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PRACTICES IN
CONSTRUCTION
CHANGE ORDER
MANAGEMENT
Joseph J. Egan, PE; Joseph E. Seder, CCE;
and Dayna L. Anderson
Abstract: Changes during most construction projects are inevitable and can lead when the scope of work performed
to cost and schedule overruns. Effectively managing these changes can signifi- differs from the scope of work outlined in
cantly reduce the risk of disputes and claims that often result in costly litigation. the contract documents. Examples of
This article examines the various approaches to change management currently common changes encountered on
used in the industry and summarizes some of these practices. In addition, a case construction projects include the
study involving the construction of a power plant impacted by a force majeure
following:
event that delayed the shipment of the major equipment for more than six
months is discussed. Impacts to the project were tracked on a contemporaneous
basis in order to efficiently quantify cost and schedule impacts for change order • addition or deletion of scope;
negotiations with the owner and for insurance recovery purposes. Some of the • changes to the project duration;
means and methods used on the project to track the impacts, including out-of- • revisions to material type and
sequence work, winter conditions, stacking of trades, and others, are addressed specifications;
in this article. The authors first presented this manuscript as CSC.607, at the 2011 • drawing and specification errors and
AACE International Annual Meeting in Anaheim, CA. omissions;
• late or defective owner-furnished
Key Words: Claims, change orders, construction, cost, risk, and schedules material;
• differing site conditions;
• equipment procurement and
C
hanges during most equipment for more than six months.
manufacturing issues;
construction projects are Impacts to the project were tracked on a
• force majeure; and
inevitable and can lead to cost contemporaneous basis in order to
• contractual non-compliance by the
and schedule overruns. efficiently quantify cost and schedule
owner.
Effectively managing these changes can impacts for change order negotiations
significantly reduce the risk of claims that with the owner and for insurance
Changes to a construction project
often result in costly disputes and recovery purposes. Some of the means
can be defined in many ways, including
litigation. This article examines the and methods used on the project to track
being generally categorized into three
various approaches to change the impacts including out-of-sequence
broad categories:
management currently used in the work, winter conditions, stacking of
industry and summarizes some of these trades, and others, are addressed in this
• directed changes;
practices. article.
• constructive changes; or
In addition, a case study involving the
• cardinal changes.
construction of a power plant is Defining Change
discussed. Construction of the plant was On many construction projects of Directed changes are changes
impacted by a force majeure event that varying size or type, changes often occur. typically issued by the owner or its
delayed the shipment of the major Changes on a construction project occur representative that are often written as
C
hange during most construction 4. SP43-1-Project Change Joseph J. Egan, PE, is
projects is inevitable and can Management, Project Change with Davis & Hosfield
lead to cost and schedule Management Research Team, Consulting, LLC. He
overruns. The change management Construction Industry Institute, can be contacted by
process typically includes: Austin, TX, 1994. sending e-mail to:
5. AACE International Recommended jegan@dhllc.com
• address potential change in the Practice No. 10S-90: Cost
contract documents; Engineering Terminology, AACE
• identify the potential change; International, Morgantown, WV,
• create a proposed change order and revised 2010. Joseph E. Seder, CCE,
document the proposed change; 6. AIA Document A201 – General is with Davis &
• review and evaluate the proposed Conditions of the Contract for Hosfield Consulting,
change order timely; Construction, Article 7.2 – Change LLC. He can be
• execute the change order; and, Orders, American Institute of contacted by sending
• document the executed change. Architects, Washington, DC, 2007. e-mail to:
7. AIA Document A201 – General jseder@dhllc.com
These are some of the practices Conditions of the Contract for
being used in the construction industry Construction, Article 15.2 – Initial
to effectively manage change. Decisions, American Institute of Dayna L. Anderson, is
As illustrated by the case example Architects, Washington, DC, 2007. with Davis & Hosfield
above, contemporaneously measuring 8. ConsensusDOCS 200 – Standard Consulting, LLC. She
and tracking the cost and schedule Agreement and General Conditions can be contacted by
impacts associated with project changes Between Owner and Contractor sending
will assist in the recovery of what is (Where the Contract Price is a Lump e-mail to:
owed under a changed condition. Sum), Article 8 – Changes, Danderson@dhllc.com
Effective management of changes can Consentaneous, LLC, 2007.
Reprinted with the permission of AACE International, 1265 Suncrest Towne Centre Dr., Morgantown, WV 25605 USA.
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