Best Practices for Construction Change Order Management
The purpose of a change order is to document and formalize any changes or adjustments to the original contract, which typically includes the project’s scope of work, plans, drawings, and specifications. It provides a mutual agreement between the parties involved to modify the work, schedule, price, or any other contract terms. According to the 2024 GCPay Industry Report, 54% of general contractors saw an increase in change orders submitted by subcontractors in 2023, highlighting the significance of change order management in construction. The expectation of change order submissions is expected to continue into 2024.
This makes understanding the common challenges and, more importantly, how to alleviate them, crucial to reduce change orders.
A change order form is commonly used to describe the change in the scope of work, cost implications, and adjustments in the project’s completion date due to the change. It may include additional information such as payment terms, markup, and adjustments to the overall contract price.
Effective change order management is crucial in construction projects, allowing flexibility and adaptation to unforeseen circumstances or evolving project requirements. Change orders help ensure that all parties involved are aware of and agree upon any modifications to the original contract terms. Here are our top 5 construction change order best practices.
Streamline your processes: Take a close look at your existing change order management processes and identify any areas that can be streamlined or automated. This could include digitizing paper-based forms, implementing workflow automation, or integrating your change order management system with other software tools.
Improve communication: Effective communication is key to successful change order management. Make sure you have clear channels of communication in place between all parties involved in the change order process, such as project managers, contractors, and suppliers. Consider using project management software or collaboration tools to facilitate communication and keep everyone updated on the status of change orders.
Enhance visibility and tracking: Maintain clear visibility over all change orders and their status. Implement a centralized system or software tool that allows you to easily track and monitor change orders, including any approvals, rejections, or modifications. This will help prevent any change orders from falling through the cracks or being forgotten.
Set clear guidelines and standards: Establish clear guidelines and standards for handling change orders. This includes defining the process for requesting and approving change orders, as well as documenting any associated costs, timelines, and necessary approvals. Having clear guidelines in place will help ensure consistency and prevent any confusion or disputes.
Continuously evaluate and improve: Regularly evaluate your change order management processes and seek feedback from all stakeholders involved. Look for any bottlenecks or areas for improvement and make necessary adjustments. Embrace a culture of continuous improvement to enhance your change order management practices over tim
Effective change order management is essential for the successful execution of construction projects. With the increasing frequency of change order submissions, it is crucial for all parties involved to understand and actively address the challenges associated with change orders and reduce their frequency.
By implementing these best practices and leveraging business solutions like GCPay that offer a full spectrum of change order management tools as part of its complete all-in-one subcontractor management product suite, construction professionals can adapt to evolving project requirements, mitigate disputes, and maintain clear lines of communication, ultimately contributing to the successful completion of construction projects.
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