Construction companies are working on lucrative and worthwhile projects for clients. Everything is going great i.e. on schedule, all activities running smoothly and the clients are happy. However, there is a point where the project hits a roadblock. This doesn’t look good in the project’s progress report.
Clients desire a few amendments and additions which are outside the contract. Taking on such kind of additional work will delay the deadline. It will cost more in terms of labor and materials. This calls for a change order. Let us now understand what a change order is and how does it work.
A change order – what is it?
A lot of professionals in the construction industry must have heard about it. But what is a change order exactly? It is an official document drawn up to request a change to the original contract.
Change orders usually make amendments to an original contract. They allow for any unforeseen issues or problems that can arise. Often submitted by contractors, any of the parties involved in construction projects can create them.
In what ways do change orders work?
Suppose a construction company began a project 5 weeks ago and is in it deep. As the professionals walk through the job site, a supervisor approaches the manager. They notify them when supplies needed for the next phase have been delayed. They both know that this will push the timeline back.
This means the project cannot be completed on time (as the contract stipulates). This also indicates that it is time for a change order.
The manual process of a ton of paperwork, receipts, other documents attached and forms are now behind. Most construction professionals now use streamlined software to place change orders. Here is how they do it:
- Clicking open their preferred template.
- Adding in the needed information.
- Sending the information to the client/clientele.
Clients then view and approve the change order online. The construction team is hence free to continue the work. It sounds easy because the construction project manager used streamlined modern software which is also available on mobile devices. With everything saved for quick access, the software has a cloud that can provide documented proof.
Change orders are able to protect the following:
- The construction project owner and company.
- Project manager.
- Client.
- The whole construction team.
In case you are wondering what happens to the contractor, they also happen to be part of the construction team.
What should be part of a change order?
A lot of professionals are wondering how a change order is made. Each change order format is different from the others. Project advisory experts state that some things are common in each change order. This is what a change order should include in full detail:
- Explain what is being changed, what needs to be changed, and how it is relevant to the original plan.
- List any additional costs to be incurred by the change order.
- Listing any expenses to be saved by the change order.
- Documenting any new subcontractor expenses.
- The information on the effects of changes on the original project timeline.
- Signatures of the contractor, project owner, and client (irrespective of who made the change order).
- Specifications on whenever the other party wishes to respond to or request more information.
What are the circumstances which lead to the creation of Construction change orders?
Considering the fact that approximately 35% of construction projects use change orders, there are many reasons construction project managers may end up writing one by themselves.
Would contractors make a change order? Here are the reasons why they might make one:
- Materials, labor, and/or employees needed came in later than expected.
- An unforeseen/unplanned interruption took place.
- The original budget, schedule, or both were not able to accurately portray what would be required.
- Unexpected roadblocks came up which caused the project to take a new direction as per requirements.
- Adverse weather conditions force the project into a pause (which can be temporary or indefinite).
Clients can also submit change orders. Here are the reasons for it:
- They desire to add or change something in the building’s/property’s/project’s design.
- Changes in the budget quotations are needed.
- The top management requires a change in the project.
- Clients wish to take the project in a new direction.
How should construction teams be ready for construction change orders?
Dispute avoidance experts stress for prevention is the best cure. The initial contract can outline the change order process and the way they can be managed in case they arise. When the process is included in the contract, conflict can be eliminated which might happen because of unexpected obstacles.
If a change order was not part of the contract then there is nothing to fear. Honest communication from the very beginning makes sure all change orders are well received.
