Change Order BasicsAssociation of Construction and Development
May 8, 2013 — 1,765 views
It is quite common for construction projects to deviate from the original plan. Problems like those related to a budget, the site conditions, and design issues can arise during the course of work. This requires every construction project to have scope for changes in the work, to take care of the unforeseen consequences. This construction change is accomplished through the change order process. This gives the project owner the authority to change the scope of work of the contractor without invalidating the terms of the contract. To accommodate the change of order without any issues, the project owner should make sure that the original clause specifically determines how the change orders are to be carried out.
There can be many causes that lead to the creation of a change of order. This can include the incorrect estimation of the project’s work. The project team or the customer may detect some obstacles which will force them to deviate from the original course of action. At times the project team might be incapable of delivering the project in time and within the previously set budget. All these reasons can lead the project manager to develop a new course of action for the completion of the project.
Finalize the Cost
Once a change of order has been made, it is necessary for the project owner to establish the exact cost that the new course of action would entail. This is essential for the process of finalizing the cost and predicting the final worth of the project. Establishing the cost of the change of order is also necessary to set up a plan for managing the contingency funds. Having an estimate about the final cost will also help to plan a negotiation with the contractor, who is in charge.
To ensure that the change of order process is justified and cost efficient, certain key requirements should be fulfilled. A professional should be selected so as to oversee the process of construction change. The professional should be selected by an objective evaluation of his experience and qualifications. If required, the owner should arrange a training program for these professionals in order to carry out the change of order estimation process.
The cost efficiency and the reasoning for the change of order should be assessed. This should include determining the identity of the requestor who asked for a change of order. You should also determine why the request was made in the first place. An accurate itemization of the costs should also be obtained.
The contract professionals should review the new costs and should also certify the reasonableness of the cost. A formal process should also be executed to analyze the cost determination of the professionals. The project owners should ensure that the contractors submit the proposal for the change of order in a complete manner, and on time.
Not all change orders have an impact on the final project cost. Some of the changes can be made for clarifications. The changes can also be notes, which are added to provide extra information. If the change of order has an impact on the pricing, then the invoices are to be studied for the quantities that only concern the change of order that is being processed.