What are the best practices for documenting and managing change orders?

This gets back to READ YOUR CONTRACT! If you are a trade contractor, you cannot set expectations based solely on your bid. If you are a GC, you cannot establish processes that do not comply with your contract. Both parties need to understand what has been agreed to in that final contract document. this includes a complete understanding of scope, as well as processes for changes. This understanding needs to filter all the way to the field personnel, including the trade partner crew leaders and the GC field engineers. Even if a process is established between parties in the field, make sure to comply with any additional procedures outlined in the contract.

So I’m our subcontract we put a clause that if anything is not clear it is the job of the GC to clarify. I also state that it is bid per plans dated that I used. If I bid drywall I state a normal drywall scope. You need to put exclusions that are not including. Remember you are the professional and the GC is depending on you. So you need to be clear as possible.

Correct. Read and prepare your contract with a good Change Order process that is agreed to by all parties. Then follow it. Also, read, understand, and thoroughly know your drawings. Know what it is you bought as part of the job, and as the customer what you asked for, is extremely important. Follow your agreed process and don't deviate from it. If you need to make decisions in the field then follow up and on a weekly call and get approval quickly after and document it in minutes. A relevant architect/engineer/consultant, and, the customer contact should be made aware in person, phone, and writing. As a customer, I look to the overall value the CO is adding to the project, then I look to why this wasn't thought of or if it is in scope.

Remember that change orders do not always have a net cost increase associated with them. That should not be what triggers documentation. Track, notify, and document all changes regardless of the net impact of cost, and don't forget that it can be equally important to request increases in contract time, even when there is no cost impact. Provide timely notification as defined in your contract, and don't wait till the end of the project when you discover you need the additional days!

Tracking change orders should be monitored one side by the owners representative & the consultant, from the other side by the main contractor. The change orders payment should be closed with each project phase.

Totally agree. CO LOGs should be a standard construction meeting topic with the consultants and the clients. This should be a standard practice. As a customer you should be review the CO Logs, meeting minutes, and, any field notes from the other consultants regularly. All of these should help to prevent any sticker shock for changes, as you will be ahead of the game.

Yes I agree the more information you can provide the better. Was it a unforeseen that caused the change order or maybe an inefficiencies caused it.

If Change orders are requested by the consultant(architectes and engineers)due to discrepancies in IFC drawings, discovered during the shop drawings coordination phase by the main contractor, the client will be fully responsible of all the additional costs ( materials,man power, equipment, engineering, machinery, permits,...)

This is part of the original post by Jim. Know and negotiate a good contract first, then, know your drawings. There will always be a field condition. That is why we have a CO process. The CO process should not be used to handle poor design decisions. Due the due diligence up front and negotiate a fair and even CO process with your contractor. Make them your partner and not your adversary.

Lots of discussion on cost. I find the key ingredient to a successful change order is the additional time required and adjusting the schedule accordingly. This can be quite challenging as it can be difficult to know exactly what delays may exacerbate due the the CO. Be prepared to continually adjust dates to accommodate the full expectation and completion of the project with any given change orders. Change orders are a necessary evil but do not put your self in a disadvantageous position because you don’t either thoroughly understand the possible ramifications or the addition of time to the entire project.

Actualy an agreement between a client and a main contractor could include a non remboursable percentage of the project total cost, to oblige the main contractor to reduce the change orders requests, & to prevent project delay.

Establish clear process for submitting, reviewing, and approving change orders. This should be documented and communicated to all project SHs. Change orders should be recorded in writing, including a detailed description of the change, the reason it's necessary, any impacts it will have on the project, and the cost estimate. Conduct a formal review process that evaluates the impact of the proposed change on all aspects of the project, including scope, schedule, budget, quality, and risk. Prioritize change orders based on their impact on the project's success criteria, such as budget, schedule, quality, or risk. Identify and assign clear responsibility and accountability for the review, approval, implementation, monitoring of the change.

One of the things that is overlooked in this article, and is often overlooked in conversations about change orders, is the discussion about the difference between a trade contactor change order (that is submitted to the general contractor) and a change order between the owner and the general contractor. While the later will almost certainly filter down to the trades, the former may not filter up to the owner. Under most standard owner contracts, the GC is obligated to proceed with the change as directed, even if they are still negotiating costs. A trade contractor is not necessarily under the same obligation. There is a substantive difference in how a GC handles change orders with owners versus handling then with trade contractors.

I agree. Lastly be fair with price. Don’t double dip. Let GC know hourly cost up front so there no hard feelings. Remember you want return customers.

The NEC compensation event mechanism is the most effective change control process I've come across. All of the above is set out clearly in the contract, and there are standard templates (and software) to manage and record everything. Of course this is during the construction phase between the client and the contractor. Something equally robust is required during the pre-construction phase to control design changes.

In alot of today's construction projects the Design Assist model is being implemented to address lead times, constructability, schedule, prefab, etc.... what we recomend to our Project Team partners is defining the "closing the gap" or process to completing a final cost/scope with your sub.