Understanding Change Orders in Construction: How to Navigate Plan Alterations Efficiently
Change orders are formal documents in the construction industry that provide instructions to revise plans after they have already been completed. While necessary, they can often lead to additional costs and project delays.
Backstory and Impact of Change Orders
Change orders can come about for a variety of reasons—client’s new ideas, modifications based on unforeseen circumstances, or omissions and errors in the original plans. At their core, change orders specify the needed modifications, and can sometimes have significant financial implications.
Example: The Unforeseen Costs
Imagine a resident, Mrs. Smith, who is in the process of constructing her home. Midway through the project, she decides that adding a half-bathroom would be beneficial for her family. She issues a change order to convert an existing closet into a half-bathroom without realizing that the cost to install necessary plumbing and fittings in that space will reach $25,000.
Best Practices for Managing Change Orders
- Advance Planning: Thorough planning and extensive reviews of initial plans can minimize the likelihood of needing change orders.
- Clear Communication: Confirm and communicate all potential changes in the project to all parties involved with as much foresight as possible.
- Budget Considerations: Including a contingency budget can help accommodate any potential overages or change orders without impacting the overall financial plan of the project.
- Documentation: Create comprehensive documentation at all stages to define the project’s scope clearly. This aids in ensuring all stakeholders are on the same page.
- Professional Consultation: Engaging professionals to conduct feasibility studies before making substantial alterations can save both money and time.
FAQs about Change Orders
Q: What is a change order in construction?
A: A change order is a formal document modifying the original construction plans after they have been approved and work has begun. It typically results in changes to the scope, budget, and timeline of the project.
Q: Why are change orders often expensive?
A: Change orders can be costly due to factors such as labor and material requirements, further engineering or architectural services, and the potential for delaying other project elements.
Q: How can I avoid expensive change orders?
A: Meticulous planning, open communication, and regular project reviews can dramatically reduce the incidence of expensive change orders. Allocating a contingency budget also mitigates unexpected costs.
Q: Can change orders be negotiated?
A: Yes, in many cases change orders can be negotiated. Ensure that all negotiations are documented to prevent misunderstandings and disputes later.
Q: What documentation needs to be included with a change order?
A: A comprehensive change order should include detailed descriptions of changes, impacts on the project’s budget and schedule, and approvals from relevant stakeholders.
By fully understanding and effectively managing change orders, you ensure smoother project execution, fewer surprises, and optimized resource utilization.
Related Terms: Construction Contract, Construction Planning, Project Management.
