Change orders are quite common in the construction industry. A change order is a work that is either added or omitted from the original project plan and scope, which affects your project completion date, costs, etc.They don’t only occur because of error or any omission in the project, but for various reasons like change in drawings, change in scope of work, unforeseen conditions, etc.
These changes are very common in the construction industry, especially in large scale projects. Your construction team can make their best effort to avoid change orders, but these are very common in the construction sector. Therefore, you need to know everything about change orders in order to handle them best.
Most Common Causes of Change Orders in Construction Projects
Change orders are an inherent part of the construction industry and are very common causes of delays and claims. Here are some of the most common causes of change orders that have a significant impact on the construction duration and costs:
- Financial Problems
- Late Decision Making
- Change in Scope or Modification in Project
- Material Changes
- Project Specification Changes
- Inadequate Project Drawings and Details
- Conflicts in Contract Documents
- Equipment Shortage
- Different Site Conditions
- Lack of Communication
Among these various causes of the change order, it has been observed that unforeseen weather conditions and financial problems faced by the owner and the contractor are two major causes of change orders. If you face these challenges, contact construction consultants as soon as possible to mitigate these risks effectively.
Effect of Change Order on Construction Projects
A change order effects the construction project in two major dimensions – time duration and cost as follows:
Project Duration:
In the construction industry, all the tasks are interrelated to one another. The timing of the change order can have various effects on the construction project. Due to the trickle-down effect of change, one change order can have a significant impact on the progress of the project. The delay can be for several weeks up to months, depending upon the size of the change order.
Change order during the execution of the project leads to extensive project delays. To process these change orders, the contractor will need additional time and budget to complete the project successfully. Large construction projects face surplus costs and huge delays as a result of change orders.
Change orders often express a feeling of negativity from all the parties involved. The Owner of the project feels like he is paying for the mistakes of the contractor or architect. The contractor, on the other hand, requires additional documents to process change orders because they disrupt the workflow of the project.
Change is a fact in the construction industry. Change orders may be small or extensive, depending upon the requirement of each project. If these change orders are well managed, they will have little impact on the performance of the project. However, if a change order is not managed effectively at every single stage of the project, it leads to project disruption in schedule and arbitration.
- Expert’s Recommendation
When you experience a change order, your first task should be re-estimating the delivery time of the project after processing the change. A real challenge for contractors is to accurately estimate other factors that create a lot of discrepancy between the actual time duration of the project and the estimated time. In time estimation, a construction delay expert witness would help you make accurate estimations of the time duration as a result of the change order.
Project Cost:
Change orders will surely increase the overall cost of your construction project. This increase will be significant if you need to revise or re-order already installed or pre-ordered items. Hence, one way to avoid this is to plan for a 10-15% contingency in your budget to handle these changes. This way, you will stay under the budget, and it will not exceed the threshold.
If change orders require extensive changes throughout the duration of the construction project, chances are you will exceed the contingency budget, resulting in extra financing and material costs. In such cases, it could lead to significant delays in the project because it may take more than weeks or months to secure the necessary funds for increased payments and costs.
- Expert’s Recommendation
It is essential for contractors to quantify the cost of change order during the lifetime of the construction project at different intervals. In case of a change order, quantification of damage or changes is highly crucial in case the change order leads to delay claims and litigation. For quantification of the change order, consider approaching a professional construction consultant for better estimations instead of DIY.
Profit Generation Through Change Orders
Change orders are not always bad for construction businesses. If managed properly and effectively, change orders can yield profits for contractors and construction businesses. Change is constant and unavoidable in the construction sector, but if you plan ahead of time, you can easily manage and minimize the changes in the project.
The key to a successful change order process is good communication and proper planning. It will ensure that the final project meets the deadlines, owner’s requirements, and budget successfully.