Nobody likes to have change orders on their project. Clients and design professionals will resist approving them. Be prepared and do your homework up front before sending them.
Document the impact of the change on the project schedule (duration, impact on substantial completion, change in critical path) when you submit the CO
Use a change order proposal form that reflects your right to claim for further impacts while performing this change order. Also, this document should protect your right to lien the project. (see our sample form)
If the client refuses to acknowledge a certain effect of the CO, reserve in writing your right to continue to assert your position.
Reflect this in the schedule updates. Document in separately line the change order, the material delivery days (if substantial), the extra work days and connect it to subsequent tasks. No orphans. This will allow your CPM schedule to reflect the impacts. This is why we recommend using 100 intervals on a CPM schedule instead of the default of 10 as in most software packages.
Bill the client for all change orders as soon as it is appropriate to bill them.
Don’t forget your field people tend to have the best relationship with the client. They do little and not so little favors for them. Your field supervisor may need to exchange this good will for an approved change order.
Do not hesitate to use a national costing or pricing service. When change order costs are in dispute, this will settle some arguments. 3,000 estimators can’t be wrong especially about labor hours per task.
Monthly schedule narratives are effective in building a case for change orders. Every 30 days at a minimum, the project manager should be writing a few paragraphs about the progress on the project, submittal handling, etc. Much like the field manager on a daily basis, this extemporaneously documents project issues. A preponderance of evidence is a key factor in determining fault. Another client said, “You can be right, but if you can’t prove it, it doesn’t matter”.
For more information on this critical subject, purchase a copy of my McGraw-Hill book, Managing a Construction Firm on Just 24 Hours a Day. We offer a bundle with Excel templates that are featured in the book to help assist in making financial, estimating and project management decisions.
Matt Stevens is President of Stevens Construction Institute, Inc. A management consulting firm which works only with construction contractors. Learn more at www.stevensci.com