Change is the only constant in projects of any scale. Managing these changes effectively requires appropriate documentation and communication. The quintessential element aiding in this process is a ‘Change Order Form.’ This form presents an efficient way to record, approve, and implement variations in project specifications.
Today, we’ll be discussing the pivotal role that Change Order Forms play in maintaining transparency and coherence in managing projects across various industries. We’ll also provide tips on how to leverage them for optimum project management outcomes.
Table of Contents
What is a change order?
A Change Order Form is a crucial document utilized in project management, particularly in construction and other industries that involve complex projects. It’s a formal request that details modifications in the original plan or scope of a project. It outlines the proposed changes, including adjustments in cost, timeline, or materials, and it requires approval from all relevant parties before implementation. The form is a way of officially documenting any changes to the original contract and ensuring that all stakeholders are on the same page. It ensures that no modifications are made without proper authorization, thereby maintaining transparency and mitigating potential conflicts.
Change Order Forms also help maintain control over the project budget and timeline. When a change is proposed, the form will outline the additional costs or time needed to implement these changes, which can then be approved or rejected by the relevant stakeholders. This process aids in preventing misunderstandings or disputes down the line, as each change is formally documented and agreed upon. It’s essential to understand that every change, no matter how small, can significantly impact a project’s overall outcome. As such, Change Order Forms serve as a pivotal tool to track these modifications and ensure a successful project completion.
Change Order Templates
Change Order Templates are standardized documents used in project management and construction fields when modifications to the original contract are needed. They detail the nature of the changes, the impact on the project’s scope, time, and budget, and they serve to officially authorize and record these changes.
Often at the top of these templates, there’s a section for project and contractor details. This includes the project name, contractor name, and contact information. This provides a quick reference to the involved parties and the project.
Directly after, most templates contain a section for original contract details. This includes the original contract number, date, and a summary of the original scope. This sets the baseline from which changes are made.
What is a change order request in construction?
In the construction industry, a Change Order Request is a formal document that outlines proposed modifications to the original scope of work, project schedule, or budget. These alterations could be due to unforeseen site conditions, design revisions, material changes, or client requests, among other things.
The Change Order Request is typically submitted by a contractor, subcontractor, or client and includes detailed information about the proposed change, such as its nature, the reason behind it, its impact on the project timeline and budget, and any alterations to contractual obligations. Once approved by all relevant parties, the change order request results in a Change Order, which officially amends the original contract. This process ensures transparency, accountability, and clear communication among all stakeholders, helping to manage expectations and avoid potential disputes.
The purpose of a change order
A change order serves as a formal document used in project management to record modifications in the original plans, whether it’s regarding the scope of work, schedule, or budget. The purpose of a change order is multifaceted: it ensures every alteration to the original plan is thoroughly discussed, negotiated, approved, and documented; preserves the integrity of the contract; helps manage risk by outlining the changes in terms of cost, time, or resources; and maintains a clear line of communication between all parties involved (client, contractor, subcontractors, etc).
By using a change order, project managers can maintain control and traceability of alterations, thus ensuring the project stays aligned with stakeholders’ expectations and avoids potential misunderstandings or disputes. The end goal is to effectively manage changes without disrupting the project’s trajectory and ensuring that all parties are accountable for their roles in the revised plan.
When Should You Use a Change Order?
During the course of a construction project, it is not uncommon for changes to arise that alter the original scope of work. A change order is a critical tool for formally modifying the plans and addressing these shifts. There are several situations when a contractor or owner should initiate a change order, such as:
- Scope Changes: Use a change order when the scope of work agreed upon in the original contract is altered. This could be an addition or reduction of services or deliverables.
- Cost Adjustments: If the project’s budget changes due to unforeseen factors, such as changes in material cost or additional labor hours, a change order is needed.
- Time Modifications: If there’s a change in the project schedule, for example, extension of completion date or acceleration of the schedule, it would require a change order.
- Unforeseen Conditions: During the project, if you encounter unforeseen conditions that were not included in the initial contract, like hidden defects or natural disasters, a change order becomes necessary.
- Regulatory Changes: If there are changes in laws, regulations or codes that affect the project, it is necessary to issue a change order.
- Client Requests: If the client decides to change certain aspects of the project or requests additional services, a change order is the appropriate way to document these changes.
