What is a Change Order in Construction?
A Change Order is an amendment to a construction contract that alters the original terms and conditions agreed upon by the project owner and the contractor. This document specifies changes to the scope of work, project timeline, or contract price. Change orders are necessary when unforeseen circumstances arise, new requirements are identified, or adjustments are needed to complete the project successfully.
About Change Orders in Construction
Change orders serve as an official record of changes made to a project contract. They help ensure that all modifications are agreed upon by both the project owner and the contractor. This process helps maintain transparency and accountability, preventing disputes and misunderstandings. Change orders typically include a detailed description of the change, the reason for the change, the impact on the project’s cost and schedule, and signatures from both parties indicating their agreement.
Best Practices for Managing Change Orders in Construction
- Detailed Documentation: Clearly document each change order, including the nature of the change, reasons for the change, and its expected impact on the project.
- Impact Analysis: Conduct a thorough analysis of the impact of the proposed change on the project’s scope, budget, and timeline. This helps stakeholders make informed decisions.
- Formal Approval Process: Establish a formal approval process that involves relevant stakeholders, such as the project owner, project manager, and contractor. Ensure that all changes are reviewed and approved before implementation.
- Communication: Maintain open communication with all stakeholders to ensure they are aware of the proposed changes and their potential impact. This helps build consensus and avoid misunderstandings.
- Documentation and Tracking: Use project management tools to document and track all change orders, ensuring that they are managed systematically and transparently.
Change Orders vs. Change Requests
- Change Orders: Specific types of change requests that modify the terms of a contract. Change orders are legally binding and typically involve changes to the scope of work, cost, or schedule agreed upon in the contract.
- Change Requests: Proposals for changes to the project that need to be reviewed and approved before becoming formal changes. They can involve changes to any aspect of the project, including scope, budget, and schedule.
When to Use Change Orders
- Scope Changes: When there are modifications to the project’s scope, such as adding new features or removing existing ones.
- Budget Adjustments: When changes in scope or unforeseen issues require adjustments to the project budget.
- Schedule Modifications: When project timelines need to be adjusted due to delays, accelerations, or changes in project priorities.
- Unforeseen Conditions: When unexpected site conditions or other unforeseen issues arise that necessitate changes to the original contract.
By using change orders, project managers can ensure that all contract changes are thoroughly evaluated, approved, and documented, leading to more controlled and successful project outcomes.
How Mastt Helps with Change Orders
Mastt provides a comprehensive platform that supports the efficient management of change orders in construction and capital projects. Here’s how Mastt can assist:
- Centralized Dashboard: Mastt's dashboard offers a centralized view of contract details, project progress, and financial status, helping project managers track and manage lump sum contracts effectively.
- Cost Management Tools: The platform provides tools for accurate budgeting, change orders and financial tracking, ensuring that the project stays within the agreed price.
- Change Order & Request Management: Mastt facilitates the management of change orders by documenting changes, tracking their impact on the contract price and timeline, and ensuring approval from all parties.
- Stakeholder Communication: Mastt enhances communication between the project owner, contractors, and other stakeholders, ensuring transparency and collaboration throughout the project lifecycle.
- Budget, Contarct & Payment Management: Mastt helps manage accurate project budgets and contracts with reliable data. Mastt allows its projects to see in real time how your project, program or portfolio is tracking across commitments, cash flow and more.
- Risk Management: By offering robust risk management tools, Mastt enables identification and mitigation of risks early, ensuring projects stay on track.
Change Order Reporting Dashboard Example
By leveraging Mastt, Project Owners and Project Managers can enhance decision making, leading to more efficient project execution, increased quality and more successful outcomes.
Mastt showing Change Order against a General Contractor Contract
