Change Orders

Sources of change

Changes are very common in construction projects and may be a result of:

  • Changing requirements by the owner,
  • Changing requirements by the authorities,
  • Added or removed features or specifications,
  • Value engineering,
  • Correction of design errors,
  • Problem resolutions,
  • Non-availability or delayed materials,
  • ...

There are plenty more possible sources of change. However above short list demonstrates that changes may be introduced for different reasons and by different stakeholders.

Impacts of change

Common impacts of changes are:

  • Changes to cost,
  • Changes to schedule,
  • Interruptions or changes in construction sequences,
  • Extra coordination efforts and overheads,
  • ...

More impacts are conceivable and after all mostly have influence on cost and/or time.

Procedure

To avoid conflicts the presence of and adherence to proper procedures by all parties and a common agreed understanding of requirements and all baselines (scope, time, cost) is absolute inevitable.

change order flow chart

Changes introduced by the client

If the client introduces a change following procedure would be desirable:

change order flow chart (PDF, 350kb)

 

01. Client's preliminary decision to proceed
The necessity of a change must be introduced to the client's change control board by the initiator. The change control board evaluates the request and determines how to proceed.
02. Client's Request For Proposal (RFP)
The client submits a RFP to the contractor(s). The RFP must include all information required to make a realistic estimate on cost, time and effort.
03. Contractor's proposal
After the RFP is received, it must be introduced to the contractor's change control board for evaluation. Based on the recommendations and decisions the contractor will prepare his response and submit it to the client as fast as possible.
04. Change authorization
The client's change control board reviews the proposal, approves or rejects it or asks further clarification and instructs the contractor formally by issuing a purchase order or whatever provided in the contract.
05. Change implementation
The contractor acts according to the client's instruction.
06. Compensation
The contractor shall submit his invoice and other documents (if any) to the contractor as agreed.

change order flow chart

Changes introduced by the contractor

It may happen that the contractor wishes to introduce a change or is forced by circumstances to do so.

Possible reasons could be value engineering, non-availability of materials, etc.

If the contractor introduces a change, following procedure would be desirable:

change order flow chart (PDF, 350kb)

 

01. Contractor's change request
The necessity of a change must be formally introduced to the client by the contractor. Detailed information along with supporting documents must be provided to determine what the effect of the change will be with regards to cost, time, scope and requirements.
02. Client's response
The client through his change control board evaluates and approves or rejects the change request or asks further clarification, and formally informs the result to the contractor.
03. Contractor's compliance
The contractor forthwith complies to the client's instruction.

 

For clarification:

Change control board (whether client or contractor)
shall be an individual or group of individuals being furnished with authority to negotiate and approve or reject changes, and usually is staffed with different subject experts.
Value engineering
in this context shall mean improving functions of a deliverable or decreasing cost of the same. Value is the ratio of function to cost.

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