How to Streamline Change Order Management

Change order management is a challenge for almost all construction business owners. Meeting clients, capturing requirements, determining costs and getting approvals can be a daunting and time-consuming task. Fai Wong, owner of Level 8 Construction Inc. and a member of Construction Business Owner’s LinkedIn group, wants to know how to streamline this process. He asks:

How can the change order process be perfected?

  Steve Antill Director of Sales Foundation Software “While it may be difficult to perfect the process, there are effective ways to take 
control of managing your change orders. The best approach is to use software that has the ability to track change orders by their status. By tracking RFCs against formal change orders, contractors can better manage the status of change orders from pending to 
approved, which will ultimately save time and hassle. A good software program also will automate the tracking of any documents and correspondence related to the change order, keeping it all in a centralized location for easy review. With these tools in place, managing change orders can become very efficient.” Norb Slowikowski President Slowikowski & Associates “The first thing you need to do is conduct a face-to-face meeting with the subcontractor before the job starts to explain your process for submitting change orders and getting approval for them. Even though it might be spelled out in the contract, the sub needs to understand the details of your process and payment dates. Once the sub is apprised of your system, the sub must comply. If the sub doesn’t follow your process, change orders will not be approved. Maintain positive and open communication with your sub. Discuss changes with him/her as they occur. Lastly, insist that change orders must be submitted on a weekly basis. Smaller monetary amounts and changes are easier to deal with than a lump sum with many changes.” Jeff Adams Senior Product Manager Sage Construction and Real Estate “I recommend setting expectations with your customers up front by clearly outlining in the contract how a change to the scope of work will be communicated and approved. It’s also a good idea to go over the change order process during contract signing. Don’t be afraid to charge a change order fee to cover overhead and profit. And finally, 
automate the process to keep track of potential changes, change orders and resulting 
contract modifications. You can also improve communications by, for example, setting up automatic email notifications when change order requests are overdue and change orders have been approved.” Noel Alvarez, PMP Principal PMA Consultants LLC “While perfecting the change order process is a tall order, enhancing it is certainly possible. The change order process flows (or stagnates) based on level of transparency,
which is initially based on substance of the documentation submitted for evaluation. Ideally, no change order should be processed until billing and/or overtime billing rates for consultants, “subconsultants” and the general contractor and his/her subcontractors
 have been reviewed and approved. It is also beneficial to have requested prior additive and deductive unit rate pricing within subcontracts for major/typical components of the work. The description of the proposed change to the contract (change order description) must clearly state the reason for entitlement on the proposed change and the specifics as to the scope of work 
included in the proposed change (reference/supplemental documentation is ideal).” Jeremy Larsen Senior Product Manager Viewpoint Construction Software “One approach is first to create and document the general business need you have around the change order process. Then, begin to work on the solution—who is involved in the process, who can create and submit, who are the reviewers and approvers, etc. Once you have that mapped out, you’ll need your teams (both internal and external) to review and agree it will work for them. Next, you’ll want to use a software package that is flexible and robust enough to reflect your processes and also allows for collaboration with external vendors/team members who are outside your business. Technology and software continue to advance and provide the industry with tools that allow you to reflect your processes using
construction-specific project management, collaboration packages, e-signatures, mark-up tools, mobile apps, etc. The other 
variable in the mix is the people who need to participate in the change order process. In order for your process to work, you have to have willing participants, and that may be one of your hardest challenges. Providing users with easy and intuitive tools that they can access and use anytime and anywhere is helpful, along with functionality that includes notifications and reminders for their tasks.”