Change orders are essential for successful construction project management. As the GC, it is your job to manage change. Actual or perceived differences that lead to change orders are an inevitable source of disruption for many construction projects that, if not handled properly, can lead to disputes and claims.
The reasons behind construction change orders vary from project to project, but the most common circumstances are design changes, contractor changes, inaccurate specs, and unforeseen conditions.
As a contractor, you’re most likely familiar with these and have encountered situations where you’ve had to deal with change orders. While we always hear about the common reasons for change orders, we don’t think about other underlying circumstances that can create a change order. Things like code, the environment, and other factors occur on the jobsite. These circumstances are essential to know so you can be prepared for future projects.
Many circumstances can lead to change orders, but here are the top ones to be knowledgeable about.
Unforeseen Environmental Conditions
You might be on a jobsite, preparing to build, and as you’re digging, you run into a water intrusion issue, or there’s a gas line 30 feet deep. This is more common than you might think. Workers try their best to asset the site before the building phase starts, but unforeseen environmental factors occur.
Now, as the GC, you have a change order on your hands that you may not want to pay for and aren’t sure who is at fault for not finding these issues. You’ll go back to the contract to figure out what was written to figure out the next steps. These environmental factors are important to keep in mind.
Any project that requires a building permit will have a set of drawings to define what is being built. Even projects without a building permit will often have a set of drawings to guide the contractor. Sometimes dimensions on the plans are incorrect, or the contractor finds a way to build the design more efficiently.
In these cases, the contractor or builder will need to make adjustments, or the plans may be revised to be the new specifications. Other design changes include simple opinion changes where the owner might prefer nickel door handles over gold to save on cost. Maybe they might want to move a door from the corner of a hall to the center. All of these changes affect the initial design and therefore lead to change orders.
Something can happen to the design where the code requires something different. Maybe the building needs another fire exit, or an extra ladder needs to be installed outside the building. No matter the new requirements necessary to meet the code, change orders are made. Depending on the owner, they can either comply or seek another engineer to deal with the new changes to the code.
As the general contractor, it’s important to have clear communication and documentation on the new decisions made for the changes. Other code changes come from safety. Maybe a jobsite requires an extra ladder and scaffolding on one side of the building. This also requires a change order. Today the construction industry is dealing with COVID, and that affects the safety measures as well. Change orders could result from the supply chain of materials that were impacted by the pandemic. To get a job done on time, different materials need to be used.
You might be walking the jobsite with the owner or PM and suggest a change to the building because of a design flaw, layout error, or substitution for materials. It’s like being a car mechanic. They (the owner) take their car for an oil change, and you (contractor) suggest any additional repairs or changes be made. Sometimes you might see a better way to build than what was initially planned. There can also be a shortage of supplies, and you might have to make substitutions for materials. This also leads to change orders.
Overall, almost anything can lead to a change order. Someone changes their mind, whether it be the owner, GC, or sub. You might have to meet code that is different than the initial design. You might run into unforeseen circumstances like environmental factors. It’s important to remember that not all change orders are bad or cost money. It’s part of the job. And as a GC, it’s part of your job to manage them.