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What is a change order in construction

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What is a Change Order in Construction: A Comprehensive Guide

In the construction industry, change orders play a crucial role in ensuring smooth project execution. This article aims to provide a simple and easy-to-understand explanation of what a change order is in construction, its benefits, and the conditions in which it can be used.

I. Understanding Change Orders:

  1. Definition: A change order is a written document that outlines modifications or adjustments to the original scope of work in a construction project.
  2. Purpose: Change orders enable project stakeholders to address unforeseen circumstances, accommodate client requests, and ensure project success.

II. Benefits of Change Orders:

  1. Flexibility and Adaptability:

    • Allows adjustments to address design changes, code compliance, or unforeseen site conditions.
    • Enables incorporation of client preferences and customization, enhancing satisfaction.
    • Facilitates the integration of new technologies, materials, or methods during construction.
  2. Clarity and Documentation:

    • Provides a formal record of changes agreed upon by all involved parties.
    • Clearly outlines the revised scope, budget, and schedule implications.
    • Helps avoid disputes and ensures accountability for all project stakeholders.
  3. Cost Control and Financial Management:

    • Allows for accurate tracking and allocation of additional

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?

But uncontrolled change can quickly eat into profits, even derail a project. That's why savvy construction firms have a hard-and-fast rule: Anything that requires a modification to an existing construction contract requires a change order, which details revisions in a project's scope of work, cost and schedule.

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.

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.

What is the proper step for a change order on a 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 should be included in a change order form?

A Change Order Form is a document that has the details of changes to the previous orders of customers. This form will provide you with the order number, date, customer details with the changes to be made on the order, previous and revised contract total.

Frequently Asked Questions

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 does RFI mean in construction?

Request for Information

An RFI, or Request for Information, is a business process used in construction to request clarification about documents, drawings, specifications, or other project conditions. RFIs are used to resolve information gaps, eliminate ambiguities, and capture and share specific decisions during the course of the project.

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.

How do you handle 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 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 should a change order look like?

6 things every change order should include
  • Project and contact information.
  • Dates of the change.
  • Details of the work.
  • Updated schedule.
  • Cost of the change.
  • Updated contract value.
  • Match the payment application.
  • Get it in writing — and save it.

What are the 5 categories of constructive change orders?

Constructive changes have been applied by the courts in five distinct situations: “(I) disputes over contract interpretation during performance; (II) government (or owner) interference or failure to cooperate; (III) defective specifications; (IV) misrepresentation and nondisclosure of superior knowledge; and (V)

What are the three types of change orders?

All three types of change orders involve different contractual revisions.
  • Additive change order. An additive change order is the most common.
  • Deductive change order.
  • Partial termination.
  • Project and contact information.
  • Updated schedule.
  • Cost of the change.
  • Updated contract value.
  • Step 1: Contract is signed.

FAQ

What is another name for a change order in construction?

In project management, change orders are also called variations or variation orders. Any modification or change to works agreed in the contract is treated as a variation.

What is the purpose of a change order in construction?

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 and how does it work?

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.

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.
How do you document contract changes?

Always put a contract amendment in writing and make sure both parties sign and date it. Reference the title of the contract, if applicable; its original parties; and original signing date, so that it is clear what document you are amending. Attach the amendment to the original contract.

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 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 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.

What is a change order in construction

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.

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 notice?

A change notice represents a work authorization to document and release new designs, to enhance existing designs, or to correct issues. The change notice can be created in reference to one or more change requests. It details the tasks that need to be completed in order for the change to be implemented.

What is a change order in a construction project?

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 negotiate a construction change order?

Negotiating the Change Order

The first thing you need to do is work with the owner to establish how the additional work will be estimated and agree upon a cost. This can be done through unit pricing, time and materials pricing, or as a lump sum cost.

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 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.

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 does change order mean in construction
    • Oct 8, 2018 — "Change order" is just the industry term for an amendment to a construction contract that changes the contractor's scope of work. Most change 

  • What is a change order form in construction?
    • 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.

  • 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 form?
    • 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.

  • 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 is the difference between a construction change directive and a change order?
    • A change directive or force account work is not the same thing as a change order. A change order requires agreement from the owner and other parties involved. A change directive is used to direct the contractor to perform additional work when there is not an agreement between the owner and contractor.

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