What is a Change Order?
A change order is a formal document that modifies the original terms of a construction contract between the Client / Employer and the Contractor.
It addresses changes in the project scope, including alterations to work, design, schedule, price, or other project aspects.
Change orders can be either additive (adding work) or deductive (removing work).
How to Prepare a Change Order Proposal?
When a change is requested, follow these steps:
1. Initiation: One party (owner or contractor) initiates a change request.
2. Assessment: Evaluate the impact of the change on cost, schedule, and project scope.
3. Proposal: Create a detailed change order proposal that outlines:
(a)Description of the change.
(b)Estimated cost breakdown.
(c)Revised timeline.
4. Negotiation: Both parties negotiate terms until consensus is reached.
5. Formalization: Document the agreed-upon changes in a signed change order.
How to Evaluate a Change Order Proposal?
Consider the following factors:
(a) Cost: Assess the proposed cost against the project budget.
(b) Schedule: Evaluate the impact on project timelines.
(c) Scope: Ensure alignment with the project’s overall goals.
(d) Contractual Obligations: Verify compliance with the original contract.
(e) Risk: Analyze potential risks associated with the change.
How to Track and Manage Change Orders:
Use a change order log to:
Record all change orders.
Track approvals and implementation.
Monitor costs and schedule adjustments.
Maintain clear communication between all stakeholders.
Regularly update project documentation to reflect approved changes.
How to Avoid or Minimize Change Orders:
Thorough Planning: Invest time in detailed project planning to minimize surprises.
Clear Communication: Ensure all parties understand project requirements and expectations.
Accurate Design and Drawings: Minimize discrepancies by having accurate plans.
Risk Assessment: Identify potential risks early and plan mitigation strategies.
Effective Change Management: Implement a robust change management process.