The Construction Change Order
Or in Other Words: Being forced into costly decisions with the least amount of influence on the solution.
It is a regrettable reality that a change required during construction, regardless of its cause, inevitably yields the largest cost increase, the longest delay, and the biggest compromise to quality. Furthermore, decisions are usually forced, offering few options and little influence by the owner.
For construction change orders, the decision-tree never includes: Which solution saves the most money or improves the final product? More likely, the decision-sapling presents questions like: Which option is the least costly, least compromising to quality, or which solution will have the smallest disruption to the schedule?
To reduce the size and impact of construction change orders, we must first recognize that they are Lagging Indicators.
Don’t despair. There is an alternate reality. One that can allow you to take control and influence positive outcomes.
To reduce the size and impact of construction change orders, we must first recognize that they are Lagging Indicators. They almost always result from previous missteps, oversights, or errant details. This means the power to take control and produce more positive results will only come when we work to identify the obstacles that lurk in a project’s life-cycle and take proactive steps to eliminate them.
Below, we will review some common preconstruction errors and oversights, explore why they occur, and suggest ways the owner-developer can leverage their influence to produce better quality and less costly outcomes, including:
- Coordinated Teamwork Now Vs. Costly Corrections During Construction
- The Exponential Cost Of Missed Drawing Errors
- How to Leverage Maximum Influence at Minimum Cost
- Common Causes of Missed Drawing Errors
- Reaping the Benefits of Success
COORDINATED TEAMWORK NOW vs. COSTLY CORRECTIONS DURING CONSTRUCTION
Proactive quality control cuts down on reactive, expensive remedies
Zero errors and omissions is an unrealistic standard of care for even the most experienced architectural and engineering team (A+E team). However, the reality is that added costs due to A+E errors are the owner’s responsibility. The design and build teams are typically stocked full of content experts with years of combined, relevant experience. And yet, the industry standard has come to accept multiple errors and omissions to be “worked out” during construction. Resolving problems during the construction phase is always the most costly to the budget, compromising to the finished product, and most disruptive to the schedule.
Resolving problems during the construction phase is always the most costly to the budget, compromising to the finished product, and most disruptive to the schedule.
Change orders generated by numerous drawing errors is equivalent to “death by a thousand cuts”, eventually adding up to hundreds of thousands, and even millions of dollars over the course of a large project. And those wounds are always borne by the owner, in the form of additional costs and schedule delays.
A carefully crafted quality control plan (QC) and a drawing review schedule, implemented at the project outset, can go great lengths towards coordinating efforts and promoting success for the design team. Given this opportunity, each consultant can build in the time and staffing required to ensure that internal QC and cross-disciplinary drawing reviews are performed at predetermined milestones.
Additional owner’s influence comes from ensuring that the appropriate scopes and responsibilities are written into the consultant agreements and by providing the oversight to hold each team accountable to perform reviews on schedule and follow through with the required changes.
THE EXPONENTIAL COSTS OF MISSED DRAWING ERRORS
The best solutions almost never occur during construction
Not all change orders cause small wounds that result in little cost and no time extension. Let’s take a quick look at an example case-study of a drawing coordination error with potentially huge consequences.
The plumbing drawings show the sewer line exiting the building at the northwest corner of the building because that was the most efficient design for the internal waste lines. The civil drawings show the sewer tap coming from the street at the East side of the building because that provides the shortest branch line to the sewer main.
No drawing coordination review was executed before construction and no RFI’s were generated during the bidding phase. Site work begins and underground utilities are being installed when the plumbing contractor stops by the job site and discovers the sewer line stubbed to the East. Confused, he asks questions.
The underground sewer line was critical path and had already been installed below future parking so that it can get based-in before winter and used for construction traffic. The piping inverts and connection elevations have been specifically designed to the existing sewer main to the east. After the plumber’s discovery, the site work is shut down, delaying all critical path elements.
The following solutions are presented to the owner, who has little leverage for a more desirable solution and no recourse to recover lost time and added costs:
Option 1) Route the sewer line underground from the northwest corner to the sewer main at the east.
Costs Associated with this Option:
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- Seldom works because longer runs make it difficult to match inverts and will encounter many other underground site elements along the way.
- Expensive excavation due to longer runs and bedding requirements.
Option 2) The plumbing engineer can redesign the building waste lines to exit the building towards the sewer main to the East.
Costs Associated to this Option:
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- Redirecting waste lines creates longer runs inside floor joist spaces, resulting in dropped soffits and undesirable ceiling heights.
- Redesign usually result in much longer sewer runs requiring more fall and lower inverts. Sometimes not possible without a pump.
- Redesign will result in more expensive internal plumbing system.
- Architect and all other consultants will have to revise drawings to coordinate with plumbing changes.