Advantages of Using Change Order Form
Change Order Forms offer several distinct advantages in the realm of project management, helping to ensure the smooth execution of a project even when unforeseen alterations arise:
Clarity and Transparency
Change Order Forms provide a clear, written record of any modifications to the initial project scope, budget, or timeline. This transparency aids in preventing misunderstandings, miscommunications, and conflicts between the parties involved.
By detailing who is requesting the change, the specifics of the change, and who approves it, the form creates a clear line of responsibility. This accountability ensures that all parties are aware of their roles and responsibilities, preventing potential disputes in the future.
Change Order Forms help manage the project’s budget by documenting any adjustments related to cost. It helps to monitor the project cost, track any additional expenses, and avoid unexpected cost overruns.
Changes often affect project schedules. A Change Order Form allows the project team to acknowledge these changes and adjust timelines accordingly. It helps to ensure that the project does not drift off course and continues to meet the desired objectives within a revised timeframe.
It enables the project manager to effectively manage the project scope by keeping an updated record of all changes. This way, ‘scope creep’, a common project management issue, can be avoided.
Change Order Forms also serve as a valuable tool for managing risk. By detailing how alterations might affect the project’s cost, timeline, or quality, potential risks can be identified, evaluated, and mitigated effectively.
Documentation and Audit Trails
Finally, maintaining a detailed Change Order Form creates an audit trail, which can be crucial for future reference or if legal issues arise. It documents the history of project changes, decisions made, and the reasoning behind them.
Change Order Forms ensure contractual compliance by formalizing the process of making changes. This protects all parties by ensuring that the agreed-upon contract terms are upheld even as changes are made.
What to Include in a Change Order Form
Creating a comprehensive and effective Change Order Form requires several key components:
- Project Information: Start with the basic details of the project, such as the project name, project number, and the address where the project is being executed.
- Change Order Details: This includes the change order number (for tracking purposes), the date of the request, and details of the party initiating the change order (like the contractor or subcontractor).
- Description of Changes: Provide a detailed account of the proposed changes. Describe what the changes entail, the reason for the changes (such as unexpected conditions, design modifications, or client requests), and how these changes will affect the overall project in terms of scope, quality, and objectives.
- Impact Analysis: This should include the anticipated impact on the project timeline and budget. Detail how the proposed changes will affect the project schedule, whether it will require more time, and any changes in costs, including labor, materials, equipment, or overhead costs.
- Revised Scope of Work: If the change alters the project’s scope, provide a revised scope of work that includes the changes. This allows all parties to understand the new project parameters.
- Approval Section: The form should include a space for necessary signatures or approvals. This often includes the contractor, client, project manager, and any other key stakeholder whose agreement is needed to validate the change order.
- Attachments: If there are relevant supporting documents like revised blueprints, designs, or other specifications, these should be attached to the Change Order Form.
- Terms and Conditions: Any change in the original terms and conditions due to the proposed alteration should be clearly stated. This includes changes in payment terms, warranty clauses, or other contractual obligations.
- Contingency Plan: This is optional but can be useful. It’s a plan detailing the steps to take if the changes do not produce the expected or desired outcomes.
Change Order Process
The Change Order Process is a systematic procedure that allows changes to be formally requested, reviewed, approved, and implemented within a project. Here are the detailed steps:
- Identification of the Need for Change: The first step in the process is identifying that a change is needed. This could be due to unforeseen circumstances, design modifications, client requests, or supplier changes. For example, during a building construction project, the contractor might discover that the site conditions require a different foundation type than originally planned.
- Change Request Preparation: Once the need for change is identified, a Change Order Request is prepared. This is a formal document detailing the proposed change, its impact on project scope, schedule, and budget, the reason for the change, and any other relevant details. Continuing with the example, the contractor would prepare a Change Order Request outlining the need for a different foundation type, the cost implications, how it would affect the construction schedule, etc.
- Review and Analysis: The Change Order Request is then reviewed by relevant parties, often including the project manager, client, and possibly a review board. This review includes an assessment of the impact of the change, verification of the need for change, and consideration of alternatives. In our example, the client and the project manager would review the Request, assess the necessity of changing the foundation type, explore alternative solutions, and consider the impact on cost and time.
