Construction Change Order Management
Change order management is one of the most important tasks over the life of a construction project, yet one of the processes that is often poorly executed. Issues related to change orders are a common source of disputes between contractors and owners. Both parties have responsibilities in managing change orders and resolving them in a timely manner to minimize impacts to the project and maximize returns for both parties.
Due to the complex and dynamic nature of construction projects, it is difficult to foresee every variable or challenge from the onset. Experience has shown that almost every project has to address changes to scope or execution. Changes are due to a wide range of events including owners requiring a scope or execution change to better meet their needs, designers addressing design issues, 3rd party events, weather impacts, or even misunderstandings. Failure to properly address these issues through a change management process will likely cause greater disruption on the project and degrade the relationship between the owner and contractor.
Contractors typically are required to provide notification of any event that they believe is a change to their scope of work. They also are required to respond to owner requests for changes. In both cases, contractors need to properly assess the impacts to existing work and calculate the cost and schedule impacts of the change. Contractors then need to work with owners to negotiate a reasonable adjustment to the contract, working with the owner to minimize impacts, and then incorporate it into the scope of work.
Owners need to acknowledge changes to the work when they occur and address contractor requests when submitted. They should assess the impact to the contractors’ work and evaluate the cost and schedule adjustments that should be made as a result of the change. Owners should also promptly respond to changes to minimize impacts to the project and provide relief to contractors where appropriate to help keep progress on track.
Both parties often lack sufficient skilled resources to manage change orders when they arise. Spire helps keep projects on track through a robust change management process. We support owners and contractors with preparing change order requests, assessing scope, and other impacts on cost and schedule, and negotiating final change order terms. Spire implements industry best practices in holistically analyzing change order requests. Whether it is from a proactive or forensic perspective, Spire’s consultants can help in validating scope of work and pricing change orders. We can help analyze project documents to determine if the key elements to demonstrate the changes were valid and reasonable. We can then analyze cost and schedule impacts against actual project data to determine the adjustments that should be made to resolve the change.