- All drawing changes will have to be resubmitted to the permit desk for review and approval.
- Plumbing contractor will have to perform new material take-offs, resulting in new lead times, restocking fees, or lost material costs all together.
- Considerable delays due to the redesign and approval process will add owner’s costs in the form of additional consultant fees, general conditions, carrying costs, lost revenue, etc.
Option 3) Relocate the sewer tap to the Northeast corner of the building (if a sewer main is even available).
Costs Associated to this Option:
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- Will require a new sewer main invert study and redesign by the civil engineer.
- Will require a resubmittal to the sewer utility for coordination and approval, all of which take significant time.
- Architect and all other consultants will have to revise their drawings to coordinate with sewer changes.
- All drawing changes will have to be resubmitted to the permit desk for review and approval.
- All excavation, labor and material costs already installed are most likely, unrecoverable.
- The site contractor will have to perform new material take-offs, resulting in new lead times, restocking fees, or lost material costs all together.
- All new piping, excavation, and labor costs will be a dollar for dollar add, plus applicable fees, OH&P.
- Considerable delays due to the redesign and approval process will add owner’s costs in the form of additional consultant fees, general conditions, carrying costs, lost revenue, etc.
The example illustrates a common error that can be caused by a number of reasons. A proactive, project management plan, with proper oversight would have ensured the execution of several upstream measures that could have greatly reduced the chances of this coordination error slipping through. Discovery of this error during the drawing phase could have easily been corrected with little cost and no delay.
HOW THE OWNER CAN LEVERAGE MAXIMUM INFLUENCE AT MINIMUM COST
Mitigating Costly Construction Changes Before They Occur
Development projects are complex. Project teams get busy and over-burdened. Best-practices can get short-circuited. But the fact is, there is hope!
These practices, if instituted, will save project time and cost the owner pennies on the dollar compared to costly changes discovered during construction.
There are practices and procedures that the owner can absolutely put in place upstream, that utilizes total teamwork and enhances success for the owner and the entire team. Processes that, with the proper management, responsibilities matrix, and scheduled tasks can improve cost estimates, reduce drawing errors, enhance quality control, decrease schedule delays, and set up the construction phase for increased success.
These practices, if instituted during the planning, contract writing, design, and preconstruction phases, will save project time and cost the owner pennies on the dollar compared to costly changes discovered during construction.
Let’s revisit our case-study above and the likely, common causes of drawing oversights. We will also show how the owner can leverage maximum influence toward better outcomes.
- Likely Cause: Owner holds direct contract with the civil engineer
Owner’s Influence @ least cost:
a. Enhance the scope language in the original agreement
b. Transfer agreement at the appropriate phase
- Likely Cause: No proactive management or quality control plan put into place
Owner’s Influence @ least cost:
a. Enhance language in consultant’s agreement
b. Ownership team drafts management and quality control plan at the outset of the project
- Likely Cause: Insufficient contract language regarding the A+E teams’ scopes of work
Owner’s Influence @ least cost:
a. Architect’s sub-consultant agreements reflect the same schedule and milestone language
b. Ownership team manages consultants’ scope and milestone obligations
- Likely Cause: GC not required to execute a robust drawing review
- Likely Cause: Written scopes of work not provided to bidding subcontractors
- Likely Cause: Limited RFI activity during subcontractor bidding
- Likely Cause: No preconstruction MEPFP coordination review meeting(s)
- Likely Cause: Bids not thoroughly vetted to ferret out scope gaps
Owner’s Influence @ least cost:
a. CG’s agreement contains negotiated language requiring robust performance procedures, reporting, and proper milestones
- Likely Cause: No language in GC’s agreement to establish shared financial risk in the case of delayed project completion
Owner’s Influence @ least cost:
a. CG’s agreement contains negotiated language establishing liquidated damages, or other risk-sharing mechanism
- Likely Cause: Drawings are behind schedule so the A+E team rushes through drawing completion
Owner’s Influence @ least cost:
a. Pre-scheduled milestone reviews are already built into the consultants’ drawing schedule, so there are NO surprises and LESS causes for drawing delays
- Likely Cause: GC’s groundbreaking is already behind schedule and preconstruction tasks are short-circuited in response to the urgency
Owner’s Influence @ least cost:
a. Because the A+E drawing schedule has been managed from the outset, combined with the fact that the GC’s review and bidding expectations have already been established, there are far fewer reasons for last-minute changes due to pricing surprises or missed drawing errors.
REAP THE BENEFITS OF SUCCESS
Project success does NOT happen by accident.
By establishing more robust mechanisms for quality control and enforcement upfront, it is possible for the owner-developer to take control of their project, instill order, and reduce the chaos of construction change orders, run-away costs, and endless project delays.