- Approval or Rejection: Based on the review, the Change Order Request can be approved or rejected. The decision is usually documented in the Change Order Form. If the Request is approved, a formal Change Order is issued. If it’s rejected, feedback is provided explaining why. In the building construction example, if the proposed change is found necessary and reasonable, it would be approved. If not, it would be rejected, and alternatives might be suggested.
- Update Project Management Plan and Baseline: If approved, the project management plan and baseline need to be updated to reflect the change. This includes adjustments to the schedule, budget, and possibly the quality or risk management plans. For instance, with the foundation change approved, the construction schedule and budget would be updated to accommodate the new foundation type.
- Communication and Implementation: The change is then communicated to all relevant stakeholders, and the implementation of the change is scheduled and carried out. In our example, all parties involved in the construction project would be informed about the change in the foundation type and the corresponding schedule and budget adjustments. The new foundation work would then be scheduled and executed.
- Tracking and Documentation: The implemented change is tracked to ensure it aligns with the Change Order, and all details are properly documented for future reference and audits. For the construction project, the actual cost and time taken for the new foundation work would be tracked, and all details would be documented in case of future reference.
- Closeout: Finally, once the change has been successfully implemented and is satisfactory, the Change Order can be closed out. In our construction example, once the new foundation is completed as per the revised plan, the change order would be officially closed.
How do you write a change order?
Writing a Change Order effectively requires a structured approach to ensure all relevant details are included and communicated. Here’s a step-by-step guide:
Step 1: Collect Basic Information
Start with the basic details of the project and the change order. This should include the project name, project number, the change order number (for tracking purposes), and the date of the change order. Also, include details of the party initiating the change order, like the contractor or subcontractor.
Step 2: Provide a Detailed Description of the Change
Describe the proposed change in detail. This should encompass what the change entails, why it’s necessary (such as unexpected conditions, design modifications, client requests, etc.), and how it will affect the overall project in terms of scope, quality, and objectives.
Step 3: Conduct an Impact Analysis
Next, detail the impact of the proposed change on the project timeline and budget. Include information on whether the change will require additional time and the reasons why. Provide a breakdown of costs, such as changes in labor, material, equipment, or overhead costs.
Step 4: Include a Revised Scope of Work
If the change significantly alters the project’s scope, provide a revised scope of work. This allows all parties to understand the new project parameters and avoids confusion later on.
Step 5: Outline the Terms and Conditions
Detail any changes to the original terms and conditions due to the proposed change. This might include changes in payment terms, warranty clauses, or other contractual obligations.
Step 6: Insert the Approval Section
Create a space for necessary approvals or signatures. This often includes the contractor, client, project manager, and any other key stakeholders whose agreement is needed to validate the change order.
Step 7: Attach Supporting Documents
If there are any supporting documents that can clarify or justify the change order, include these. This could be updated blueprints, new design plans, or other documentation that supports the proposed changes.
Step 8: Add a Contingency Plan (Optional)
This is not always necessary, but a plan detailing what steps to take if the changes do not produce the desired or expected outcomes can be helpful. This helps ensure that all parties are prepared to manage potential risks associated with the change.
Step 9: Review and Finalize
Before sending the Change Order Form, review it for accuracy and completeness. Make sure all details are clearly stated and all necessary sections are filled out. Once you are sure the form is accurate and comprehensive, finalize it and distribute it to the relevant parties for review and approval.
Change Order Request Form Template
|Project Name||[Name of Project]|
|Project Location||[Street Address, City, State, Zip Code]|
|Change Order Details|
|Change Order Number||[Number]|
|Change Type||Addition Deletion Modification|
|Description of Change||[Descriptive details of requested change]|
|Reason for Change||[Reason change is needed]|
|Cost Impact||[Increase/decrease to overall project cost]|
|Schedule Impact||[Increase/decrease in project duration]|
Effective Tips for Managing Construction Change Orders
Managing construction change orders is a critical part of any construction project. A change order is a modification to the original contract that changes the scope of work, the price, or the schedule. Change orders can be stressful and challenging to handle, especially when they pile up. However, with the right strategies, they can be managed effectively. Below are some effective tips for managing construction change orders:
1. Understand the Nature of Change Orders
Construction change orders are inevitable in most construction projects. They could result from unforeseen circumstances, errors in the initial project plan, or client requests. Understanding the nature of change orders and accepting their inevitability will help you approach them in a positive and proactive manner.
