How can you avoid cost overruns by managing change orders?

1) Get the request for a potential change in writing including the clarity needed to provide an accurate assessment of impact 2) Assemble the estimated cost and time impacts promptly 3) Review the documentation for accuracy and defend ability 4) Present to the client in a timely manner 5) If approved move quickly to incorporate the impacts into the financial and scheduling process

It's important to notify your client of time impact just as much as cost impact. In this case, time is literally money. Keep a lookahead schedule and share with the stakeholders or owners rep on a regular basis. Send notices of time impact once a change has been identified to avoid delay. This notice should go through to all partners and subcontractors that are on the critical path.

At my project we follow a strict process for fully executing change orders. -COR from sub must be provided -Generate PCO and attach all backup -Generate SCO and save in contract folder with contract numbering and sequence naming convention -Route through DocuSign -Once fully executed, save that version with 'fully executed' and do not overwrite the original in order to keep a transaction history -Approve in all integration systems for billing

Negotiation wherever possible should be done ahead of time. The higher your profit margins on a particular item, the more likely you are to upset the client if the reconciliation lags beyond when the work was performed. I can float a price in advance, it can be high (quality) and my client is welcome to refute... it's a lot harder when the work is already done as the client feels as though they are arguing over a bill already invoiced. In terms of complex scope with unforseen potential for increased cost, tread carefully and try to qualify the variables before the work commences. This sometimes means not reacting immediately in the field, pull off and do other productive works while the "extra" is documented and communicated.

The most important review process is knowing the contract terms, making sure any field tags are signed by the Superintendent to make sure it's valid work and RFIs. Make sure the change orders are also being reviewed by the Engineer and Project Manager to approve all rates, material and confirm if cost is recoverable from the owner or if it's an internal change.

From my experience, the following steps would allow stakeholders to effectively analyse change orders and mitigate their impacts on cost, schedule, and overall project success. 1. Identify the causes 2. Assess the impacts 3. Quantify the changes 4. Review contract documents 5. Evaluate design before approval 6. Negotiate change orders 7. Implement and monitor 8. Track and control

Move your money! For all debits there must be credits. Make sure you're constantly reviewing your job cost report and accurately reflecting earnings. Some times numerous change orders are being generated without reviewing the job cost report. This is the only way to make sure budget for those committed costs are also being accounted for and not reflecting inaccurate cost overruns. When generating change orders, always know where your money is coming from and where it's going. Budget and cost allocations are #1.