Change Orders and Their Effect on Construction

Construction Change Order

Do you have a construction project underway or ready to begin?  Have you considered the possibility of change orders and their impact they can have on your project?

Change orders can occur and are often unavoidable during the construction process.  A change order is work that is added or deleted from the original scope of work and as a result the original contract amount and/or completion date of your project is modified.  Despite the project team’s best effort to avoid change orders during construction, they are common.   There are many reasons changes can occur.  Most of the time they result from unknown field conditions, design changes or owner requests.  If change orders occur, here is what you can expect and how to best handle them.

Change orders can increase the cost of your project.  One way to avoid going over budget is to plan for a 5-10% contingency to handle these items.  This way if changes occur, they will not exceed your budget.

When a change is required it is best to notify the team immediately.  This way the issue can be discussed and a solution developed.  Many times the changes will require the architect or engineer to revise the project drawings or make permitting changes and then additional work must be priced for owner acceptance.  Depending on the magnitude of the change, the project schedule may be extended or completion of certain work could be delayed.

The cost of your project will increase and the project schedule will extend if custom, pre-ordered or installed items, (i.e. structural steel) need to be revised or re-ordered.

The timing of changes can also have varying effects on construction.  Changes can result in a several week delay as the trickle-down effect of one change impacts other progress.

If changes are significant throughout the duration of the project, contingency budgets could be exceeded resulting in additional bank financing.  Depending on the financing package, it could take a few weeks or several months to secure the necessary funds.

Changes throughout a project may be unavoidable, but planning ahead with your design and project team can minimize changes along the way.  Changes must be factored into the overall plan as they can extend project completion.  The key to the entire construction process is good communication with the project team.  This will help ensure that the final product meets the owner’s building, budget and schedule requirements.

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