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Change Orders: What You Need To Know


Posted on July 1st, 2024

What is a change order in construction?.

Any change of plans in the middle of your construction project can negatively impact productivity and profitability. Learn how to manage change orders with minimal disruption to your workflows. 

What is a change order in construction?

In construction, a change order is any alteration to the original contract or project plan, including changes to the project scope, schedule, and budget. Change orders may be requested by the project owner or by the contractor. They must be approved by all parties.

With all the complexities involved in construction, change orders are a regular occurrence. Many businesses establish a formal process for creating, implementing, and managing them.

What causes a change order?

These are the most common reasons for change orders in construction:

  • Poorly defined or inaccurate estimates

  • Mismanaged labor

  • Late or damaged material deliveries

  • Requests for additional work from the project owner

  • Unexpected issues on the jobsite

What should a change order include?

No matter the cause, a change order must be thoroughly documented before beginning any new work that is outside the scope of the original project. 

Because poor communication and misinterpretation are often contributing factors, it’s important to define the details of a change order and clearly state how project milestones will be affected. Create a form or template to standardize the type of data you collect. 

A change order form should include:

  1. Background details

  2. Scope of new work

  3. Updated schedule

  4. Costs

  5. Updated contract terms

  6. Supporting documentation

1. Background details

Who instigated this change order? What prompted it? When was the request made?

Your change order should capture these critical details and more. The more information you provide about the background of the change order, the better.

2. Scope of new work

Treat the change order like a new project. Assess the request and create a detailed plan of action for the work that’s required to complete it. Include accurate estimates of time, labor, materials, and equipment.  

3. Updated schedule

Addressing a change order takes time that wasn’t initially accounted for in your estimates. Clearly define how long implementing the change order will take and provide an updated schedule that demonstrates any impact on subsequent tasks and the project’s date of completion.

4. Costs

One of the most important details of a change order is the overall cost—and how the cost of the change order may alter the total cost of the project. 

Provide a complete cost breakdown, similar to the initial contract.

5. Updated contract terms

A change order is an amendment to the contract. Define how the terms of the original contract are changing and provide a comparison of the old terms against the updates. 

6. Supporting documentation

Attach any supporting documentation to your change order. This can include jobsite photos or videos, daily reports, and relevant communications from the project owner, suppliers, or third-parties.

How to manage change orders 

Effectively manage change orders by:

  1. Monitoring the jobsite

  2. Documenting the details

  3. Prioritizing communication

  4. Using digital tools

1. Monitor the jobsite

Project managers, superintendents, and other supervisors should keep a close eye on progress as the change order is implemented. If your normal work process has been interrupted to address the change order, keeping your team on track may require extra vigilance.  

The last thing you want is another change order. Consistent oversight will ensure the change order is carried out as planned and work stays on schedule. 

2. Document the details

Don’t just monitor progress. You should also formally document the work your team completes related to change orders in daily reports, checklists, photos, and other formats.

Good documentation is proof you’re living up to your end of the amended contract. Having both a detailed change order form (that includes all the information outlined above), plus a record of how you're addressing the change order in the field, will prevent future issues and help defend your business against potential disputes or litigation. 

3. Prioritize communication

Successful change orders require good communication on all levels. Keep the project owner, managers, employees, and any subcontractors or other collaborators informed throughout the entire change order process.

By providing clear, timely updates, you’ll set realistic expectations for stakeholders and help affected workers better adjust and adapt.

4. Use digital tools

Digital field management and documentation tools increase visibility and help businesses communicate with both internal and external stakeholders seamlessly.

Consider investing in software that helps you collect, document, and share data from the field to better manage change orders, save time, and reduce manual tasks.

Digitize your change orders with Raken

Change order management software.

Raken makes managing change orders and all your other project documentation easy. Ditch the paperwork and go digital with our simple, streamlined construction forms tools. 

Use our web and mobile app to:

  • Upload company forms and documents

  • Create templates that can be used across projects

  • Review, edit, annotate, and share 

  • Manage company forms in a single, convenient location

Get fast, reliable access to change orders and other documents from the field or office.

Try it today

See how Raken keeps all of your crucial project documentation in one place.

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