Managing the Construction Change Process for Owners
If you manage construction projects, then you are familiar with the construction contract change process. Are you managing that process efficiently and effectively or are you spinning your wheels and creating waste? If you are not using a Project Management Information System (PMIS), then you may fall into the latter category.
“The only constant is change” – Heraclitus
The change order process without a PMIS
Change is inevitable, whether initiated by the owner, the architect, the contractor, an authority having jurisdiction, or inherent field conditions. No matter who identifies or initiates the change, it’s typically the contractor to identify the scope, schedule, and cost of the change.
If neither the contractor nor the owner is using a PMIS to manage the project, then the process becomes manual for all parties involved. Perhaps the contractor starts a Word document to begin the process and enters the potential change order into a spreadsheet (either on their hard drive or on an internal shared drive). The contractor can then begin the process of defining scope, schedule impact, and cost impact. Perhaps the owner and architect are aware of the potential change, but more often than not, they aren’t. If the owner/architect are aware of the potential change, then they may be entering information into their own tracker(s), which is a duplication of effort.
When the potential change order is ready for review, most likely it is emailed out to team members for initial review (hopefully it doesn’t get lost in someone’s email inbox). If the owners and/or architects are keeping their own trackers, then they’re updating their spreadsheets with the latest scope, schedule, and cost changes. They may also need to save the corresponding cover sheet, details, and back-up on their own hard/shared drive.
If the team meets regularly during the construction process, then they may carve out time to review the potential changes; otherwise, multiple emails back and forth may take place, and hopefully everyone is keeping up on their emails. If the team is not diligent enough and on top of reviewing the potential change orders, then the contractor and owner are increasing their risk.
+ Contractors are at risk of paying for work that wasn’t approved by the owner
+ Owners are at risk of paying for work that was not wanted.
+ The project is at risk of not addressing critical path changes.
After review, the potential change orders get bundled into a Change Order package. Typically, the owner’s PM is responsible for the creation and approval process of the Change Order package. Perhaps the owner is using an industry-standard change order form. However, one size does not fit all, so most likely the owner’s team is using a modified form: potentially with each PM having their own version of such a form if there’s not strict document control in place. To save time on data entry, the PM may even reuse a previously filled-out form, adding the risk of incorrect data entry to the process.
The change order process without an Owner PMIS
Perhaps you’re an owner who doesn’t generate a large number of capital projects, or are more tech savvy and realize the benefits, but are not ready to adopt your own PMIS, so you go and hire a contractor that has their own PMIS. What risks are there for you as an owner?
Obviously, you are subject to the contractor’s system and to their processes. Your PM depends on them for access, and if the relationship flounders, then access to project data is at risk. Extracting the data for internal use or historical benchmarking is also subject to the Contractor’s system and access to it. The contractor’s PMIS may not provide the required data in the format or structure that the owner requires. The level of detail the contractor’s PMIS provides may be different from what the owner requires, and now the data needs to be transformed, requiring further effort by the owner to make it useful.
The change order process with an Owner PMIS
There are benefits to an owner for adopting a PMIS. A centralized repository for all data and documents, standardization of processes and output forms/reports, and accountability of team members.
The process with an Owner PMIS could go something like this:
+ Contractor enters the Potential Change Order into the Owner’s PMIS at the appropriate level of detail, including back-up/attachments.
+ The cost of the Potential Change Order is automatically added to the Owner’s cost tracker.
+ The Potential Change Order gets routed through the owner’s predetermined review process, with architects/engineers/consultants appropriately assigned.
+ The Owner’s project control team would have the last review as a check on previous reviewers’ responses.
+ Any revisions could be routed back through the process and, when corrected, re-reviewed.
+ Most PMIS’ allow for collaboration outside the standard process.
+ Team members with access can see where in the process the Potential Change Order is and how long it has been at that step.
+ The Potential Change Orders can easily be bundled into a Contract Change Order, usually with a click of a button.
+ The Owner’s Change Order form is stored in the PMIS, ensuring the same form is used by all users, and it can include all back-up as necessary, which means less time
at the printer and/or merging files into one PDF.
+ Although duplicate data entry is potentially occurring (Owner’s PMIS and Contractor’s PMIS), modern APIs may be able to facilitate connection between systems, and if
not, the centralization and data integrity for the owner far outweighs the costs of duplication of effort.
Additional Benefits of an Owner PMIS
+ Change orders can typically be added to the schedule of values of invoices with a click of a button.
+ Multiple defined processes can typically be handled by the PMIS. This allows the owner to have different processes for different scenarios involving dollar amounts and approval limits.
