A change order is an official request from the contractor for additional funding and time to complete the contractual obligations that have been revised on the owner’s request. If left unaccounted for, these change orders cause project delays and contractual issues leading to expensive disputes and litigation.
However, change order is not something to be afraid of; if you manage it appropriately, it can turn out to be profitable in the end. They are complex and can be a real challenge for the contractor, especially in the presence of time and budget constraints. If change orders are handled properly and managed effectively, then you can avoid distrust and disputes.
Common Construction Issues that Lead to Change Orders
Change orders in construction differ from project to project, but they are mostly related to one of the following types of problems. These most common issues include the following:
Errors in Construction Drawings
One of the most common reasons behind the initiation of a change order in the construction industry are the errors in project drawings and also its scope. Misrepresentation or wrong details can lead to serious change order requests from the parties involved. A change order can also be requested in case of incomplete project drawings.
To prevent this problem from affecting your work, make sure to review all contract details and documents to verify that the owner has provided you with all the information. Before starting work, make sure all the information is accurate and up-to-date with the latest standards specified by a construction project management company.
Project Design Changes
Most contractors don’t fully review the contract and project drawings before starting the construction work, and most of them start work before receiving the final drawings. This creates a massive problem down the road and is the most common cause of order changing in the construction industry.
When work starts before the final drawings, the ongoing process leads to cost overruns, delays, and sometimes even complete work stoppages. This can have a significant impact on the overhead costs as it leads to multiple issues like labor availability, additional time, and material.
Faulty Project Specifications
When professional architects and construction experts don’t design project drawings, the drawings often ask for one product, while the specifications ask for something else. This is quite common when you involve multiple consultants for one project, and they all have their own suggestions. This leads to several issues in terms of the project scope as the owner asks for something else while the contract says entirely different.
Another common reason behind change order is when the contractor cannot find the specified materials or equipment and make last-minute changes due to the unavailability or shortage of supplies/ materials. This leads to change order and cost issues as the contractor might need to make up for the difference in the cost of materials.
Another issue that might lead to construction change order are problems at the worksite, and the most common type of problem is the condition of the soil. Soil conditions lead to failure to perform construction work because you cannot bore for work initiation. A soil test ahead of time can save you from unexpected issues, but if the soil profile varies, it may lead to additional issues.
How to Manage Change Orders and Make Profit?
Here are some tips to effective management at your construction project to make it profitable:
- Carefully read your contractual details and clauses regarding change order to make sure you protect your payments. To avoid missing out on important details, consider hiring a quantum expert to ensure that it is profitable for you.
- Review your change order specifications and construction plans and drawings to measure the scope of the change. Failing to do so will lead to more change orders down the way.
- Communicate with all the involved parties about the change order process of a project to identify how the change will be managed and avoid disputes.
- Don’t ignore change orders or put them off until late in the project as it leads to cost overruns. Once it is initiated, work quickly to amend the work and negotiate cost and time.
- To avoid disputes arising, make sure to document everything, including plans, pictures, legal documents, communication, invoices, etc.
- Before working on the change, make sure to negotiate it, and agree upon additional time and budget.
Managing Construction Project Effectively
These are the top five most common issues in the construction industry that can lead to change order and how to manage them as effectively as possible. Your ability to effectively manage them can directly affect your whole project and its profitability.
Now you recognize the importance of effective order management, so make sure to consult with a professional company for managing a construction project, and include changing order management in every contract to avoid arbitration.