What Is Construction Change Order Management?
The Change Order Process in Construction
A construction contract is a legal agreement that details cost, schedule and performance of all work to be performed. It is a document that serves to assign and allocate risk. By maintaining control of the process of scope, cost and duration changes, the risk of miscommunication for both the Owner and Contractor will be minimized.
A good construction contract ensures that there is no confusion regarding:
- What the contractor will build and how it is to be built;
- How much the project will cost;
- How long the work will take;
- The quality of the work to be performed and the materials to be used;
- Payment terms and a whole host of terms and conditions.
That said, even the best planned projects encounter the unexpected, particularly renovation projects. No one can predict what the future holds: delays, increased costs or disruptions due to unforeseen conditions may arise, conditions underground may engender necessary changes to the scope, the Owner’s desires and needs may change, etc. (This is why every project budget should include a contingency.) It is in the best interests of all parties that any changes to the agreed, contractual scope of work be formalized by a written Change Order. Here are some key points on the basics:
- Familiarize yourself thoroughly with the scope of work for each contract. Do not allow the Contractor to perform any work that changes any of the criteria listed above until approval of a written Change Order.
- Require that any change requests be made in writing by the Contractor. Avoid verbal change orders which could be a source of dispute later. Carefully review all Change Order requests for appropriate scope of work, amount, and duration. Discuss and revise the Change Order Request with the project team until acceptable to all parties.
- A special note about duration: many change orders trigger a delay to the schedule which is not often captured at the time of the change and creates misunderstandings later. Insist that all change orders clearly either extend the schedule or not at the time of negotiation.
- When the invoice arrives, confirm the Change Order has not been previously billed and that all arithmetic is correct.
- If you are an Agent for the Owner, establish clearly articulated parameters regarding the scope and dollar amount of your authority so you will know when you can make autonomous decisions and when you need to seek the Owner’s approval.
This article is intended as a beginner’s primer for the process for Change Order Management. For large, complex projects, or those involving water intrusion and engineering issues, rely on a professional construction manager for advice.
Educational Resources What You Need to Know About Construction Change Order Management Top 10 Benefits of Construction Management Importance of Communication During a Construction Project Payment Procedures in Construction Management