Understanding Change Orders in Construction Industry

As we all know, the contractor starts working on a project after a long process that begins with bidding on this project to the contract agreement (scope of work, budget, and total working days).

However, during the project duration, issues may arise, for instance, Unforeseen site conditions, delays, or client requirements that can change the contract agreement.

A change order is a document that alters the agreed scope of work, budget, and schedule.

What triggers a change order to be submitted?

A change order document can mainly arise from these two options:

1. Addition to the Scope of Work.
2. Deduction from the Scope of Work.

So, what can arise these additions and deductions to the Scope work. Construction Risks is the answer.

Risks in construction include, but are not limited to:

• Design/Scope Changes.
• Unforeseen Site Conditions.
• Poorly written contracts.
• Fluctuations in material costs.
• Delays.
• Supply Chain issues.
• Force majeure.

Process of a change order

Every contract should state the change order process to avoid conflicts during the project duration. It also affirms the dates of when the contractor can give a notice of change or the time of the submission and approval.

The process starts with knowing that an expected delay might result caused by any of the risks mentioned before. Once the contractor is aware of such delay, they can give notice to the owner in a (COR) change order request.

This document can be accepted or declined due to the validity of the information and whether the contractor has the right to additional days and costs.

If accepted, the contractor should prepare the change order document. Contemporaneously, the contractor shouldn’t start working on site until it is approved.

Upon approval from the owner, the contractor should start working the next day to avoid further delays.

What is included in a change order?

Project Information

This section should include the contract number, project name, address, owner’s name and contact information, contractor’s name and contact information, and the change order number.

Description of the Change

The contractor should describe the added or deducted work in detail. Also, they should mention the reason behind the change order if it is an unforeseen site condition, design change, force majeure, etc.

If practicable, support the document with extra descriptions or drawings to prove contractor’s position.

Change Timeline

Be careful to read the contract and understand when to give such a notice, when to submit it, and the amount of time needed for approval by the client. Doing so can support contractor’s argument to get approval of the change order.

Accurate Reflection of the New Contract Time and Cost

This can include the old contract value and duration, all past change orders (if any), the current time and cost of this change order, and suggested contract value and duration.

Updated Schedule

The change order should be supported with a detailed updated schedule reflecting the changes.

The change is added to the schedule in a separate WBS with details to make it readable to anyone who sees the schedule. An analysis is to be submitted with the update to reflect the before and after pictures after adding this change to the schedule and how it affected the critical path.

Predict these change orders

As we know, Changes are inevitable in any construction project. However, the contractor can anticipate some of them. Regular updates to the schedule can save a contractor a lot.

Progress updates – weekly, Bi-weekly, or Monthly updates give an overview of the contractor’s position.

If the update is ahead of schedule, all is good. And if it is behind schedule then there is a problem, and should be investigated more to be well prepared.

If you’re looking for expert guidance on construction planning, scheduling, or change management, our team at Syplan is here to help.

We have a proven track record of delivering successful projects on time and within budget.

Contact us today to learn more about how our services can benefit your construction project.