With every construction project, all parties involved draw up an initial contract outlining the details involved in completing the project. It’s inevitable that changes occur during the course of a project. Sometimes the changes are minor, but other times, the changes may cost time and money. Every contractor should be aware of possible change orders, and be prepared to manage them in a way that makes clear to all parties involved what is needed for a project to progress toward completion.
Know and prepare
The most common causes for a change order can vary from one project to another, but they are all additions that need to be quantified in terms of time and money. They can be a headache on complex projects and when the time frame is tight. Change order management is a different process than for regular contract documents since change orders can lead to disputes, legal battles, and arbitration. Here are some tips for the most common change order reasons.
Drawing Errors and Omissions: Inadequate details, misrepresentation, or simply neglecting to prepare a complete set of detailed drawings can lead to serious change order requests. Sometimes leaving out details and misrepresenting the exact environment of the jobsite can also lead to change order claims. Design changes caused by starting a project without a complete project scope can not only lead to change orders, but can result in work stoppage and additional costs. Always be sure to dot your I’s and cross your T’s when looking over drawings and project plans to avoid serious change orders down the line.
Specifications: Sometimes the drawing calls for one product but the specifications call for another. This is common on projects where the drawings are assigned to different consultants — each one acting on their own, without any kind of direction from a team leader. This leaves the contractor with the difficult task of assuming and quoting products that will likely be changed once installation begins. Before starting a project, be sure to check that all parties involved are on the same page.
Unforeseen Conditions: How many times do you have to complete a soil boring? Soil problems, in particular, are the most common reason for unforeseen conditions that lead to change orders. Assumptions based on testing of the soil conditions or any other issue regarding the construction of the project can be different from the actual conditions found on the site. Unforeseen conditions almost always lead to a change order. Be sure to check the conditions on the actual jobsite.
Substitutions: A contractor may want to substitute material when he cannot get the specified materials or there is a shortage in supplies. This type of change order is different because it can lead to another issue: A credit will be asked if the material cost is less, or sometimes the contractor will have to absorb the cost difference between materials or products. Sometimes, the owner asks for upgrades during the construction process. In this case you must submit a change order request claiming the economic and time costs associated with the proposed modifications.
Managing the Change Order Process: Make Sure You Get Paid What You Deserve, was a seminar presented by C.J. Schoenwetter of Bowman and Brooke LLP, at World of Concrete 2012. Schoenwetter discusses the importance of change orders as a tool that “helps put the organization back into the organized chaos that sometimes constitutes the construction process.” Visit go.hw.net/ChangeOrders for a PDF of the entire seminar.
Parts of this article were taken from Juan Rodriguez’s article, “Common Causes for a Change Order.” Rodríguez is a registered professional engineer with more than 17 years of experience in the construction industry. He has managed several multi-million dollar projects in the infrastructure, housing, and renewable energy industries. He provides assistance to GC’s, engineering firms, and builders across the U.S. and Canada. Visit go.hw.net/CommonCauses to view the complete article.