Change orders are essential for successful construction project management. As the General Contractor (GC) or Construction Manager, it’s your job to manage change. Actual or perceived differences that lead to change orders are an inevitable source of disruption for many construction projects that, if not handled properly, can lead to project delays, disputes and claims.
The reasons behind construction change orders vary from project to project, but the most common circumstances are design inconsistencies or design changes, contractor changes, inaccurate specifications and unforeseen conditions. As a contractor or Construction Manager, you’re likely familiar with these and have encountered situations where you’ve had to deal with change orders. While we often hear about the common reasons for change orders, we don’t always think about other underlying circumstances that can lead to a change order. Things like local building codes, the environment and other events that occur on the jobsite. These circumstances are essential to think about so you can be prepared as you plan out future projects.
Let’s review some of the most important circumstances that lead to change orders.
Unforeseen environmental conditions
Workers try their best to assess the site before the building phase starts, but unforeseen environmental factors occur. You might be on a jobsite preparing to build and as you’re digging, you run into a water intrusion issue or there’s a gas line 30 feet deep. Unfortunately, this is more common than you might think.
Now, as the GC or the Construction Manager, you have a change order on your hands that you may not want to pay for and aren’t sure who’s at fault for not finding these issues prior to the build phase. You’ll go back to the contract documents, including plans and specifications, to figure out what was specified in the scope of work to figure out the next steps. These potential environmental factors are important to keep in mind.
Design changes
Any project that requires a building permit will have a set of plans to define what is to be built. Even projects that don’t require a building permit will often have a set of drawings to guide the contractor. Sometimes dimensions on the plans are incorrect or the contractor finds a way to build the design more efficiently.
In these cases, the contractor or builder will need to make adjustments during construction, which can be recorded using redline markups to create the as-built set of plans or the plans may be revised by the design team to match the new specifications. Other design changes include simple opinion changes where the owner might prefer nickel door handles over gold to save on cost. Perhaps they want to move a door from the corner of a hall to the center. All of these changes affect the initial project scope and therefore lead to change orders.
Code changes
The local building codes might have been updated and may require something different than originally specified on the contract documents. Maybe the building needs another fire exit or an extra ladder needs to be installed outside the building. No matter the updates necessary to meet the code, change orders are required.
It’s important to have clear communication and documentation on the new decisions made for the changes. Other code changes come from safety. Today, the construction industry is still dealing with the impacts from the COVID-19 pandemic. Change orders could result from supply chain issues surrounding some common construction materials that were impacted by the pandemic. To get a job done on time different–and potentially more expensive–materials need to be used. Depending on how the prime contract and all subcontracts’ terms were written, the GC and / or affected vendors may have to absorb some or all of the increased material costs.
Contractor changes
You might be walking the jobsite with the owner or PM and suggest a change to the building because of a design flaw, layout error or substitution for materials. Sometimes you may see a better way to build than what was initially planned. There can also be a shortage of supplies, and you might have to make substitutions for materials. This can also lead to change orders.
Many things can require a change order. Someone changes their mind, whether it be the owner, GC or sub. You might have to meet building code that differs from the initial design. You might run into unforeseen circumstances, like environmental factors. It’s important to remember that not all change orders are bad or cost your team money. It’s part of the job. And as a GC or Construction Manager, it’s part of your job to manage them efficiently to reduce the likelihood of project delays.
Construction management software and jobsite management software can make the process of documenting and generating potential changes as issues arise much simpler and more efficient, saving your team time and money. Fieldlens by RedTeam is an intuitive construction jobsite management software for efficient collaboration that field teams can use to create quick posts to document potential issues as soon as they arise. Subcontractors who may be affected by the potential change can be notified immediately and asked to provide quotes on any potential scope changes. RedTeam Go is an easy-to-use construction project management software that helps you automate and standardize your workflows, including creation of potential changes, change proposals and change orders, both for owners and vendor changes. Everything is stored in one location that all project stakeholders have access to so the change process is handled quickly and effectively. RedTeam Flex is a highly customizable construction management solution designed to help mid-to enterprise level contractors manage construction projects from start to finish. Create potential changes from a request for information (RFI) response or generate a potential change directly from the prime contract or a vendor contract. All collaboration with subs affected by a potential change, including quotes requested and received and any discussions along the way are documented within the change and can be pulled into a customer change proposal as backup. AIA-style change orders can be issued and executed within minutes. Check out RedTeam’s website to learn more about how our solutions can help you manage your project changes.
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Frequently Asked Questions
Q: What is a change order in construction?
A change order is an official document that modifies the original construction contract. It outlines changes in the project scope, cost, time or other critical aspects, ensuring that all parties agree to the modifications.
Q: Why are change orders important in construction project management?
Change orders are crucial because they help manage and document any alterations to the initial project plan. This ensures accountability and clarity, preventing disputes and delays, and helps in maintaining the project’s overall timeline and budget.
Q: What are some common reasons for construction change orders?
Common reasons include design inconsistencies, contractor changes, inaccurate specifications, unforeseen environmental conditions and updates to local building codes. These factors can significantly alter the scope and requirements of the project.
Q: How do unforeseen environmental conditions lead to change orders?
Unforeseen environmental conditions, such as discovering a hidden gas line or encountering water intrusion, can necessitate a change order. These conditions often require additional work or adjustments not included in the original contract, affecting both cost and timeline.
Q: How can design changes impact the construction project?
Design changes, whether due to errors in the initial plans or the owner’s preference changes, can lead to change orders. For example, a contractor might find a more efficient way to build or the owner might decide to change fixtures or room layouts, necessitating project adjustments.
Q: What role do local building codes play in necessitating change orders?
Local building codes may be updated during the construction process, requiring compliance changes that weren’t part of the original contract. For instance, new safety regulations might require additional exits or specific materials, leading to change orders to meet these new standards.
Q: How do contractor changes result in change orders?
Contractor changes can occur due to a need for material substitutions, design flaw corrections or layout adjustments. These changes often require modifications to the project scope, impacting cost and time, thus necessitating a change order.
Q: Are change orders always a negative aspect of construction projects?
Not necessarily. Change orders can indicate issues or unforeseen conditions, but they also provide a structured way to manage and document changes. This helps ensure project alignment and reduces the risk of disputes. When managed properly, change orders can lead to better project outcomes.
Q: How can construction management software help in handling change orders?
Construction management software, like RedTeam’s suite of solutions, can streamline the process of documenting, generating and managing change orders. These tools provide a centralized platform for communication, documentation and collaboration, making it easier to handle changes efficiently and transparently.
Q: What steps should be taken when a change order is identified?
When a change order is identified, the project manager should review the contract documents, assess the impact of the change, communicate with all stakeholders and document the change formally. This ensures that everyone is on the same page and that the project can proceed smoothly with the new adjustments.
