Great change management starts with a good tracking system. The far more important part of change management is the rigorous review process at least 2X monthly with your PMs that will limit your risk, increase your opportunities, and train your team.
Managing changes effectively means that you need clear visibility across all projects. While the workflow will vary by project, the key progress milestones in your internal process will remain fixed.
For contractors to manage changes effectively, they must understand the entire change management workflow up through the project owner’s approval and payment process.
If you perceive that changes are a problem in construction, then you are likely framing them as a point of blaming others. This framing will impact your ability to effectively manage changes.
Construction is a cash-intensive business and change orders are often one of the root causes of poor cash flow. A 30-day improvement to change management workflow can generate over $400K in additional cash flow for a $50M contractor.
A 10% improvement in change order pricing for a $50M per year contractor will add $500K to their bottom line. This is not about simply marking up the change more, but rather, including the many costs that are typically missed or undervalued.
Changes are a part of the construction process with many underlying causes. While we have all heard the average of 10% changes on construction projects, it is interesting to look at an industry study for validation.
The first step for contractors improving their management of changes on a project is simply earlier identification. This starts with a better definition of what a change really is, and then setting standards within your company around that definition.