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What is a change order in construction

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What is a Change Order in Construction?

In the fast-paced world of construction, change is inevitable. As projects progress, it is not uncommon for unexpected circumstances or new requirements to arise. This is where change orders come into play. A change order is a written document that alters the scope of work or terms of a construction contract. It serves as a formal request to modify the original agreement, whether it involves changes in design, materials, or schedule.

Change orders can arise from various factors. One common reason is design changes. During the early stages of a project, plans may need to be adjusted to meet the client's evolving needs or to comply with updated building codes and regulations. These changes often require adjustments in the construction process, such as modifications to structural elements or alterations in electrical and plumbing systems.

Another factor that can lead to change orders is unforeseen conditions. Construction sites are notorious for throwing surprises at contractors. Hidden pipes, unstable soil, or unexpected weather conditions can significantly impact the project's timeline and budget. In such cases, change orders allow for the necessary adjustments to be made, ensuring that the construction process can move forward smoothly.

Additionally, change orders can be triggered by the client's requests for additional work or upgrades. As the project progresses, clients may decide to include

Classic examples of change orders include the owner's desire to move the location of a wall to accommodate some other design element, adding a window where there was none in the original plans, or changing the finish of the floors from tile to terrazzo.

What are the 2 types of change orders?

Generally, there are four types of change orders. These are Time and Material, Lump Sum, Zero Cost, and Unitary Cost change orders. A lump sum change order is used when the defined change in the work scope is quantifiable, and a definite price developed.

What requires a change order?

Whether initiated by the client or by the contractor, anything that alters the original contracted scope of work, costs or project timeline requires a signed change order that captures these modifications.

What is a change order form for construction contract?

By Diana Ramos | April 13, 2017. Change orders are written orders to make changes to the scope of work outlined in an original project contract. Change orders describe the new work that needs to be done (or omitted), the impact on budget, and the revised schedule for completion.

Who initiates a change order?

A change order is simply an addendum or amendment to the original construction contract and scope of work and can be initiated by the owner or the contractor.

How do you explain change order in construction?

What Is a Change Order in Construction? In construction, a change order refers to the documentation of an agreement to add or subtract work, alter the design, revise the schedule, modify the price, or deviate from the original project in some other way.

How do you tell a client about change order?

The lead carpenter should say, "We can do that, but it will cost money and take more time." If you state this up front, the client knows the change order will produce additional costs and an extended time frame. Otherwise, clients may assume the change is free or won't affect the schedule.

Frequently Asked Questions

How do you mitigate change orders in construction?

Below are some tips for reducing or eliminating unwanted change orders on construction projects.
  1. Ensure a clear project scope.
  2. Provide clear project specifications.
  3. Perform a detailed constructability.
  4. Avoid the “silo conundrum.” Nearly every project includes work elements designed by different disciplines.

What are examples of change orders in construction?

Classic examples of change orders include the owner's desire to move the location of a wall to accommodate some other design element, adding a window where there was none in the original plans, or changing the finish of the floors from tile to terrazzo.

What is a changed conditions in construction?

United States government contracts define changed conditions as “(1) subsurface, latent, or physical conditions at the site materially different from those indicated in the contract or (2) unknown physical conditions at the site of an unusual nature, differing materially from those ordinarily encountered and generally

What is the process of a change order?

The contractor prepares a "change order proposal" quoting a price for the extra work. Once the owner and contractor have agreed on scope, price, and schedule, a formal, written change order is prepared and signed by all parties. Then, the contractor proceeds to perform the changed work.

What are the 4 stages of change in order?

The Four Phases of Change
  • Phase 1: Denial. In this stage individuals go through withdrawal and focus on the past.
  • Phase 2: Resistance. In this stage be prepared, because you will see anger, blame, anxiety and depression.
  • Phase 3: Exploration.
  • Phase 4: Commitment.

What is a change request in construction?

A Change Order represents the mutual consensus between the parties on a change to the work, the price, the schedule, or some other term of the contract.” As such, a change order must be written out and approved by all parties, which can take time, money, and patience to complete.

