What Is A Change Order In Construction?
What Is A Change Order In Construction?
A change order in construction is an agreement between a contractor and a client that modifies the original terms of a contract.
It is a legal document that describes any changes to the project scope, schedule, and cost, resulting from something that wasn’t previously specified or included in the breach or not agreed upon in advance.
Change orders are necessary when a contractor wishes to make adjustments to their work, whether due to unforeseen circumstances or based on customer preference.
They allow for flexibility within the contract process by allowing both parties to agree on changes without having to start over with a new contract.
What Is The Change Order Process In Construction?
The Change Order Process in Construction typically involves a contractor preparing a “Change Order Proposal” which outlines the extra work required, as well as any additional costs associated with it.
This proposal is then reviewed and agreed upon by both the owner and contractor for scope, price, and timeline before a formal written change order is created and signed by all parties involved.
Once an agreement has been reached, the contractor then carries out the changed work as outlined in the change order.
Give A Classic Example Of A Change Order Construction.
A classic example of a change order in construction is when an owner wants to move the location of a wall to accommodate another design element, add a window that wasn’t in the original plans, or modify the finish of the floors from tile to terrazzo.
Change orders for these sorts of modifications must be requested and approved by all parties involved; otherwise, costs can spiral out of control if additional labor and materials are needed.
A more complicated form may also be required if local building codes need to be updated due to structural changes made by the new design.
What Are The Types Of Change Orders In Construction?
Change orders in construction involve changes to the scope or size of a project and are classified into four types: Time and Material, Lump Sum, Zero Cost, and Unitary Cost. A Time and Material change order is used to adjust the working hours or cost of materials needed for the work.
A Lump Sum change order defines a quantifiable change in work scope with a definitive cost determined after negotiation between parties.
A Zero Cost change order involves no additional costs as it either adjusts labor costs or doesn’t add any value to the project. Lastly, a Unitary Cost change order is used when each unit of work will require the same amount of effort and cost.
What Is The Cost Of Change Orders In Construction?
Change orders in construction typically cost 10 to 15 percent of the contract value, according to research studies.
This is especially true for large projects where change orders can cause disruption and delay in the project schedule, leading to higher costs for labor, materials, and other resources needed for successful completion.
Change orders may also lead to extended duration with associated additional overhead costs. They may also add complexity and cost for both contractors and owners due to the need for additional paperwork needed for their approval.
It is important that all stakeholders involved in the project understand the potential costs associated with any requested changes in order to properly evaluate their impact.
