What Is A Change Order In Project Management?​

Do you want to know the truth about change orders in project management? In this blog, I’m going to share with you the 10 commandments of change orders and how to prevent them from derailing your team. Let’s dive right in!

What is a Change Order?

A change order is a document used to modify the original project agreement. It outlines necessary changes in the scope of work, costs, and schedule. In many cases, construction contracts dictate the change order process. So, whether there’s a design change, unforeseen circumstances, or any reason to adjust the scope, a formal change order process must be followed. Tip: Never proceed with any change order work until you have financial approval. Also, ensure that change orders are opened in your project management system to avoid losing track of them.

The 10 Commandments of Change Orders

1. Know Thy Contract To be successful with change orders, you must understand the contract and the process for handling them. Knowing the rules of the game is crucial.
2. Do Not Give Away Leverage The owner wants the project completed, including changes, but you should be compensated for the additional work. Ensure your pricing is approved before you begin.
3. Know the Point of Release Never start any change order work without a written, signed, and authorized change order. Know the rules and permissions needed.
4. Ask for What You Need Clearly specify all aspects of the change order, including additional hours, demo, and reinstall costs. Don’t assume you can add extra charges later—ask for what you need upfront.
5. Time is Money Ensure you request the appropriate amount of time for the change order and get both the money and the time approved.
6. Surprise Not the Owner Always keep the owner informed about any delays or disruptions. This makes it easier to get equitable compensation for the additional costs.
7. Be Persistent Persistence yields results. Don’t give up easily when negotiating a change order.
8. Maintain Bargaining Power You have just as much bargaining power as the owner. Don’t give away your leverage.
9. The Job Isn’t Done Until the Money is Collected The goal isn’t just completing the work but getting paid for it. Managers should focus on profitability, not excuses.
10. Make it Lawyer-Proof Ensure all documentation can stand up in a court of law to justify your payment.

The Truth About Change Orders

There’s a common belief that change orders aren’t necessarily good. While they can sometimes be profitable, they usually create a lot of administrative paperwork. When managed poorly, change orders can derail a project with excessive variation. It’s best to reduce the number of change orders whenever possible.

How to Manage Change Orders Efficiently

1. Clearly Identify Impacts As soon as an impact occurs, document it in your meeting minutes, daily reports, and on the legal schedule.
2. Keep the Main Workforce Moving Don’t allow change orders to distract your team from the original project. Keep the focus on the main tasks while managing change orders separately.
3. Allocate Specific Labor If you don’t have the resources to handle change orders, hire a separate crew to ensure that your main team isn’t derailed.
4. Prioritize the Contract First Always complete the original contract work first, and treat change orders as secondary priorities.

Conclusion

The key to successfully handling change orders is ensuring that they don’t create chaos. By following these 10 commandments and focusing on your contractual obligations first, you can manage change orders without derailing your project.