Why Controlling Change Orders in Construction Is Important

In any new building project, there are several trades and subcontractors (SCs) subcontracted to a General Contractor (GC). It is important to manage CRs and COs effectively for effective team cooperation and work product accountability as between Owner, GC, and SC.

This is relative to a construction management software (CMS), which is crucial for maintaining control, compliance, and efficiency during the construction life cycle.

What is a Change Order?

Change Order (CO) – A scope of work that arises at any point other than what was agreed upon originally by all the parties. These may be Owner-, GC-, or SC-driven due to design changes, changed work conditions, or client request.

How Are Change Orders Raised?

1. The Use of a Construction Management Software (CMS)

By far the best and most transparent approach in tracking and approving completion orders.

2. Through Email Communication

This approach is still applied today, but it is subject to mismanagement, delays, and no centralized tracking.

How to Manage Change Orders with Construction Management Software

Leverage Strong Construction Management Software (CMS)

You know the old adage: “Treat your tools as well as you are treated by them.”

CMS in the hands of Owners, GCs, SCs

A robust CMS tool should belong in the hands of Owners, GCs, and SCs, who can undertake to submit, approve, review, and track Change Orders in real time. This means there is transparency via fewer disputes.

Hire a Construction Management Consultant

“This is a time-consuming and complex process. Get it right the first time.”

Owners should engage with a construction management professional to develop a detailed scope of work and schedule before bringing a GC on board to avoid needless COs.

Keep CMS with Current Construction Documents

Provide 24/7 cloud access to current construction plans for the Owner, engineers, architects, GC, and SCs through the software.
This also eliminates the need of using obsolete paper versions.

Create Clearly Defined Change Order Approval Process

Owners will need to establish a procedure for a formal approval of COs.
Align both GCs and SCs with the approval process, documentation, and compliance.

Leverage CMS to Elevate, Monitor, and Approve Change Orders

• Any COs GCs generate must be submitted through the software for the Owner to approve.
  
  
• The Owner’s team (engineers, consultants, etc.) should evaluate the CO for time and impact.
  
  
• All CO-related communication is necessary to be entered in the CMS for legal & compliance reasons.
  
  
• After agreement is reached, CO should be notarized and signed in legal terms, then update SOV.
  
  

Uniform CO Procedure for GC and SCs

• GCs should define the CO procedure to their SCs long before contracts are to be performed.
  
  
• The GC has to give CMS the right to use all SCs and ensure that no COs get lifted except through the system.
  
  
• When GC and SC agree on COs (if ever), those COs must become legally formalized, and the appropriate SOVs updated.
  
  

Verify That Payments Correspond to the Approved COs

• All pay applications shall be in accordance with approved Change Orders and progress of the work.
  
  
• CO work not approved may not be provided or billed.
  
  

Keep Digital Footage for Compliance

Owners, GCs, and SCs shall retain electronic records of all signed COs within the CMS.
This is in order to guarantee the fulfillment of legal and contractual obligations.

Bottom Line: You Need a System to Manage Change Orders

Change Orders are a reality in every construction project — but mishandling them is not.

If you don’t have in place a well-managed Change Order approval process, your projects will run late, over budget, and carry the potential for litigation.

By deploying integrated BIM-enabled construction management software, not only is work collaborative and simple to track, but all parties are insulated from much of that risk.