If you’re involved in a construction project, read our guide below to learn more about change orders and 5 effective strategies for curtailing them and softening their impact.
What are change orders and why do they happen?A change order is a procedure for modifying a construction contract’s price, schedule, or scope of work. The need for a change order can arise out of several situations, such as:
• a client’s or architect’s design change
• unbuildable elements
• coordination mishaps between various disciplines
• contractor’s misinterpretation of design requirements
• unforeseen site conditions
Client-initiated changes are the most common of these sources, and the easiest to anticipate. On the other hand, design issues, interpretation errors, or undetected problems at the site are much more challenging to plan for and mitigate. Regardless of their cause, change orders can emerge as stunning new expenses during construction, leading to claims, litigation, and spoilt relationships.
While it’s seldom possible to ward off change orders completely, certain precautions can help minimize their occurrence and mitigate their effect. These steps are aimed at resolving the root causes of change orders discussed above, and require the dedication of all project stakeholders.
1. Encourage collaboration between the contractor and the design teamWaiting until construction to find unbuildable components is a sure-fire way to encourage change orders. For this reason, contractors, or similarly experienced field professionals are an invaluable asset during planning and design to determine the constructability of the project. Their hands-on experience allows them to identify design elements that don’t work in practice. Bringing a contractor on board during design when errors are easy to fix is a great safeguard against potential changes.
Unfortunately, not all construction project delivery methods offer equal opportunities for contractor-designer collaboration. The traditional Design-Bid-Build (DBB) method is very linear, and limits contractor involvement to the bidding stage. On the contrary, methods such as Design-Build (DB) and Integrated Project Delivery (IPD) are structured in a way that promotes the contractor’s participation early on in the project. Even with DBB, the contractor can be brought in early for preconstruction services that are very helpful.
2. Enhance interdisciplinary coordination during designIt takes several disciplines to design a building. Most design teams comprise an architect, a civil/structural engineer, as well as mechanical, electrical, and plumbing engineers. Highly complex projects may require even the input of more specialized consultants.
For a design to be buildable and functional, these disciplines’ inputs must interface seamlessly. Coordination flaws, such as ducts running through structural connections, may lead to costly change orders if they go unnoticed during on the drawing issued for construction. Conversely, thorough coordination between disciplines can help to ward off such clashes. Peer reviews and Building Information Modeling (BIM) are a great way to detect these flaws before drawings are finalized.
3. Ensure clarity in contract documentsContractors must have a clear understanding of what they’re supposed to build. When their scope of work is vaguely defined, or when contract documents are riddled with ambiguities, the contractor may inadvertently misinterpret the design requirements or their contractual obligations.
Such errors are a common cause of change orders. To avert them, it’s imperative to keep the contract documents clear. For architects and engineers, this means producing drawings and specifications a contractor and their subcontractors-essentially, non-engineers-could understand without confusion. All important details must be included, the notes must be concise, and the drawings should adhere to accepted architectural and engineering standards.
Further, construction project management team members should establish effective Request for Information (RFI) procedures through which contractors could raise queries and get prompt responses.
4. Minimize the risks brought on by unforeseen conditionsCost overruns and schedule delays often originate from unforeseen conditions such as underground hazards, hidden structural flaws, and outdated electrical and plumbing systems. Too often, these threats are not identified nor accounted for before operations commence, and emerge only once a project is underway.
While it’s impossible to uncover every flaw and hazard without costly, invasive investigations, the project team should strive to evaluate the site and/or the existing building for signs of defects. Additionally, adequate risk management processes should be in place, with each potential cost identified, quantified, and assigned a control measure. A contingency should be set aside as an additional “cushion” for the budget should change orders emerge from unforeseen conditions.
5. Get quotes for alternatives, include appropriate sums as allowances in your budgetMost change orders originate with the client. It’s natural to have better ideas or second thoughts about a building as it actually takes shape. To this end, the client should anticipate possible design changes, and prepare for them by exploring alternatives before construction.
Ideally, alternative solutions to the final design should be quoted during the bidding stage. Doing so would give the client a firm idea of what they’d expect to pay should they proceed with the change. Having a priced alternative would also let the client allocate enough funds to pay for the change order should the need arise.
While having priced alternatives does not reduce change orders, it makes them more predictable and manageable for all involved. The strategy may also shorten the inevitable delays, as it lets the design team prepare their solution ahead of time.
If you are involved in a construction project, consider retaining a professional construction management company to help you manage change orders.