Change orders are quite common in the construction, and if it makes you feel uneasy, then it is time to upgrade your change order management process. If managed successfully, change orders are not something to be afraid of, but for that, you need to manage them as soon as they arise and make sure every team is on the same page regarding the change in the scope of work.
All the profitable contractors and construction firms have a change order management process in place in case the owner initiates a change in the scope of the project. Change orders are inevitable in the construction industry, but it doesn’t mean that getting paid for your work has to be compromised.
Top 5 Tips for Effective Change Order Management in Construction
Change orders are common in the construction industry when the owner decides to add or change something when the construction has already begun. These can be quite tricky for the contractor to process and accommodate in the current schedule.
Here are a few tips to help you process and manage a change order effectively.
Carefully Understand the Contract Details
A change order is simply an amendment in the original construction contract or the scope of work. Hence, the first step in processing a change order is to look at the contractual details and the scope. Change orders usually involve additional work not mentioned in the contract. It could be due to an error, safety issues, regulatory concerns, material change, or a change in the construction drawings.
Consider hiring a quantum expert to fully understand your contract and paying attention to all the written clauses regarding the change order and protecting oneself from cost overruns. It includes requirements regarding the extension in the timeline of the project in case of a change order, or who will cover the extra costs.
Be sure to address these ambiguities in the contract before initiating the work and processing the change order.
Review All the Plans
After carefully reviewing the contractual details, the next step is to review your construction plans. Identify any ambiguity in the drawing or error in the new order and discuss it with the owner before starting working on the change. The chances are that after addressing these issues, there will be no need for a change order.
If you fail to review the work scope for any errors, it will lead to unnecessary change orders and cost overruns down the line. It includes addressing construction site conditions, public utilities in case of a commercial project, and anything that might delay the future.
Communicate with All the Parties
A major part of your change order process should be establishing good communication with all the parties that are involved in the construction project. It includes the contractor, owner, suppliers, investors, etc. The first thing you need to discuss with all the parties is the reason behind the change requested and how to manage it.
Without proper communication, there is a great chance of disputes arising due to the poor handling of the change order. You need to sit down with the project owner and ask them to clearly define the scope of the change order and how it will affect your current schedule and costs. Make sure everyone is on the same page before starting the work on the change order.
After discussing the change order with the owner, you need to make schedule adjustments with the suppliers and the subcontractors. Discuss the scope of the new work and how it will affect their work. Make sure everyone understands their roles and the change order requirements.
Documenting is essential for dealing with change orders, but it helps avoid construction claims and disputes in the industry. A good way to process the change order is to document every step of the process and record all the communication between the parties regarding the change order. Proper documentation can help you avert disputes and construction claims.
Remember never to begin work on a change order, before getting an authorized and signed document from the owner that states that the owner will cover costs of the change. Once you have started working on the change order, keep a record of all the invoices, time, and material costs and share the documents with all the related parties.
Negotiate Change Orders
The final step is to negotiate the change order with the owner before you start working on new work. This can be very tricky because most of the disputes arise because the contract does not have a scope for an actual change. There can also be an agreement issue on who will cover the costs and whether there will be an extension in the project’s timeline.
The first thing to do is consider hiring a construction claims consultant from fractalexpertservices.com to help you negotiate with the owner. It would help if you established how additional work would be estimated and the required time and costs. Chances are your contract already covers these aspects, if not, then you can deal through unit pricing, cost of materials, or lump sum cost.
Don’t be afraid to ask for an extension in the project timeline as a result of the change order, especially if the owner initiated it. You need additional time if you require additional work.
Don’t Delay Change Orders!
Regardless of whether a change order is initiated by you or the owner of the project, they need to be handled as soon as possible. Ignoring a change order or delaying it can lead to costly litigation and disputes that adversely affect the construction project. Once the change order is initiated, consider consulting a quantum expert, and begin working on processing and accommodating the changes.
These are some of the ways to help you streamline the change process as effectively as possible. Regardless of the complexity of the change order, a good process will let you handle the change efficiently.