What is a Construction Change Order?

A construction change order is a written document used to alter the initial scope, schedule, or cost of a construction project. It is used when unexpected changes occur that necessitate changes to the contract between the project owner and the contractor. The changes may include extra work, substitution of materials, design change, or project specification adjustments.

It helps to ensure that all stakeholders are on board regarding project data and that the revised work is done with proper authorization. Without a proper change order process, projects can be delayed, cost more to accomplish, and create disputes among the parties involved.

When Should You Use a Construction Change Order?

A construction change order should be used in every instance of a deviation in the original contract that affects cost, time, or project scope. 

Some of the most typical examples where an order is needed include:

Design Changes: When changes are made by the client or architect to the initial plans, including increasing rooms, modifying layouts, or upgrading materials.

Unforeseen Site Conditions: In the event of unexpected issues like soil instability, hidden utilities, or structural damage during construction that requires modification to the original plan.

Material Substitutions: When a specified material is not available, and a replacement must be used, which may impact cost or performance.

Regulatory Compliance Modifications: If new building codes or permit requirements arise during the course of construction, necessitating changes to comply with the law.

Client Requests: When the owner asks for additional features, upgrades, or customizations beyond what was initially agreed upon.

Budget Adjustments: Where the cost variations for labor, materials, or unanticipated expenses necessitate adjustments to the contract for budget variations.

Project Timeline Extensions: In case of weather delays, supply chain interruptions, or other unforeseen events, requiring an extension of the building timeline.

Construction Change Order Management Process

Effective management of orders must be achieved in order to keep construction projects on track, not delayed, and within budget. A process-based construction change order management process ensures that all changes in scope, cost, or schedule in the project are documented and approved before they are executed. This is what the process typically entails:

Identification of the Change: 

The project owner, contractor, or architect identifies the necessity of a change order due to unforeseen site conditions, client requests, or regulatory requirements.

Analyze the Impact:

The contractor identifies the impact on the cost, schedule, and project scope. It also encompasses the availability of materials, labor rates, and potential delays.

Recording the Change Order: A construction change order document is duly prepared, stating the changes required, altered costs, schedule changes, and approvals required.

Obtaining Approval: The construction change order will be reviewed and approved by each party, e.g., project owner, contractor, and, if necessary, subcontractors or suppliers.

Amending the Contract: Upon approval, the change order is integrated into the initial contract to facilitate legal and financial accountability.

Implementation of the Change: The changes are rolled out on the ground, and project teams update schedules, budgets, and procurement plans accordingly.

Monitoring and Tracking: Frequent check-ins ensure that the change order is being executed properly. Any further changes or cost effects are tracked.

By using this systematic approach, building crews can reduce disputes, keep the project running smoothly, and make sure that all the changes are well-documented and informed.

What Should a Construction Change Order Contain?

A construction change order is a written form that must include significant details to avoid conflicts and misunderstandings.

Project Information 

Project name, contract number, and other details to make it recognizable.

Description of the Change 

Brief description of the change being requested, and the reason for such a change.

Revised Scope of Work 

Description of work added, deleted tasks, or changes being done.

Cost Adjustments 

Summary of other costs, cost savings (if any), and revised project budget.

Timeline Changes  

Any alteration of the due date of the final project, i.e., delays or extensions.

Supporting Documents  

Documents such as new design drawings, permits, specifications for materials, or approvals.

Signatures and Approvals 

Signatures of the project owner, contractor, and other involved parties to authenticate the agreement.

Tips to Improve Change Order Management in Construction

Change orders are inevitable in construction projects, but they may lead to cost overruns, delays, and miscommunication if poorly managed. Here are some tips on how to streamline the process of managing change orders and keep projects on track:

Create a Clearly Defined Order Procedure – Develop a step-by-step procedure for discovering, recording, and approving change orders prior to their implementation to keep everyone on the same page.

Communicate Early and Often – Keep lines of communication open between owners, contractors, and architects to talk through potential changes before they become costly issues.

Use Detailed Documentation – All changes are to be documented with a precise scope of work, cost changes, and timing changes to avoid misunderstanding.

Set Expectations in the Contract – Clarify how to handle change orders in the very first contract such that there is no conflict down the line on the project.

Track and Monitor Changes – Maintain a formal system to track all approved and pending order changes to maintain transparency and accountability.

Take Advantage of Technology for Efficiency – Technology supports order change with real-time communication, tracking, and record keeping.

Measure Cost and Schedule Impacts – As a condition of approving the change, determine how it will impact the project schedule and budget in order to avoid disruptions.

Standardize Templates and Forms – The adoption of a standard template request simplifies processing and ensures all the information needed is submitted.

By employing these measures, construction teams can minimize project risks, prevent avoidable delays, and facilitate the management of change orders.

How RDash Helps You Manage Construction Change Orders

Managing construction orders manually can be time-consuming and prone to errors. RDash simplifies the process by providing a centralized platform to track, document, and approve changes efficiently.

Here’s how RDash improves change order management:

• Real-Time Visibility – All project stakeholders have instant access to approved and pending change orders, reducing delays and miscommunication.
• Automated Workflows – The platform streamlines the approval process, ensuring all changes go through the correct hierarchy before implementation.
• Cost & Budget Tracking – RDash helps project teams track the financial impact of each change order, preventing budget overruns.
• Centralized Documentation – Store all change orders in one place, making it easy to access historical records and maintain project compliance.
• Seamless Collaboration – Teams can collaborate in real-time, reducing back-and-forth emails and paperwork.

With RDash, construction companies can save time, improve accuracy, and maintain better control over project changes, ensuring smoother project execution.

FAQs

How do you manage change orders effectively?

Effective management of order change requires adequate communication, documentation, approval processes, and project management software such as RDash to monitor real-time changes.

Why do change orders happen in construction projects?

Change orders are initiated by design modifications, unforeseen site conditions, material substitutions, regulatory requirements, or changes from the clients.

How can technology help with change order management? 

Tools like RDash improve change order management with automated approvals, cost and schedule impact tracking, and real-time visibility to all stakeholders. 

Can change orders affect project budgets? 

Yes, change orders that are not well managed can lead to cost overruns and delays. Proper tracking and approval processes minimize financial impact.