How do you control a construction site?

11 ways to keep your construction safe: 1. Start with safety training
  1. Minimise and manage risk.
  2. Site security.
  3. Safe work method assessment.
  4. Use clear signage throughout the site.
  5. Entry and exit points.
  6. Compliant chemical storage.
  7. Environmental conditions.
  8. First aid.

How do I ask for a change order?

Simple Steps to Create a Change Order Request
  1. Article Highlights:
  2. Common causes for change order requests.
  3. Start with the original contract.
  4. Review plans and specifications.
  5. Don't delay or ignore change orders.
  6. Communicate with all individuals involved.
  7. Document everything in a centralized location.
  8. Negotiate the change order.

What are the 4 different types of change requests?

Types Of Change Requests
  • Major change. A major change is a high-risk, high-impact change that requires proper planning to prevent disruptions in live production environments.
  • Standard change.
  • Minor change.
  • Emergency change.
  • Requestor and request number.
  • Request description.
  • Reason for the change.
  • Requested changes.

What can be changed in a construction contracty

Oct 8, 2018 — Once the owner and contractor have agreed on scope, price, and schedule, a formal, written change order is prepared and signed by all parties.

Why are change orders important in construction?

The purpose of a change order

It acts as an extension of the contract and ensures that all parties understand their new duties and expectations. It codifies the specific changes the client wants, and provides legal notice of any adjustments to the price and timeline that the client should expect.

What are the effects of change orders?

The change order request may require you to shift those resources to another activity, resulting in a loss of productivity in the original scope of work. The loss in productivity may then lead to longer durations for the work and increased labor and equipment needs amongst several scheduled activities.

What is the effect of a change in construction?

One of the harmful consequences of project change is rework or revision of work [2], [6]. The cost of rework in construction projects can be as high as 10–15% of the contract value. In addition to rework, other negative effects of change include extra work, time loss, design revisions, increase costs, etc.

Are change orders good or bad?

Change isn't always bad, but on a construction project, it usually isn't good. Change orders can wreak havoc on a construction schedule and raise project costs beyond the allocated budget.

When should you ask for a change order?

Do request a change order immediately and in writing when:
  1. You come upon a site condition which is inconsistent with the plans and specifications and/or you are directed to do work which is outside of the scope of your work;
  2. You need more time to complete your work…for any reason;

What triggers a change order?

Common causes of change orders include: ‌The customer requesting adjustments to the project, such as new features or changes to existing elements. ‌Correcting an inaccurate estimate of the project's work or scope, such as an overestimate of time to completion.

What is the purpose of a change order in construction?

What Is a Change Order in Construction? In construction, a change order refers to the documentation of an agreement to add or subtract work, alter the design, revise the schedule, modify the price, or deviate from the original project in some other way.

What is the proper step for a change order on a project?

Change Order Process
  1. Review the Contract and Identify the Reason for the Change Order.
  2. Create a Change Order Request.
  3. Reach an Agreement About the Change Order Proposal.
  4. Get Approval On the Change Order and Adjust the Contract.
  5. Use a Change Order Log to Keep Track of Change Orders.

How do you complete a change order?

6 things every change order should include
  1. Project and contact information.
  2. Dates of the change.
  3. Details of the work.
  4. Updated schedule.
  5. Cost of the change.
  6. Updated contract value.
  7. Match the payment application.
  8. Get it in writing — and save it.

FAQ

What is the process of variation order in construction?

Variation order process

Variations are initiated by the Engineer at any time prior to issuing the Taking-Over Certificate for the Works, either by an instruction or by a request for the Contractor to submit a proposal.

How do you manage change orders in construction?
A Quick Guide to Managing Change Orders in Construction
  1. Get Clarity on Scope of Work.
  2. Review the Construction Contract.
  3. Get Written Approval for All Change Orders.
  4. Communicate With Stakeholders.
  5. Understand the Impact of Change Orders.
  6. Final Thoughts on Change Orders.
What is the cost of a change order?

