Almost every construction project encounters change. In fact, it has been said that the only constant in construction is change. Whether it’s a change to the scope of work, a revision to the specifications, or an impact to the means and methods of performing the work, changes can significantly impact a project’s cost and schedule.
- There are numerous reasons why changes may occur on a construction project, including, but not limited to:
- Unclear bid documents
- Owner directed changes
- Late, incomplete, or defective drawings; specifications, and other contract documents
- Preferential changes by the owner
- Misinterpreted contract requirements by the parties
- Differing site conditions
- New or revised codes/standards
- Impacts/changes to the construction means and methods
- Scope additions
- Acceleration and/or schedule changes
- Constructive changes
Changes can impact a project in many different ways. In a majority of cases, the change in the work is handled by a change order in which the parties agree to the scope of work, as well as the cost of the work or pricing to be used. In this way, the change is incorporated into the overall contract and the contractor is compensated. The change order management process generally involves the following:
- Reviewing the contract, understanding the scope of work, and knowing the parties’ responsibilities
- Identifying the change or potential change
- Providing notice of the change in accordance with the contract
- Documenting the change, including costs and schedule impacts related to the change
- Preparing and pricing the change request
- Negotiating and resolving the change and executing a signed change order
Disputes arise when the owner and the contractor have differing views regarding the following:
- Whether a change has actually occurred, or was the work contemplated in the contract scope of work
- The parties’ responsibilities
- The change order pricing or schedule impacts
Disputes over the changed conditions can vary from little to no impact on the project to extensive changes. For instance, an owner’s preferential change to the scope of work may be easily resolved once the pricing for the changed scope of work is agreed upon and the change order is executed. However, on the other end of the spectrum, there may be defective drawings and specifications which more significantly impact the work. The defective drawings and specifications may lead to the contractor submitting many Requests for Information (RFIs) requesting clarification. Although some of these RFIs are for informational purposes, some may lead to change orders. In other cases, the response to RFIs may change and impact work which has already been performed, thus requiring the contractor to perform rework. Excessive RFIs, changes, and rework may lead to labor productivity problems as the contractor is required to reallocate resources pending the resolution of the RFI or change.
Additionally, an excessive number of changes can disrupt a project and may require a significant change to the contractor’s means and methods of performing the work. With excessive changes, the work scope may no longer closely resemble the original contract work scope and the contractor will have to expend additional time and resources to perform the changed work. This could negatively affect the labor productivity on not only the changed work, but also the original contract scope of work.
The timing of a particular change is also relevant, as changes that occur later in the project can be more costly and more disruptive to the overall project. Late changes often result in more rework, or may require higher manpower loading to meet the completion date. This typically results in lower labor productivity and increased project costs relative to the same change occurring earlier in the project.
Belmont’s construction claims consultants routinely work on assignments involving change. Whether providing change order management on an ongoing project or testifying to the disruptions and impacts of changes on a project, we understand the key elements associated with managing and mitigating change. Belmont reviews the contract to ensure that a change has occurred and that it was beyond the party’s contractual obligation. It is also important to review the contract’s change order provisions to determine if it has been properly handled according to the contractual change order procedures. We then evaluate the facts surrounding the change, including reviewing project documentation and interviewing project personnel, to assess responsibility for the change. Finally, Belmont evaluates the change order pricing and schedule impacts to verify that these elements are properly calculated and substantiated, and that the amounts being claimed are a fair and reasonable value of the extra or changed work.