Definition
A change order is a formal request to make alterations to the original construction plans after they have been finalized. This modification can involve changes to design, materials, or project scope and often comes with adjusted timelines and increased costs. Change orders require thorough documentation and agreement by all parties involved, including clients, contractors, and sometimes, subcontractors.
Examples
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Residential: Mrs. Jones decided mid-construction to convert a closet into a half-bath. The change required additional plumbing work, resulting in an extra $20,000 in costs.
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Commercial: A retail store chain decides to expand its storefront during construction. This change results in a change order involving new architectural plans, additional materials, and labor, thus increasing the project’s overall budget and completion time.
Frequently Asked Questions
What is a change order in construction?
A change order is an approved written request for changes to the original construction plans. It often includes modifications to the project’s scope, design, materials, schedule, or costs.
Why are change orders necessary?
Change orders can be necessary due to unforeseen conditions, design changes requested by the owner, or errors and omissions in the original plans. They allow for flexibility in accommodating these changes.
Who approves a change order?
A change order must be reviewed and approved by the project owner, contractor, and sometimes the subcontractors involved, ensuring all parties agree to the proposed changes and associated costs.
How do change orders affect project timelines?
Change orders typically result in adjustments to project timelines. The extent of the delay depends on the complexity and scope of the requested changes.
Do change orders always increase costs?
While change orders often lead to increased costs, some change orders that reduce project scope or substitute less expensive materials may potentially decrease the overall budget.
Scope Creep
The gradual expansion of the project’s scope beyond its original objectives, often leading to increased costs and extended timelines.
Contract Amendment
A formal change to the terms and conditions of the original contract, which can involve various aspects such as project scope, cost, and schedule.
Contingency Allowance
A budget reserve set aside for unforeseen work that may arise during a construction project, often used to cover the costs of change orders.
Project Management Plan (PMP)
A formal, approved document defining how the project is executed, monitored, and controlled, and can include information on how change orders are handled.
Online Resources
References
- Castronovo, F., Jensen, D., & Anderson, D. (2018). “Construction Project Administration”.
- Koontz, H., & O’Donnell, C. (2015). “Management: A System of Contingency Forecasting Plans”.
- Scarlet, K. (2017). “Managing Project Scope and Change Management on Construction Projects.”
Suggested Books for Further Studies
- “Construction Project Management: A Practical Guide to Field Construction Management” by Dawood Ali
- “Project Management for Construction: Fundamental Concepts for Owners, Engineers, Architects, and Builders” by Chris Hendrickson and Tung Au
- “Managing Change in Construction Projects: A Knowledge-Based Approach” by Sepani Senaratne and Martin Sexton
Real Estate Basics: Change Order Fundamentals Quiz
### What is a change order in the context of construction?
- [x] A formal request to alter the original plans.
- [ ] A final approval of completed work.
- [ ] A blueprint for the original construction.
- [ ] A cost estimate for materials.
> **Explanation:** A change order is a formal request that alters the original construction plans which may change the project scope, cost, or timeline.
### Who typically approves a change order in a construction project?
- [ ] Only the contractor.
- [ ] The project architect.
- [x] The project owner and contractor.
- [ ] The building inspectors.
> **Explanation:** Both the project owner and contractor need to review and approve a change order to ensure transparency and mutual agreement.
### Can change orders impact project timelines?
- [x] Yes, they can adjust timelines.
- [ ] No, they only affect project costs.
- [ ] Only when project scope is reduced.
- [ ] Change orders do not impact project timelines.
> **Explanation:** Change orders can affect the project's timeline as they may add new tasks which require additional time to complete.
### What is a common reason for issuing a change order?
- [x] Unforeseen conditions or design changes.
- [ ] Regular project updates.
- [ ] To lower project bids.
- [ ] For scheduling routine inspections.
> **Explanation:** Change orders are often issued due to unforeseen conditions, client-driven design changes, or errors found in the initial blueprints.
### Do all change orders increase project costs?
- [ ] Yes, always.
- [ ] No, they only impact timelines.
- [ ] Yes, except in industrial projects.
- [x] No, some can decrease costs.
> **Explanation:** While most change orders lead to higher costs, there are instances—involving scope reductions or material substitutions—where they can decrease costs.
### What is 'scope creep' and how is it related to change orders?
- [ ] Extra future project planning.
- [ ] Strict adherence to initial plans.
- [x] Unplanned growth in project scope.
- [ ] Minimizing project budget.
> **Explanation:** Scope creep is the term for unplanned and gradual expansions to the project scope, often managed through multiple change orders.
### What document defines how construction change orders are managed?
- [ ] Brochure templates.
- [x] Project Management Plan (PMP).
- [ ] Residential Blueprints.
- [ ] Manufacturer's Instruction.
> **Explanation:** The Project Management Plan (PMP) states precisely how change orders will be managed and documented in the scope of project execution.
### What might be included in the cost assessment of a change order?
- [x] Labor and materials estimated for the new work.
- [ ] The initial contract bid amount.
- [ ] Previous month's project expenses.
- [ ] Estimated costs of future projects.
> **Explanation:** The cost assessment for a change order typically includes the expected expenses for additional labor and materials required to fulfill the new scope.
### What does a contingency allowance often cover in construction projects?
- [ ] Administrative costs.
- [ ] Initial blueprint creation.
- [x] Costs related to unforeseen changes.
- [ ] Post-project maintenance.
> **Explanation:** Contingency allowances are budget reserves set aside specifically for unexpected work related to new change orders and possible unforeseen changes.
### What alteration may a contract amendment cover in larger long-term construction projects?
- [x] Project scope, cost, or scheduling terms.
- [ ] Branding Guidelines.
- [ ] Only specified supply sources.
- [ ] Residential resale estimates.
> **Explanation:** A contract amendment could cover key elements such as adjustments in project scope, changes in costs, or updated project timelines.
