Quantity Surveyors and Cost Managers spend a significant amount of time during the construction phase dealing with “Change Orders”
However, a flawed Change Orders Review process can lead to budget overruns and schedule delays.
Here are TEN tips to ensure an effective and efficient change orders review process:
1. Think 80/20: focus on the top 20% of the change orders that constitute 80% of the change orders dollar amount
2. Prioritize: ask the subcontractors and/or Construction Managers to identify the change orders which have a direct impact on: a) health, safety, environment; and/or b) schedule’s critical path and lead times. These identified change orders should be your starting point and top priority.
3. Establish Entitlement: Before you spend time analyzing the cost (Quantum), first of all establish “entitlement” and validate the scope of work. Seek feedback from the project managers and the design team.
4. Maintain Objectivity: keep the analysis factual, stay unbiased, and back your numbers by evidence and data (scope, quantity, unit rate). Avoid any subjective discussions or arguments.
5. Follow the ABC Rule: Assume nothing...Believe no one...Check everything
6. Stay Organized: maintain a change orders log showing the count and dollar amount of submitted, approved, pending, open, and potential change orders. Always reconcile your log with the Construction Manager’s log to ensure nothing slips through the crack
7. Communication: it is key to have a weekly or bi-weekly change orders review meeting. Always have an agenda, and use the change orders log as the basis of the meeting. Also agree on KPIs to track weekly progress (i.e. approved vs submitted). Don’t use the meeting to discuss updates, but rather to take actions.
8. Process the Paperwork: Once a change order is agreed, make sure that the paperwork is processed ASAP so that people can get paid in the next payment requisition. Remember that Cash flow is the lifeblood of the Construction Industry.
9. Pivot Tables: learn how to use Pivot tables in excel. They will help you slice and dice the data very easily for reporting purposes.
10. Audit Trail: keep clear records and analysis showing the source(s) of data used, and explaining ‘how and why’ you made the decisions that you made.
An effective and efficient change orders review process is simply a must in order for construction projects to succeed!