Everything to Know about Design Change Risks

The meaning of Design Changes, causes and how to mitigate Design Change risks in construction.

What is Design Changes?

Design Changes in construction refer to modifications made to the project's original plans or specifications. These changes can arise from client requests, unforeseen site conditions, regulatory requirements, or errors and omissions in the initial design. While sometimes necessary, design changes is a cause of other risks such as delays, increased costs, and contractual disputes.

What does Design Change Risk mean?

'Design Change' risk means any chance of alteration to the agreed-upon architectural or engineering plans after the project has commenced. These changes require adjustments in project management, potentially affecting timelines, budgets, and resource allocations.

Design Changes Example

An example of design changes in construction is a Project Owner requesting the addition of an eco-friendly roofing system very late in a Capital Project, which may require additional structural support and different materials than originally planned. This kind of change can disrupt the General Contractor and extend the project's duration.

Ryugyong Hotel in Pyongyang, North Korea, has had its fair share of design changes in its time. Even though the hotel sits empty, for several hours each night, the glass façade acts as a giant LED screen to project slogans and short videos to citizens of Pyongyang. Now that is a cool Design Change!

The History of Design Changes

Design changes have been a common aspect of construction projects, historically recognized as a source of risk due to their potential to disrupt the planned progression of a project. The industry has continually sought better ways to manage design changes through advanced planning, technology, and improved client communication.

Causes of Design Changes

Design changes can be triggered by several factors:

Client Requests: Changes requested by the client to better meet their needs or preferences.
Regulatory Requirements: Adjustments needed to comply with updated or previously unconsidered regulations.
Unforeseen Conditions: Discoveries made during construction that necessitate changes, such as unexpected soil conditions or existing structures.
Technical Improvements: Technological advancements or better materials becoming available after the design phase.

Likelihood of Design Changes

The likelihood of design changes is moderately high, especially in complex or long-duration projects. Changes are more frequent when clients are actively involved and when projects face variable regulatory and physical environments.

Consequence / Impact of Design Changes

The consequences of design changes can range from minor cost adjustments to major impacts on the project scope, schedule, and cost. Significant changes may lead to project delays, increased expenses, and strained relations between contractors and clients.

Design Changes: A screenshot from Ankura. — The consequences and impacts of Design Changes increases as the project gets more progressed. It is **much most costly to make design changes in the construction and post construction phases**.

Design Changes Clauses in Construction Contracts

Design change / Scope change clauses appear in Standard Form Contracts in Australian and North America, with contract authorities such as Standards Australia and AIA Contract Docs respectively. In your contracts, keep an eye out for clauses or terms that relate to the following which may be triggered by a Design Change.

Change Order Process: Clearly defined procedures for submitting, reviewing, and approving changes to ensure they are handled efficiently.
Cost Adjustment Mechanisms: Mechanisms to adjust the contract price based on the scope of the change, including labor, materials, and time.
Timeline Adjustments: Provisions for extending the project timeline due to significant design changes.
Approval Rights: Specifications about who must approve changes, often requiring client sign-off to ensure transparency.

Mitigations and Treatments for Design Changes Risk

Effective mitigation and treatment strategies for design changes include:

Early and Thorough Planning: Engaging in comprehensive planning and client consultations during the design phase to minimize changes later on.
Flexible Design Approaches: Incorporating flexibility in the initial design to accommodate potential changes without major disruptions.
Strong Communication Channels: Maintaining open lines of communication with all stakeholders, including clients, designers, and contractors, to manage changes smoothly.
Regular Review Meetings: Holding regular project review meetings to discuss progress and potential need for changes, helping to identify issues before they require significant alterations

Risk Management and Reporting of Design Change Risk

As we've seen above, there are alot of considerations when it comes to Risk Management. Implementing Risk Management and Reporting controls will make managing this risk easy, and ensure success of your Capital Project.

Risk Management Plan: Download a free Risk Management Plan Template and put a Risk Management process in place.
Risk Register: Download a manual Risk Register Template or use an automated Risk Register solution to track all risks, causes, consquences and mitigations.
Reporting: Create automated Risk Reports, Project Status Reports or Dashboards for communicating with stakeholders. If you need a free Report Template, you can find some examples here.