Managing Change Orders and Additional Expenses

Change orders and additional expenses can arise during a construction project, leading to adjustments in the original plan or budget. Effectively managing these changes is crucial to keeping the project on track and minimizing the impact on the overall cost and timeline. You can use a task list inside your EcoHome project to help keep you organized here.

Sometimes these change orders are things that you request along the way. Other times, they are just unexpected issues that arise. Some change orders may be initiated by the contractor, architect, or other team members involved in the project. These change orders might be due to unforeseen circumstances, errors or omissions in the original plans, or changes in regulations or codes. Here are a few examples of change orders that the client might not have requested:

• Unforeseen Site Conditions: During construction, the contractor may discover unexpected site conditions such as poor soil quality, hidden utilities, or underground water sources. These issues may require changes to the construction plans, resulting in a change order.

• Errors or Omissions in Plans: Mistakes or oversights in the original design or construction documents may require modifications to the project, leading to change orders. These changes might be necessary to correct discrepancies, comply with building codes, or address safety concerns.

• Regulatory Changes: Changes in building codes, zoning regulations, or other requirements can necessitate alterations to the original plans. In these cases, a change order would be needed to ensure the project complies with the updated regulations.

• Material Availability: Occasionally, specified materials may become unavailable, too expensive, or face long lead times. In such cases, the contractor might suggest alternative materials, resulting in a change order.

• Value Engineering: The contractor or architect might identify opportunities to improve the project's cost-effectiveness, construction methods, or overall quality. These suggestions can lead to change orders, even if they were not directly requested by the client.

While clients might not initiate these change orders, they still need to be involved in the decision-making process, review the proposed changes, and approve or reject them based on their impact on the project's cost, timeline, and quality.

Regardless of the change, there are some things you can do to manage change orders and the additional expenses that come with them:

Understand the Change Order Process¶

Before starting a construction project, familiarize yourself with the change order process outlined in your contract with the builder or contractor. This process typically includes submitting a written request for a change, receiving a proposal that outlines the cost and time implications, and approving or rejecting the change order.

Monitor Project Progress¶

Regularly monitor the progress of your project to identify any potential changes or deviations from the original plan. This may involve site visits, progress meetings with the construction team, and reviewing project reports or updates.

Evaluate and Prioritize Changes¶

When a change order or additional expense arises, evaluate its necessity and impact on the project. Consider whether the change is essential for safety, functionality, or aesthetics, and prioritize changes based on their importance and potential impact on the project's timeline and budget. This is something that your contractor or architect can help you to do.

Request Detailed Proposals¶

For each change order, request a detailed proposal from the contractor that outlines the scope of work, cost, and time implications. Review this proposal carefully and ask for clarification on any unclear aspects. This information will help you make an informed decision about whether to approve or reject the change order.

Negotiate Costs and Time Extensions¶

When approving a change order, negotiate with the contractor to minimize the impact on the project's cost and timeline. This may involve discussing alternative materials or construction methods, adjusting other aspects of the project to offset the additional cost, or negotiating a reduced price for the change.

Document and Approve Change Orders¶

Once you've decided to proceed with a change order, ensure that it is documented in writing and signed by all relevant parties. This documentation should include a description of the change, the revised cost, and any adjustments to the project timeline.

Update Project Budget and Schedule¶

After approving a change order or incurring additional expenses, update your project budget and schedule to reflect the new information. This will help you track the overall impact of the changes on your project and ensure that you stay on top of your budget and timeline.

Communicate Changes to the Team¶

Keep your construction team informed of any approved change orders or additional expenses. Clear communication can help prevent misunderstandings, ensure that everyone is working towards the same goals, and minimize the potential for future change orders.

By following these steps, you can effectively manage change orders and additional expenses during your construction project, minimizing their impact on your overall budget and timeline.