If you’ve managed construction projects in any capacity for longer than a month you probably are fairly familiar with Change Orders. Of course an approved Change Order is when an Owner (typically) is paying extra money – above the agreed-upon Contract Sum- to some Contractor for work completed at the Project that the Contractor can prove is beyond his/her Scope of Work. The general breakdown of attitude regarding discussing Change Orders is something like this:
Subcontractor/ Trade contractor- generally pro-change order; this is their means of assuring or increasing their profit margin and/or reducing “Scope creep” on a Project.
General Contractor- generally anti-change order; GC’s are often in the middle of the entire CO argument and discussion between the various trade contractors, the Owner/Developer, and the Architect. Sometimes the GC is forced to pay out CO’s to subcontractors but not have them be reimbursed by the Owner- due to specific contractual language or GC oversights.
Architect- the Project Architect is usually not a fan of change orders; at a minimum this is extra administrative work for them. In some cases change orders which the Owner pays as a direct result of faulty or incomplete Drawings/Specifications can become a financial issue for the design firm.
Owner/Developer – 90% of the time is anti-change order; the only exception to this would be if the Owner itself directly asked for some additional work to the Project which they clearly know is beyond the original scope.
This review is very simplistic, and perhaps not 100% accurate. But it is just offered to set the tone.
And just how common are Change Orders and Change Order Requests?
Common enough for some larger owners and institutions to employ entire “Change Order Groups”. These are people in addition to the various Project Executives, Project Managers, Estimators, Project Engineers, and Construction Managers.
I recently noticed this local (Boston area) job posting:
Manager of Construction Change Orders – MBTA (quasi-governmental public transportation agency in Massachusetts) Salary = $121,000 / year
The Manager of Construction Change Orders will assist with the day-to-day operations and management of the Change Order group. The position will assist the Senior Manager of Construction Change Orders with the change order process by providing technical advice and support to staff and field personnel in the field of construction change orders, work directives, risk reallocations, construction quantity variances, time extensions and claims. This position will report to the Senior Manager of Construction Change Orders and will supervise the Change Order staff.
Here is a position needed with a decent salary, plus excellent company benefits. They will supervise the “Change Order staff” (how many people is that?), and they will report to the Senior Manager of Construction Change Orders.
How many Change Orders are they processing and reviewing on a weekly basis? It must be quite a lot.
Truth be told I have some direct project knowledge of being a subcontractor at an MBTA project. I can say without question that on their projects it is very, very difficult and cumbersome to even submit a Change Order Request. Contractually they do all they can to reduce or eliminate Change Orders. So even with that background, they still require a staff of change order professionals.
What are the solutions to this conundrum in the AEC industry? That perhaps is a bit complicated- and beyond the scope of this article. If I provided such answers here, I may need to submit a Change Order to the reader….