The cost of a change order is the difference between the original contract price and the revised contract price, and it can include direct and indirect costs. Direct costs are the expenses that are directly related to the change order, such as materials, labor, equipment, and subcontractors.

What are the steps in order to change?
The Five Steps of Change
  1. Step 1: Awareness. Change begins with awareness, and admittedly, being objectively aware can be challenging.
  2. Step 2: Desire. Think about a time when someone was trying to change you.
  3. Step 3: Knowledge.
  4. Step 4: Action.
  5. Step 5: Perseverance.
What are change orders in construction?

What Is a Change Order in Construction? In construction, a change order refers to the documentation of an agreement to add or subtract work, alter the design, revise the schedule, modify the price, or deviate from the original project in some other way.

What is a change event in construction?

On a construction project, a change event is any change that affects the original scope of a construction project. It can be any event that affects the scope of the work to be completed, causes a change to the project schedule, or results in unexpected costs.

What is a change clause in construction?

A changes clause is not an exculpatory clause excusing the owner from liability for changes. Rather, the clause provides for a structured way for the owner to direct changes and for the contractor to perform them and be properly compensated.

What is the purpose of a change order?

The purpose of a change order

It acts as an extension of the contract and ensures that all parties understand their new duties and expectations. It codifies the specific changes the client wants, and provides legal notice of any adjustments to the price and timeline that the client should expect.

What is the purpose of a change order request?

A change order request is a formal, written proposal to modify a project's scope, specifications, or requirements. Change order requests are an essential component of effective change management, allowing for the assessment and negotiation of alterations while maintaining clear communication among key stakeholders.

What is a request for change in construction?

Last Updated Oct 12, 2023. A change order is an agreement made during the course of a job that alters one of three things: the cost, the scope, or the schedule. But before a change order request can be issued, the terms must be sorted out. The parties who will carry out the changes need to agree to revisions.

Why is a change order important on a construction project?

Change orders are essential for construction contractors. They protect contractors from being pressured into doing extra work beyond the agreed-upon terms of the contract. This can be a big deal if your client asks you to add more work without being agreeable to paying for it.

What are the three possible reasons for a change request?

Reasons to make change request include internal and external events, project errors, miscalculations, improvements, and the implementation of corrective and preventive measures.

What is the change order clause in construction contract?

What is a change order? A change order is a written amendment to an existing contract after the effective date that alters the work, the contract sum, or the contract time. While contracts are intended to be the final word for projects, sometimes things need to change.

Under what authority can a contracting officer unilaterally issue a change order?

43.201 General.

(a) Generally, Government contracts contain a changes clause that permits the contracting officer to make unilateral changes, in designated areas, within the general scope of the contract.

What is the difference between a change order and an addendum in construction?

A Change Order is used to exchange or modify materials and/or work listed on the Scope for other materials or work. An Addendum is used to add additional work (labor and/or materials) to the Scope.

Who authorizes a change order?

Hear this out loudPauseThe contractor prepares a "change order proposal" quoting a price for the extra work. Once the owner and contractor have agreed on scope, price, and schedule, a formal, written change order is prepared and signed by all parties. Then, the contractor proceeds to perform the changed work.

Who signs a construction change directive?

Hear this out loudPauseTypically, a Construction Change Directive is signed by only the owner and architect. It will describe the changed work and may propose an adjustment to the Contract Sum and the Contract Time.

What is an approved change order?

Hear this out loudPauseA Change Order represents the mutual consensus between the parties on a change to the work, the price, the schedule, or some other term of the contract.” As such, a change order must be written out and approved by all parties, which can take time, money, and patience to complete.

Who has the authority and responsibility to propose changes?

Hear this out loudPauseChange authorities/approvers

A change authority is a person who makes the decision on whether or not to authorize a change. Sometimes this is a single person, such as a manager or executive. Sometimes it's a group of people on a change advisory board.

What is a change order in construction

What are the benefits of change orders?

