How Contractors Can Improve Change Order Management

Change order management is a common part of construction projects. If not managed well, they can lead to higher costs and delays. Contractors, in particular, face unique challenges in handling change orders because of their position within the project hierarchy. Subcontractors can significantly improve their change order management by implementing standardized processes, leveraging digital tools, and enhancing communication.

The Challenge of Change Orders in Construction

A report by Navigant Construction Forum says change orders can make up 8% to 14% of total project costs. They can also cause delays of 10% to 20% in project timelines. In many cases, subcontractors struggle with:

• Poor documentation leading to unpaid work
• Slow approval processes that disrupt schedules
• Lack of visibility into cost impacts
• Disputes over scope and pricing

To improve change order management, we need active strategies and digital tools. These will help ensure that everyone notes, approves, and pays for all changes on time.

1. Standardize the Change Order Process

Establishing a standardized process for managing changes ensures consistency and clarity. Key steps include:

• Clear Documentation: Provide detailed descriptions of the change, including scope, cost, and time implications.
• Formal Approval Procedures: Set defined protocols for submitting and approving change orders to prevent misunderstandings.
• Training: Educate team members on the standardized procedures to ensure compliance and efficiency.

The Construction Industry Institute (CII) emphasizes that managing change is essential for a successful project outcome. Uncontrolled changes can lead to interruptions, delays, and increased costs.

2. Leverage Digital Tools for Improving Change Order Management

Transitioning from paper-based systems to digital platforms can streamline the change order process. Digital tools offer:

• Real-Time Tracking: Monitor the status of change orders instantly, reducing delays.
• Improved Accuracy: Minimize errors associated with manual data entry.
• Enhanced Communication: Facilitate better collaboration among project stakeholders.

Rhumbix offers a digital tool for subcontractors that tracks unplanned work in real time. This tool also makes it easier to process change orders.

3. Improve Documentation and Communication

Adequate documentation and communication are critical in managing change orders. Subcontractors should:

• Maintain Detailed Records: Keep comprehensive records of all communications, decisions, and approvals related to change orders.
• Use Centralized Platforms: Utilize platforms that allow all stakeholders to access up-to-date information, ensuring transparency.
• Regular Updates: Provide frequent updates to all parties involved to inform everyone of progress and any issues.

The Construction Management Association of America (CMAA) says that using best practices can help avoid disputes over change orders. It also helps subcontractors finish their work efficiently. This approach can keep opportunities open for future projects.

4. Analyze and Learn from Past Projects

Reviewing past projects can provide valuable insights into everyday issues and practical solutions. Subcontractors should:

• Identify Patterns: Determine recurring causes of change orders to address underlying issues.
• Develop Mitigation Strategies: Create plans to prevent similar problems in future projects.
• Continuously Improve: Use lessons learned to refine processes and enhance overall project management.

The Construction Industry Institute (CII) has studied how change orders affect projects. They found that these changes often lead to a loss in productivity. This shows how important it is to manage change orders effectively.

5. Strengthen Negotiation Strategies

A well-documented and data-backed change order submission strengthens subcontractors’ negotiating power. Best practices include:

• Presenting a detailed cost breakdown
• Citing contract clauses that support the request
• Demonstrating historical data from similar projects
• Using real-time field data to justify claims

When subcontractors give clear and strong change orders, they lower the chances of disputes. This also helps them get approval more easily.

Optimizing Change Order Management

Effective change request management is essential for subcontractors to maintain profits and project efficiency. By standardizing processes, using digital tools, improving documentation, and analyzing trends, subcontractors can reduce risks. This helps them ensure they receive payment for all their work.

Tools like Rhumbix offers a complete solution for managing change requests in the field. They help make the process smoother, cut down approval times, and improve financial visibility. Implementing these best practices will help subcontractors stay competitive and profitable in a dynamic construction environment.