Construction worker on a walkie talkie with a crane in the background 1200x800
Construction worker on a walkie talkie with a crane in the background 1200x800

How to Handle Construction PCO & Change Orders Effectively

You may have methodically mapped out the supply chain, created a rock-solid estimate and developed the perfect schedule for your construction project. Still, when you’re working in the construction industry, roadblocks always seem to surface that may keep you from your project completion date.

That’s why leading construction professionals are dedicated to creating a strong change order management plan: to organize the chaos.

To the untrained eye, change orders may not seem like a major issue. But to the seasoned construction professional, change orders are predictive of whether or not a project will succeed.

Refining change order management is an important step for any construction company because change orders are a regular occurrence. A change order may be the result of employee mistakes, changes to the design or scope of the project, material availability, and compliance issues — to name a few.

Whatever the reason, handling a PCO in construction effectively allows firms to:

  • Keep projects on schedule and prevent delays

  • Avoid costly rework caused by a communication breakdown

  • Maintain a strong relationship with the client by maintaining transparency and clear communication

Unfortunately, ensuring that change orders are handled in an efficient way is easier said than done. Many companies are unaware of organizational bottlenecks and may not realize which parts of their change order workflow are problematic. To help you gain greater insight into the ways your change order procedures can be improved, check out these four common change order mistakes, and how construction software offers a fix.

1. Pricing a Construction PCO (Potential Change Order)

Without an advanced construction ERP platform, entering the pricing for a PCO takes time and patience. Workers must manually transfer the pricing information from the PCO document to the accounting system. Here’s why a manual entry is problematic:

  • It often results in costly typos and inaccurate pricing information

  • It requires duplicate entry across platforms, which wastes time and decreases productivity

  • It slows down the flow of data between team members, resulting in project delays

With a construction ERP software system like CMiC’s, change order process pitfalls are avoided. Instead of manually copying over the numbers, employees can create CMiC change documents that are intelligently integrated with accounting software. This means that accurate costs are reflected across all applications within the organization and re-keying is avoided.

2. Creating an RFQ (Request for Quote)

When creating RFQs, construction firms must balance precision with speed. This means producing accurate documents within tight timeframes. Unfortunately, many firms haven’t mastered this process. For some, the RFQ process still involves re-keying information to and from scope documents and emails. Countless hours are wasted searching through email folders and copying over costs for a given change order.

The RFQ process can be easily streamlined with ERP software. CMiC’s platform stores scope data and changes so you can easily transfer information with the click of a button. You can automatically populate an email with relevant scope changes and a quote request – there’s no need to manually attach documents or print out the scope changes and hand-deliver.

3. Waiting on Approvals

Waiting on the final approval for a change order can cause significant project delays. For many firms, their strategies for expediting the process involves employees requesting approvals from project management or financials in person. If approval is being held up by an external stakeholder, however, this strategy won’t work. Salaried and hourly workers will be left waiting around, wasting valuable time and money.

CMiC has a unique solution to this problem: the workflow queue. The workflow queue immediately routes documents to relevant parties for approval and sends out recurring alerts to keep things moving. Decision-makers view all pending COs in their workflow queue and can approve several changes at a single time. Once the construction PCO is approved by all parties, the document will automatically change the status to approved.

4. Document Sharing

In traditional change order management, there are three documents: a potential change order (PCO), an owner change order and a subcontract change order. Data is copied and pasted across all three documents and they’re shared separately.

With the CMiC platform, these documents are consolidated into a single file that is sent through the approval pipeline, and the document is updated automatically at each step. CMiC also populates customized “cover pages” for owner and subcontractor change orders with relevant information. If the client denies approval on a change, your document will indicate exactly that.

This process allows for easy communication and collaboration and introduced effective revision control protocols. Anyone receiving the document can be sure that the information contained in the report is accurate and up-to-date, and they’ll be able to see the status of the change order within the document. That means there’s no re-keying of information, and you can easily tell what’s going on with a given change order by its status. This process also provides a level of protection against client backlash: if they take issue with your work at any stage, this single document will have everything you need to prove your due diligence.

Summary of ERP Change Order Management

ERP construction software like CMiC, increase efficiency by streamlining data sharing for the firm. Here’s a quick breakdown of the specific advantages CMiC offers for change order management:

  • All changes and requests are performed within the system

  • Change order construction documents include clear statuses such as pending, waiting for approval, etc.

  • There is no need to re-key or copy-paste information — no additional work

  • Contractor quotes and other information are auto-populated across the system, reducing manual data entry and unnecessary work

  • Emails are intelligently populated and are stored in the system for easy retrieval

Change order management is just one of the areas where construction firms can benefit from a single database ERP system. Check out The ERP Approach to Construction Management to learn about the ways unified software supports construction project planning and execution.