In some cases, with a clearly defined scope and a perfect plan, projects steam smoothly from preconstruction to completion. In other cases, life happens. Your budget is suddenly cut, or you realize that some critical component was left out and needs to be added.
A change order is in order.
Change orders can be uncomfortable, even intimidating, but three simple keys can help your organization navigate change orders to maintain power and make proactive decisions throughout the life of a project.
1. Discuss the Changes EARLY
As a client, you have the power to set the tone. At the beginning of a project, establish with your contractor the expectation that all changes be communicated as early as possible.
Whether changes are initiated by the owner or the contractor, discussing them early allows time to be proactive and change direction if necessary. When changes are mentioned too late, organizations can be forced to make fast, reactive decisions with little flexibility.
Mike Woods, President of Haskell’s Consumer Packaged Goods (CPG) Group, suggests clients and contractors diagnose the ripple effect of a change early in the process. Woods describes the ripple effect as the ability to assess everything affected by a change, not just the change itself.
Before making decisions, consider how a change will impact your overall project, schedule and budget.
2. Discuss the Changes OFTEN
Be clear about how often you and your contractor will discuss issues within the project. An ideal way to make this a habit is by including change orders as a topic in your monthly meetings. This way, even if there is no change to discuss, it allows the lines of communication to be open.
By talking over changes frequently, you can avoid the question, “How did we get here?” You can and deserve to be aware of where you stand in your project each step of the way.
3. Changes should be VERBAL and WRITTEN
All change orders should be written and explained verbally in detail to ensure all parties are on the same page.
For more clarity, you can require your contractor to be as descriptive as possible in each line item of the change order. This promotes analysis of the change’s ripple effect before it gets to you. Assessing the ripple effect may even uncover a better solution before submittal.
Although it’s no secret that changes can occur before all documentation is completed, you should be clear when you want change order documentation from your contractor. There is no rule of thumb for how often documentation should be submitted because it can work differently depending on the organization.
For example, one Haskell client prefers change order documentation be submitted quarterly to minimize paperwork. Another requests that completed documentation 60 days following the change. You and your contractor should agree on an interval that works for both of you.
Best Practices
Below are several best practices you should apply before you encounter a change order.
- Designate a point of contact in your organization. If changes occur, you want the contractor to ask the right person for approval.
- Diagnose the ripple effect. Analyze each area the change will affect.
- Be clear on who will bear the cost of a change. If this is not discussed with your contractor early, it can lead to surprises in the end.
- Align your expectations with your contractor so the process and procedures are understood when a change occurs.
- Collaborate with a trusted contractor about your scope so you can understand what is possible, what is necessary and what can be omitted for your project to be a success.
- Team with a contractor that has a change management program. If they have a policy in place and a depth of experience with change orders, it will mean fewer headaches for you.
Although change orders are less than ideal and often quite complex, they are part of the construction landscape. Communication and structure are vital and following these steps and best practices will help you navigate them more smoothly.
If you would like to learn more about Haskell’s change-management program and how it is implemented on our projects, feel free to contact us.