2. Include a Clear Change Order Process in the Contract
Before the project begins, make sure there’s a clear process in place for handling change orders. This process should be outlined in the contract and agreed upon by all parties involved. This way, everyone will know what to expect and how to proceed when a change order is necessary.
3. Maintain Open and Transparent Communication
Clear, transparent communication with your team, clients, and stakeholders is vital. Make sure everyone involved understands why the change order is necessary and how it will affect the project. This can help avoid misunderstandings, reduce pushback, and ensure smoother execution.
4. Document Everything
Every change order should be thoroughly documented. This includes the details of the change, the reasons for it, and any relevant conversations or agreements. This documentation will be invaluable if there are disputes later on and will help you maintain control over the project.
5. Review and Validate Change Orders
Not all change orders are created equal. Some might be necessary to complete the project, while others might be unnecessary or even detrimental. It’s important to carefully review and validate each change order to ensure it’s in the best interest of the project.
6. Estimate the Impact on Cost and Schedule
Each change order will have an impact on the cost and schedule of the project. These impacts should be estimated as accurately as possible and communicated to all relevant parties. This will help manage expectations and reduce the likelihood of surprises down the line.
7. Negotiate Fair Pricing
Pricing for change orders can often be a contentious issue. To avoid disputes, make sure to negotiate a fair price that reflects the work required by the change order.
8. Implement a Change Order Management Software
There are many software solutions available that can streamline and automate the change order process. These can help reduce manual work, ensure consistency, and keep track of all change orders in one place.
9. Train Your Team
Ensure your team is well trained on the change order process. They should understand why change orders are necessary, how to process them, and how to communicate about them effectively.
10. Stay Flexible and Adaptable
Lastly, maintaining a flexible and adaptable approach will help you manage change orders effectively. Even with the best planning and communication, surprises can still happen. Being ready to adapt will help you navigate these challenges and keep your project on track.
Q: Why are change orders necessary?
A: Change orders are necessary because construction projects often encounter unforeseen circumstances, design changes, or client requests that require adjustments to the original plans. They provide a formal process to manage and document these changes, ensuring that all parties involved are aware of the modifications and their implications.
Q: Who initiates a change order?
A: Change orders can be initiated by various parties involved in a construction project, including the owner/client, architect, engineer, general contractor, or subcontractors. The specific circumstances and the contractual agreements in place will determine who has the authority to initiate a change order.
Q: How are change orders approved?
A: The approval process for change orders may vary depending on the project and the contractual agreements in place. Typically, the change order is submitted to the party responsible for approving changes, which could be the owner/client, architect, engineer, or project manager. The change order is reviewed, and if accepted, it is signed by the appropriate parties to indicate their agreement.
Q: What happens after a change order is approved?
A: Once a change order is approved and signed, it becomes a legally binding agreement, and the changes outlined in the document are incorporated into the project. The project team, including contractors, subcontractors, and suppliers, should be notified of the approved change and any adjustments to the project schedule, budget, or scope of work.
Q: Can change orders impact the project schedule and budget?
A: Yes, change orders can have a significant impact on the project schedule and budget. Depending on the nature and extent of the change, additional time may be needed to accommodate revisions to the plans or the introduction of new work. Similarly, changes can result in additional costs for materials, labor, equipment, or other project-related expenses. It is important to carefully evaluate the impact of a change order before approving it to manage any potential schedule delays or cost overruns.
Q: Can change orders be disputed or rejected?
A: Yes, change orders can be disputed or rejected if the parties involved do not agree on the proposed changes, their impact, or the associated costs. Disputes can arise due to differences in interpretation, disagreements over responsibility, or contractual issues. In such cases, it is advisable to consult the original contract, engage in negotiations, or seek legal advice to resolve the dispute.
Q: How should change orders be documented?
A: Change orders should be documented in writing to ensure clarity, accountability, and legal validity. It is important to maintain a consistent format for change order documentation, including a unique identifier, a clear description of the changes, and the parties involved. The document should be dated and signed by all relevant parties, and copies should be distributed to the appropriate stakeholders for record-keeping purposes.