A Broader Definition of a Change on a Construction Project

The first step for contractors improving their management of changes on a project is simply earlier identification.

D. Brown Management Profile Picture
Share

Regardless of the project delivery method, early identification of changes is always an advantage. As contractors get more involved in advanced preconstruction services on projects, this ability to identify changes early in the design-development process becomes a differentiating competitive advantage. 

The first step in early identification is to broaden the definition of a change.  


A change is any material deviation from your planned execution of the project.


 

You will have to set standards for your company and what you consider something material enough to count as a change from your plan. This may be a fixed dollar amount, percentage of daily costs, percentage of weekly costs, or some other factor. The important things are that:

  1. The decision on materiality must not be left to a project manager, superintendent, foreman, or other team member as this will lead to inconsistency in project outcomes. Set standards at the company level so their focus can remain on early identification and processing.
  2. Be clear on how to deal with cumulative impacts. A $1,000 impact one-time may not be material for your company or project - but what about that impact on 11 of the last 15 working days?
  3. Be clear on which roles have what levels of decision rights regarding whether a change will be taken to the customer or not. Though the PM is likely the point person for working with the customer on change management, there should be clear boundaries and escalation paths based on size limits and timing for the customer to approve the change. These will likely be evaluated in terms of dollars, frequency, and days outstanding.  

Being clear on your Planned Execution starts with a broader overview of the project, ultimately breaking it down into “Good Tasks” that can be started and completed without interruption if all prerequisites are met.  

There are two basic outcomes of planning a project down to each task: “On-Schedule” and “On-Budget.” You want to identify any material deviations. Systems like the Last Planner (LPS), Percent Planned Complete (PPC) calculations on your Short-Interval Plans (SIPs), and ABC Daily Planning help project teams stay on track and better able to identify changes early.


  • Not all changes are good and not all are bad.

  • You will get compensated for some, while many others you won’t.

  • Not all changes will be driven by the customer or other trades. Some will be driven by you and others by external conditions.
  • You can learn from all changes, including how to identify them earlier and possibly mitigate them all together.  

Change Orders
Change orders are a fact of life in construction. Improve profitability, cash flow and customer satisfaction by effectively managing changes. Build a foundation for success with 12 steps to improve pricing and 11 negotiating strategies for the whole project team....

Related Training
Change Orders
Change orders are a fact of life in construction. Improve profitability, cash flow and customer satisfaction by effectively managing changes. Build a foundation for success with 12 steps to improve pricing and 11 negotiating strategies for the whole project team....

Early Identification as a Trainable Skill
The ability to identify potential changes early is a skill that can be tested, trained, and managed just like a craft skill.
Tracking Change Progress (The Funnel): Basic Status Categories
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.
Changes and Cash Flow Improvement
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.