A change order is a construction document that outlines changes to be made to an original scope of work. Revisions on a change order include: addition or subtraction of work, schedule revision, price adjustments, or design alteration.
While change orders are common in the construction world, it’s in the interest of every contractor to avoid them. The reason: change orders can cause project delays and expensive reworks, which ultimately stalls the entire project.
Change orders can be caused by several factors, which we’ll outline in this article.
Common reasons that change orders happen
Construction projects face many challenges, the biggest of them being unforeseen obstacles. An example of an unexpected obstacle is when a pandemic disrupts the market, as has happened in 2020.
Another example of an unforeseen obstacle is when the construction crew discovers that they’re building on a major and unmarked gas line.
Such obstacles can cause construction delays that may necessitate a change order.
There are cases in which building plans created by architects can be confusing or impossible to implement. Therefore, the contractor might prepare a change order to rectify this mistake.
When the budget is inaccurate, it becomes difficult for contractors to implement construction blueprints. To ensure that the project does not stall, contractors can prepare a change order to modify the design or request more financing.
Change orders are also made when there’s a delay in the delivery of equipment and materials. If there’s a prolonged delay, the wait can cause the project to stall, affecting the overall construction schedule.
7 Mitigation Strategies to Deal with Construction Change Orders
As mentioned above, change orders should be avoided because they can disrupt an entire project. Therefore, contractors and project owners should use strategies to deal with change orders. Here are a few of them.
1. Use modern technology
Some factors that cause change orders can be controlled using modern technology. One technology designed for this is https://www.alicetechnologies.com/product/manage.
ALICE is the first construction optioneering platform on the market, designed to create multiple construction simulations for reducing risks and getting the best viable alternatives or options. The platform also allows the contractor to visualize progress, detect construction delays, and solve schedule problems.
This software can reduce project time by more than 17% and labor costs by more than 14%. It also creates backup schedules in case unforeseen obstacles arise.
2. Be prepared for the change order
Though change orders should generally be avoided, they’re usually a part of the project life cycle. In this regard, it’s in the contractor’s best interest to have a contract drafted with specific instructions on how change orders should be executed, funding terms, and ways to gauge performance.
This is important because you don’t want to be in a position where project decision-makers claim they did not authorize the change orders. After you’ve created a clear structure on how a change order can be done, you should prepare to document the order by having a dedicated file for it. This makes it easy to retrieve it in case of a legal lawsuit or dispute.
3. Encourage collaboration
One way to deal with change orders is to reduce the chances of it being a required option. The best way to do this is by encouraging collaboration between all key decision-making teams. Engineers and architects must be able to communicate and collaborate with contractors promptly.
For this reason, contractors should always be involved during the construction project’s planning and design phase.
4. Encourage communication
To encourage communication, have regular pre-construction meetings and use modern communication platforms. The communication platform you use should be mobile-friendly so it’s easily accessible to all key stakeholders. The platform should also make it possible for contractors to hold subcontractors accountable by tracking task completion rates.
5. Be thorough
Another way to deal with construction change orders is to be detailed throughout the entire construction stage. For example, when you get your estimates during the planning phase, it’s crucial to seek a second opinion on whether the cost estimates are accurate.
This way, property developers can identify vague descriptions and unrealistic costs that can affect the project’s success. When there is a change order, it’s vital to have a risk analysis done to know how the order can affect your profitability.
6. Create precise contracts
One of the best mitigation strategies to deal with change orders is ensuring that contracts are precise. You risk having several change orders if you have a vague agreement with a poorly defined scope of work. Similarly, architects and engineers are required to produce drawings and design specifications that are clear and easy to understand.
In addition, project managers should establish a Request for Information (RFI) protocol that will make it easy for contractors to get answers promptly. Project architects and engineers will promptly respond to this protocol when contractors need urgent information about the building.
7. Reduce the risk of unforeseen obstacles
Though it’s impossible to reduce the risk of all unforeseen obstacles, project managers should ensure that unexpected obstacles that are commonly-known are immediately dealt with. Some common unforeseen obstacles that contractors may miss are underground hazards, outdated plumbing systems, and hidden structural flaws.
Property developers need to have backup design changes and explore alternatives to the design of the building. When this is done, the budget will cater to these options, reducing risks. If you have three alternatives, you should ensure that all three alternatives are budgeted in case the owner wants to change the design.