Change orders are a fact of life for your construction firm. Changes in project schedule and completion date, budget, materials, specifications and more — all deviations from the original scope of work — call for a written change order.
You need systems for reacting to these directions quickly and effectively. Initiating a change order (or a Potential Change Order) is likely second nature for your organization, but there are ways to change matters for the better: It pays to cut down on the need for change orders in advance.
There is less need for change orders when a project’s costs, schedule and other essential information are clear in advance. This is accomplished by having a single source of accurate, up-to-date data. When different people and teams throughout the organization are working with different sets of manually updated figures, uncertainty can take hold.
A purpose-built enterprise content management (ECM) platform designed with the construction industry in mind allows you to organize information in ways that boost visibility and access, allowing projects to move ahead smoothly. Issues that may have gone undetected without a dedicated information management approach are visible in advance, necessitating fewer change orders and an overall more efficient approach to getting projects completed.
If your organization can create better visibility into data, it can potentially minimize the need for these last-minute adjustments.
What Types of Issues Lead to Change Orders?
In an ideal world, there’d be no construction change orders. Every project would flow smoothly from its initial plan to the ribbon cutting, exactly as sketched out in advance. Since even the best-planned projects never reach this level of perfection, minimizing and quickly handling change orders is a best practice for contractors of all specialties.
It’s worth asking how change orders commonly come about. The Balance listed several issues that tend to force changes to projects in progress. For example, there are discoveries on the job site that can lead to necessary changes, such as issues with the soil. When personnel discover that the ground on which a structure is being built has unexpected qualities, or that there are many different soil types present, a quick change of direction may be needed regarding plans, materials or both.
Sometimes, it’s disagreements between the various documents associated with the project. The Balance pointed out that when different subcontracting firms are handling specifications, drawings and other elements of the plan, there can be confusion regarding the materials to be used in a specific part of a structure. It’s not unheard of for owners to request a last-minute change to match an inconsistent document.
In a few cases, change orders are necessary because local laws have shifted in the course of a job. The Constructor noted that such an alteration can render a big enough difference to a contract — in terms of duration, cost, scope or another variable — that an official change order is warranted. Long, multi-phase projects that stretch on for years are at the greatest risk of encountering such an issue, simply because of their duration.
Changes can be entirely out of your hands and beyond the control of the owner and subcontractors, as well. For example, unexpected shortages of a material may lead to a last-minute substitution. The Balance noted that these can result in either increases or decreases in overall job cost, based on whether the new approach is more or less expensive than the initial intention. In any case, they will call for a change order.
The general uncertainty around conditions relating to a construction project is the root cause of many change orders, while others are due to miscommunication or data management errors. While the former kind of change will always be relevant, and calls for a quick and efficient change order filing process, the latter type is best handled by a simpler approach: If your organization can create better visibility into data, it can potentially minimize the need for these last-minute adjustments.
How Does Data Visibility Help Reduce Change Orders?
Projects require fewer changes — whether for additional work, additional time to complete the original contract, added budget or any other alteration — when information is consistent and freely shared among all parties. This means visibility that extends between the project’s owner, your firm, the architect, all subcontractors, government authorities and every other relevant group. It also entails real-time contact between teams on the job site and personnel in the office.
When this level of information sharing is possible, it becomes simpler for personnel to raise red flags about issues that, if left unaddressed, might lead to change orders. For instance, discrepancies between different subcontractors’ plans and expectations will become clearly visible when they are all working from a consistent set of shared figures. Project owners who have access to these figures will also be less likely to request last-minute changes, as they’re setting expectations directly from the single source of data truth.
Companies that have adopted ECM platforms designed for the construction space have improved their ability to share information and prevent unnecessary change orders and other miscommunications between project management, the office, the job site and subcontractors.
JE Dunn serves as an example of the better communications processes that are possible with improved data sharing. Now, equipped with a centralized ECM tool that has broken down data silos within the organization, the company has ensured all its offices and sites are working from the same set of centralized figures. Companies that adopt these practices and principles can get ahead of the need for excessive change orders.
Meeting the challenge of change orders head-on means taking an agile approach to change management.
What is the Key to Effective Change Orders?
Meeting the challenge of change orders head-on means taking an agile approach to change management. You need to have project controls in place to ensure these orders are taken into account in budgeting and scheduling modules as soon as they are received. Your teams in the field also need to have access to the most up-to-date version of information. If a change order has been filed but personnel on the job site are following the original plan, confusion is the likely result.
Fortunately, the same kind of modern and purpose-built construction ECM deployments that enable better communications and data sharing are also capable of bringing this level of agile project controls. When everyone is working from the same source of data truth, from the office to the job site and beyond, there is no room for confusion or ambiguity regarding the state of the project.
The Right Tools to Improve Change Management
Getting started on software transformation is not as daunting as it may seem. Modern, cloud-based ECM tools that impact every aspect of your organization can have such a positive impact on processes across the board that there’s never a bad time for an upgrade. Check out CMiC’s change management controls to see how you could revolutionize the way your organization handles change orders.