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As any construction professional knows, change orders are a common and inevitable part of the construction process. Change orders refer to modifications or additions to the original scope of work in a construction contract project. They can arise due to various reasons, such as design changes, unforeseen site conditions, or owner requests. While change orders can significantly impact a construction project, tracking and managing them effectively is crucial to ensure project success. In this blog post, we will delve into the importance of contractors tracking change orders in construction projects.
Accurate Cost Management
Change orders often result in additional costs, such as labor, materials, and equipment. Without proper tracking, these costs can quickly add up and lead to cost overruns, which can strain project budgets and profitability. By diligently tracking change orders, contractors can accurately capture and document all changes to the scope of work, and ensure that the associated costs are properly accounted for. This allows for better cost management and enables contractors to have a clear understanding of the financial impact of change orders on the project.
Legal Protection
Construction projects involve multiple parties, including owners, contractors, subcontractors, and suppliers, and change orders can sometimes lead to disputes or claims. Properly tracking change orders can provide legal protection to contractors in case of any disputes or claims related to project changes. Accurate documentation of all change orders, including the scope of work, cost implications, and approvals, can serve as crucial evidence in case of any legal proceedings, helping contractors to protect their interests and avoid potential liabilities.
Project Schedule
Change orders can impact project timelines, as they may require additional time for design, procurement, or construction activities. By tracking change orders, contractors can assess the impact of changes on the project schedule and take necessary steps to mitigate delays. This may include adjusting the construction timeline, reallocating resources, or re-sequencing tasks. Timely tracking of change orders enables contractors to proactively manage the project schedule and keep the project on track.
Communication & Collaboration
Effective communication and collaboration among project stakeholders are critical for successful construction projects. Change orders can have implications on various aspects of the project, including cost, schedule, and quality. Tracking change orders ensures that all relevant parties are aware of the changes, and facilitates communication and collaboration among project stakeholders. This includes documenting the details of the change order, obtaining necessary approvals, and sharing updated information with relevant team members. Clear and transparent communication through change order tracking can help in resolving issues, managing expectations, and maintaining a positive working relationship among project stakeholders.
Improved Documentation
Proper documentation is essential for construction projects, and change orders are no exception. Tracking change orders involves documenting all changes in writing, including the revised scope of work, cost implications, approvals, and any other relevant details. This documentation serves as a historical record of project changes and provides a comprehensive view of the project’s evolution. It can be a valuable reference for future reference, such as during project audits, claims, or warranty periods.
Client Satisfaction
Clients expect transparency, accuracy, and professionalism from contractors when it comes to change orders. By diligently tracking change orders and providing updated documentation, contractors can build trust with their clients and enhance client satisfaction. Transparently tracking and managing change orders can help in establishing clear expectations, managing client requests effectively, and maintaining a positive client-contractor relationship.
Werx Takes the Guesswork out of Project Changes
In a fixed-price contract project, tracking changes to the project scope is crucial. Werx has devised a three-step process to facilitate this task from the field to the next pay application.
Extra Work Authorization
The first step is to create an Extra Work Authorization (EWA) when the client requests work that falls outside the scope of the contract. An Extra Work Authorization (EWA) is typically utilized when a client requests additional work from a user while they are on the job site. The Werx Field App can be used by the team in the field to quickly generate an EWA and obtain client authorization on the spot. Note that an EWA only documents the requested work, and prices are not associated with it at this stage.
Change Order Request
Once the EWA is signed, the project manager can use the information to create a Change Order Request. The manager can edit the work requested and add pricing information to it. Multiple EWAs can be combined into a single Change Order request. This document is then sent to the client as a REQUEST to send an official Change Order to the contract.
Change Order
When the client receives the Change Order request, they can respond by sending their own official Change Order document and number. Alternatively, they can approve the Change Order request, automatically generating a Change Order for the project. A client may choose to combine multiple Change Order Requests into a single Change Order. The completed Change Order is then added to the schedule of values as a new line and is treated the same way as other items on pay applications.
Tracking change orders is a critical aspect of construction project management. It ensures accurate cost management, provides legal protection, maintains project schedules, enhances communication and collaboration, improves project documentation, and enhances client satisfaction. By implementing effective change order tracking processes, contractors can mitigate risks, ensure project success, and build a solid reputation in the construction industry
