If you were to look at survey data, you will find that around 30% of construction projects incur major changes after construction has begun. Change orders are common in the construction industry and are typically the reason for many disputes between contractors, owners, and designers. These change orders have a negative impact on the budget of the project and result in cost overruns which eventually lead to project delays.
According to several studies, on average, around 15% of projects face cost overruns. They are usually 20% behind their scheduled delivery time due to change orders. If you are dealing with change orders and want to avoid that outcome, the following are a few tips that can help you in saving your business from a loss.
Clarity in the Contract
When you are taking on a new project, make sure that you go through all the specifications with all the involved parties before you sign the contract. Ask them to clarify the scope of the project and make sure that you understand everything clearly that is included in the price that was agreed upon. If there are any parts of the project where expectations are not clear, make sure to discuss them with the clients. By doing so, you can avoid any confusion or questions from arising later on about the clients’ expectations.
In the contract, everything should be clearly specified regarding change orders. Make sure to include what kind of approvals are necessary for the change order to proceed. In case there are any disagreements over whether a change order is necessary, the contract should cover details to help deal with such disputes.
Make sure to include details like who receives the change orders and what the submission timeframe of change orders is in the contract. You should also include the approval process and format as well as the cost of work details for change orders in the contract. Of course, do not forget to include details regarding the schedule changes and delays that will result as a direct consequence of change orders.
Communicate with the Stakeholders
There are a lot of different reasons for which a client might request a change order. They might have had a change of heart regarding the design, or it could be due to errors in the original design. It does not matter what the reason is for the change order. You will have to communicate openly and regularly with your clients and any subcontractors who are affected by the change.
Make sure to explain to your client that in order to make the changes, you will need to pause work. If there are going to be any delays or schedule changes, make the client aware of them as early as possible. Remember to account for any labor, material, and equipment requirements that will arise due to the change order and any additional costs that will impact the schedule of the project. If the changes will have a negative impact on the work that has already been done, make sure that the client knows about it.
Technology and Digitization
Technology makes managing change orders much easier than it was before. Construction projects run more efficiently after undergoing full-scale digitization. You can talk to your equipment dealers about digitizing your worksite. This way you will be better equipped to deal with change orders.
Besides modern equipment, you should also think about using construction software. Using construction management software will allow you to communicate clearly and easily with fewer points of contact. You will have an easier time tracking change orders and having everyone in on the project change plans.