in the project.
Schedule delays and cost overruns are often the result of unforeseen conditions such as hidden structural flaws, underground hazards, or outdated electrical and plumbing systems. Unfortunately, these issues are often not identified or accounted for prior to the start of operations and only emerge after a project has started.
Uncovering every flaw or hazard is not possible without costly, invasive investigations. However, the project team should make it a priority to evaluate the site or existing building for any signs of defects.
It's also good practice to ensure proper risk management processes are in place to help identify, quantify, and assign a control measure to each potential cost. A reserve of contingency funds should be set aside as an extra cushion for the budget should any change orders result from unforeseen conditions.
Establishing a construction quality control process for all stages and levels of the project will help minimize the number of change orders. This includes the design process, specifications and engineering changes, technical documentation, testing and inspection reports, and other procedures specified in the contract.
By having testing and inspection at every stage and level of your project, you are able to catch potential problems earlier, reducing the number of change orders later on. Implementing testing and inspections also helps reduce costs as it's less likely you'll have to go back and fix problems later in the project.
The majority of change orders are initiated by the client. It's common for them to have new ideas or second thoughts about a building as it actually comes together. In this regard, the client should anticipate possible design changes and prepare in advance by considering alternatives before construction.
If possible, you want to have alternative solutions to the final design quoted during the bidding stage. Doing so will give the client a clearer picture of what they would pay if they proceeded with the changes. Having a priced alternative would also allow the client to allocate the necessary funds to pay for the potential change order.
Priced alternatives may not reduce change orders, however, they make them more predictable and easier to manage. This strategy also helps shorten delays as the design team can prepare their solution in advance.
It's the contractor's responsibility to ensure that all subcontractors meet or exceed the contract requirements. This means that the goods and services provided by the subcontractors must comply with the scope of work and other regulations. The contractor must ensure that all team members are employed according to federal contractor and subcontractor legislative requirements.
It's imperative to provide and maintain an inspection system and documentation. This will ensure that all work from the subcontractors falls in line with the project and does not result in unnecessary change orders.
Many change orders can be avoided through adequate planning before a project commences. The best way to accurately plan your construction projects is with a reliable estimating software.
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