Benefits of Change Orders

Flexibility is a benefit, in that change orders allow the owner to accommodate modifications without having to renegotiate the entire basic agreement with the contractor. Often work can proceed on the base contract while allowing changes within the overall general scope of the work.

Why should a contractor keep a record of all change orders?

Keep Records of All Change Orders

Whether they come up in a legal dispute or during a discussion with a subcontractor, having the written order prevents miscommunications and keeps everyone on the same page. Keeping a record of all change orders is also helpful when it comes to analyzing project performance.

What is the owner's change directive?

Change directives are literally a direction, given by an owner, that a contractor must abide by. Often, a change directive will follow a disagreement between the owner and the contractor.

What is the owner accountable for on a construction project?

The owner usually warrants the adequacy of the plans and specifications on many projects and, therefore, bears the responsibility for any defects or deficiencies in them. Such defects can exist in many forms, but tend to fall into the two categories: product and time.

What is the owner's role in the construction process?

Throughout the construction process, the owner is responsible for overseeing the project to ensure that it is progressing according to plan. This involves monitoring the contractor's progress, reviewing and approving change orders, and resolving any issues that arise during the construction process.

What is an owner change order?

As Construction Law Today explains, “a Change Order is a bilateral agreement between parties to the contract–an owner and prime contractor, prime contractor and subcontractor, two or more subcontractors–to change the contract.

What is a construction change order?

A change order is a document used to alter the original agreement on a construction project. It details the changes in the scope of work, cost, and schedule that are required. In many instances, the construction contract dictates the change order process.

What is a change order in a construction project?

A change order is a document used to alter the original agreement on a construction project. It details the changes in the scope of work, cost, and schedule that are required. In many instances, the construction contract dictates the change order process.

What is the meaning of change order?

A change order is work that is added to or deleted from the original scope of work of a contract. Depending on the magnitude of the change, it may or may not alter the original contract amount and/or completion date. A change order may force a new project to handle significant changes to the current project.

Why do construction projects have change orders?

Some of the most common reasons for change orders include: Inaccurate specifications in the original designs or contract. Ambiguous or inaccurate drawings. Unforeseen conditions at the job site, such as obstructions that could not be planned for.

How to do a construction change order

A change order is a document used to alter the original agreement on a construction project. It details the changes in the scope of work, cost, and schedule 

What is the typical change order process on a construction project?

The contractor prepares a "change order proposal" quoting a price for the extra work. Once the owner and contractor have agreed on scope, price, and schedule, a formal, written change order is prepared and signed by all parties. Then, the contractor proceeds to perform the changed work.

What is the average percent of change orders in construction?

You can calculate those costs using either a forward or backward approach (described in detail below). Research studies have found that, on major projects, the change order costs typically amount to 10 to 15 percent of the contract value.

What are the 5 categories of constructive change orders?

Five distinct types of “constructive changes” have been identified by legal scholars and the courts: “(I) disputes over contract interpretation during performance; (II) Government interference or failure to cooperate; (III) defective specifications; (IV) misrepresentation and nondisclosure of superior knowledge; and (V

Who can approve a released change order on Buildertrend?

To authorize the changes, you may need signatures from project managers, engineers, architects and clients – and it's easy with convenient electronic signatures.

What is a change notice in construction?

A Proposed Change Notice (PCN) is a document issued to the Contractor or others wherein the proposed change in work is outlined and pricing for the change is requested.

What is a change in construction contract?

Contract Changes means any change or modification to the Services or this Agreement, including without limitation, changes or modifications to any Statement of Work, other than Operational Changes. Contract Changes has the meaning given in Section 11.1(d).

What is a change order form in construction?

What Is a Change Order in Construction? In construction, a change order refers to the documentation of an agreement to add or subtract work, alter the design, revise the schedule, modify the price, or deviate from the original project in some other way.

  • What are changes made to the contract documents during construction called?
    • Change orders are formal documents that enable Asset Owners and General Contractors to make amendments to scheduled construction work. Changes to construction scope are often frequent and costly, so it's important that contractor understand the implications of a change order and how to mange the change order process.

