What is a Change Order?
What is a Change Order?
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Change is inevitable in the Design industry, making Change Orders a common practice. We can not stress enough the importance of having a clear vision for your project before the design process begins. Making the most of the early design meetings is essential to ensuring a smooth and budget friendly process. Early on, minor changes are allowed and included in the cost of your project. However, late-stage and major revisions can be costly and result in delays. That being said, we don't want you to be afraid to request changes to your project if need be. In this article, we'll explore Change Orders and how to navigate them effectively.
Our most common types of change orders are: lump sum (when the change can be quantified in price); zero cost (no change in price); time and material (cost cannot be immediately estimated); and unitary cost (a change in scope that can be defined by measurement units).
Lump Sum
A lump sum change order is used when the change in the work scope can be quantified with a firm price, resulting in an overall increase in the expense of the project. It can occur when the project owner or a hired contractor finds conditions that warrant a change in work scope.
Zero Cost
This type of change order does not change the contracted price, but is used to document scope- of-work changes that do not affect the contract value.
Time
This change order occurs when the entire cost of the proposed change cannot be immediately estimated. In this case, we track the time spent working on the change, as well as any costs associated.
Unitary Cost
We will usually negotiate this type of change upfront, before any change-related work begins. It is based on additional scope of work that can be defined by specific measurement units. We will track completed work based on those specified units.
How Does the Change Order Process Work?
How Does the Change Order Process Work?
The path to a fully executed Change Order typically goes as follows:
Step 1: The contract is signed. This document outlines the project’s scope, schedule and budget that have been agreed upon.
Step 2: An issue is raised. Often, contractual agreements need to be changed due to reasons such as:
Material procurement issues
Regulatory changes
Owner-initiated changes
Design errors, omissions or alterations
Less-than-ideal site conditions
***NOTE: ALL WORK CEASES UNTIL CHANGE ORDER PROCESS IS COMPLETE***
***PROJECT TIMELINE IS DELAYED***
Step 3: A change is proposed. Someone proposes a solution to fix or manage the issue that was raised, and relevant parties review the proposal* (subcontractors may also be asked to estimate the change’s impact on the project budget and timeline).
Step 4: The proposed change is reviewed. The designer evaluates the change(s) and draws up an official Change Order Request form. Any adjustments to the timeline may be noted.
Step 5: The change is agreed upon in writing. All appropriate parties agree on the proposed change. Depending on the scope of changes, we will either execute the Change Order Request form or amend the original contract.
Step 6: If the original contract is amended, all appropriate parties must sign the new document.
***ALL WORK RESUMES***
*Be aware that the change order process does not necessarily go smoothly every time. When there is a request for a change (Step 3 above), the project owner, general contractor or designer can decide to approve the change, counter the change, deny the change, etc.
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