Changes - Impacts Beyond the Direct Costs

Contractors don't typically see the full negative impact of changes and, therefore, don’t put the right level of resources into their management.

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Typically overlooked impacts that must be quantified include:

Change Management: Impacts Beyond the Direct Costs.
  • Dilution of management on the project, which causes overall loss of productivity.

  • Cash flow that incurs financing costs, as well as potentially keeping a contractor from taking early-pay discounts unless they are very well capitalized.
      
  • Risk of not getting paid for completed change orders is typical and a significant cause of margin fade late in the project.
      
  • Lowered customer satisfaction impacting future work can be the biggest cost of all. However, this does not mean avoiding real changes to the project. 

  • Productivity on the project suffers from many factors related to excessive changes, including dilution of management, schedule compression, overtime, additional mobilizations to the work area, and lower crew morale. 
     
  • Extended project overhead - general conditions.

Contractors, project owners, and architects that fully understand these put the resources in at the earliest design stages driven by weekly meetings and continue managing the project with the same discipline.  


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....

Changes - Impacts Beyond the Direct Costs
Contractors don't typically see the full negative impact of changes and, therefore, don’t put the right level of resources into their management.
Changes in Construction Survey
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.
Changes - Impacts Beyond the Direct Costs
Contractors don't typically see the full negative impact of changes and, therefore, don’t put the right level of resources into their management.