  • What is included in a change order?
    • Change orders typically consist of three parts: the project information, the changes to the contract, and the change in cost and time for performance. Project information includes the project name and the owner's and contractor's information.

  • How do I create a change order?
    • 6 things every change order should include
      1. Project and contact information.
      2. Dates of the change.
      3. Details of the work.
      4. Updated schedule.
      5. Cost of the change.
      6. Updated contract value.
      7. Match the payment application.
      8. Get it in writing — and save it.
  • How do you format a change order?
    • What is included in a change order form?
      1. Project details: The name of the project, the client, the contractor, and any other relevant information about the project.
      2. Description of change: A detailed description of the modifications to the original agreement, such as changes to the project scope, budget, or timeline.
  • What is the first proper step for a change order on a project?
    • Regardless of who initiates a potential change, the first step is for the project owner and contractor to discuss what the change is, why it's being requested and how it will impact the project's cost and timeline.

  • How do you make a variation order in construction?
    • Variation orders should particularly involve below mentioned information in order not to be the source of conflict/dispute later on between the agreeing parties :
      1. Identification of variation order.
      2. Description of variation order.
      3. Reason for change.
      4. Change in contract price.
      5. Change in unit prices (if applicable)
  • How do you charge a change order?
    • Construction change order fees are typically calculated as a percentage of the total contract price. The portion is usually between 1% and 5%. If you have to justify the slight increase, it's easier to explain that the 5% covers the time spent on new changes and delays necessary to keep the project moving.

  • What is the difference between a construction change directive and a change order?
    • CCDs are provisional instructions issued for immediate implementation, allowing work to proceed while final costs and details are determined. Change Orders, on the other hand, involve a formal process that includes evaluation, negotiation, and contractual modifications.

  • What causes change orders in construction projects?
    • Some of the most common reasons for change orders include: Inaccurate specifications in the original designs or contract. Ambiguous or inaccurate drawings. Unforeseen conditions at the job site, such as obstructions that could not be planned for.

  • Who will prepare change orders and change directives as provided?
    • The contractor prepares a "change order proposal" quoting a price for the extra work. Once the owner and contractor have agreed on scope, price, and schedule, a formal, written change order is prepared and signed by all parties. Then, the contractor proceeds to perform the changed work.

  • How do you avoid construction change orders?
    • Change orders on any project can be reduced by improving collaboration between team members earlier in a project's development, increasing visibility among stakeholders to the information that could impact project cost and schedule, and implementing a tight process to manage change.

  • What is a change order in construction contract?
    • A change order is a document used to alter the original agreement on a construction project. It details the changes in the scope of work, cost, and schedule that are required. In many instances, the construction contract dictates the change order process.

  • What are the three types of change request?
    • Change management groups such as normal changes, standard changes and emergency changes also help reduce risk and assess the cost of a proposed change before they're implemented.

  • Who creates a change order?
    • A change order is an official, documented modification to an existing construction project contract. It can be initiated by either the owner or the contractor.

  • Who will initiate a change request?
    • A change request refers to the formal proposal to alter a product, system, or project. Change requests can be initiated internally or externally, depending on the circumstances. An external change request is usually from the client, who may request to make some adjustments to the project plan.

  • How do I send a change order?
    • 6 things every change order should include
      1. Project and contact information.
      2. Dates of the change.
      3. Details of the work.
      4. Updated schedule.
      5. Cost of the change.
      6. Updated contract value.
      7. Match the payment application.
      8. Get it in writing — and save it.
  • What information is generally required on a change order form?
    • Change orders vary from one project to another, but most of them include the following basic elements: Project information such as the contract number, contractor's name, project owner's name and change order number. A description of the proposed changes and how they compare to the original contract.

  • What are the major reasons for change orders?
    • Some of the most common reasons for change orders include: Inaccurate specifications in the original designs or contract. Ambiguous or inaccurate drawings. Unforeseen conditions at the job site, such as obstructions that could not be planned for.

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