Guide to Effective Handling of Construction Change Orders

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Changes are almost inevitable in construction. Even with the best construction management software, you still can’t be sure that things will go according to your plans 100%. And the reasons for the changes are too many. It could be the weather, it could be additional work requests from the client, it could be a change in objective, or maybe, while the construction is ongoing, you’d suddenly realize that the current project state won’t let you finish on time or within budget. When these things happen, you will need to go through the proper change order process or suffer from disputes or, possibly, litigation later on. 

Keep in mind that when changes in the operation happen, the scope of your contract also changes. And you know very well that pushing through with construction without a change order document means a breach of contract. And it won’t be very pretty for your company to go through a legal fight that concerns a breach of contract. 

So in our blog today, we’re going to walk you through the change order process you should follow when changes happen in your project.

What is a Change Order?

Change order in construction actually refers to a document that details the scope of changes in design, builders schedule, plan, budget, or site conditions. In most cases, the contract includes the change order process and guidelines on managing the change. This means that clients consider the fact that there could be changes along the way. 

Generally, people in construction refer to change order as additional work, change in work directive, or change in the work request. A change order can be requested either by the client or the general contractor. They then pass the signed document to the site and the construction project manager will be the one to inform the crew members and implement the change. 

Common Reasons for Change Order in Construction

As we mentioned earlier, there are various reasons for a change order to be requested. Sometimes, when the construction project manager realizes that the site condition has changed because of weather or the project progress won’t meet the client’s expectation, then he reports it to the general contractor and the general contractor will have to request the client’s approval to carry out changes. 

Other times, when decisions around drawings, design, budget, materials, builders schedule, suppliers, subcontractors, and human resources can be the reasons why change order should be issued. 

No matter the reason or the impact on the project, changes will always affect the overall result or feasibility of the project. 

For instance, moving a single wall can lead to a change in design of the affected room. The schedule will be changed and days to work will be added. Ultimately, the delivery of the project will be delayed, resulting in the displacement of supposed occupants.

This situation could’ve been prevented when plans have been reviewed thoroughly and contingency plans were prepared before the construction started. But then again, there’s no perfect plan. It now boils down to your ability to handle the change and make adjustments so that you can still deliver the project on time and within the budget while meeting the client’s expectations. 

Construction Change Order Process

For a change order to be implemented, there should first be an agreement between the project team and the client on what changes should be carried out and how they’ll be executed at the site. This is why documentation is important. Reports sent by crew members to your construction crew management software can serve as your references when tracing for the root cause that brought about the change. So make sure to document everything that’s happening at the site everyday. 

Prior to the implementation of change, a change order form should be completed, which will serve as a reference for the client, architect, and project manager. 

Basically, the format of the change order form to use should be indicated in the contract. It should also define how to submit the form. Typically, the AIA G701 Change Order form is required by the client as well as the ConsensusDocs 202/795. 

If the contract didn’t specify this, then the contractor can use a general template that is downloadable online or choose to write his own format. What’s important is that the form includes this crucial information:

  1. Project and contact information

This part of the form should clearly define the following:

  •         Contract number
  •         Client’s name and contact details
  •         Contractor’s name and contact details
  •         Project/Structure’s name and address
  •         Change order number
  1. Date of Change Order

Indicate the date when you’re able to complete the change order. You may also write down the dates for:

  •         The first time you gave the client a notice of the change
  •         The day you are submitting the change order form for approval

Remember that it is important to give notice to the concerned party that a change needs to be done on the project. Give them a heads up and an overview of the scope of change as well as your estimated time frame to complete the change. Failure to give an early notice can lead to the rejection of the change order. Normally, notice should be given 5 to 10 days prior to the submission of the change order form. 

The worst thing that can happen when the change order gets rejected is when the contractor doesn’t get paid even when he’s able to complete the project. Sometimes, the worst can be the cancellation of the contract or a lawsuit. 

So always read the contract thoroughly and review the terms on the client’s change order process. 

  1. Details of Change

This part of the form is where the contractor describes the change in detail. What caused the change? What extra work will be done? How long will it take to finish the change? 

It is here where you give the client the reasons to approve the change order so take time to write the details and be sure that the client understands what happened and what will happen when the change order doesn’t get approved. 

We recommend that you attach photos, reports, and other documents as evidence for the cause of change. Going to details can also protect your rights should the form fall into the hands of a lawyer. 

  1. Updated Builders Schedule

The first thing that comes to a client’s mind when a change order is requested is the possibility of delays. In your form, you should then attach an updated schedule when the change is already executed so that the client knows how many days are added to the timeline. This also allows him to prepare for an extra budget that will cover the operation on those added days as well as the materials needed to carry out the change.

  1. Cost of the Change

As we mentioned earlier, change order will mean extensions and additional expenses. And these extra costs include additional operational costs, labor cost, material cost tax, insurance, and other costs related to the operation. 

So, in your change order form, indicate the following values:

  •         Original contract value
  •         Cost of change order
  •         New proposed contract value
  •         Cost of previously approved change orders
  1. Signature

Your signature is what will complete the change order form and what will make it a valid, legal document. After signing, send the document to the client for review. When he asks for additional information, provide them right away so that the project doesn’t get delayed any further. Once the client signs and sends back the document to you, then it’s time to inform the crew and implement the changes. 

Software for More Effective Change Order Process

Stay on top of the changes in your project by automating your reports. Reports are crucial evidence you can use to prove the change needed in the project. Photos and videos are helpful too so ask your team to save them in a central location. 

A good option for automating reports and saving as much supporting documents as needed is a construction project management software. Using spreadsheets or pen and paper to identify the need for change order is no longer effective. Manual methods only make the process slower and most of the time, data is inaccurate. As a result, your change order form won’t be too convincing for the client to approve. 

Benefits of Automating Construction Change Order Process

Just like how it’s better to automate your construction crew management, automating your change order process will also ensure speed and accuracy. This way, you can prevent more cash loss on your client’s side as well as your company’s side. 

So standardize how you manage issues at the site and how you communicate changes. Doing so will avoid long and costly delays. 

The best construction scheduling planning software can help.

Best Construction Management Software for Handling Change Order

The software market for the construction industry is filled with numerous options. However, the best construction project management software will be the one that can gather everything you need to write an agreeable change order form. It won’t generate a document for you that you can submit right away but will supply you with references and evidence you can use to convince the client to approve your request. 

Pro Crew Schedule is a front-runner schedule software and mobile app that features project progress reports, scheduling, project calendars, and document management. All of which are all useful when writing change orders. 

Start saving, managing, and tracking your change orders more efficiently by using Pro Crew Schedule. Request your free demo today.

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