Jun 24, 2023

The Impact That Change Orders Can Have

After going over what makes up a change order, we're ready to dive into all that change orders can change for each project. If you feel like you're up to speed, check out the legal aspects of change orders to ensure you protect your business well!



Effects of Change Orders on Project Scheduling


Change orders are alterations or modifications made to the original project plans, contracts, or agreements due to unforeseen changes in project requirements, scope, or objectives. They play a vital role in any project, as they allow project managers to adapt plans to new constraints, add new resources or tasks to the project, or adjust an existing project element. However, change orders can have a significant impact on a project's scheduling, which includes milestone dates, resource allocation, and supply chain management. This article will discuss each one of these areas in-depth, highlighting the effects of change orders on project scheduling and providing some recommendations to manage them effectively.



Influences on Milestone Dates and Deadlines

The first area where change orders can affect project scheduling is in milestone dates and deadlines. Milestones are specific points within a project that indicate the completion of a significant phase or task. Deadlines are the dates by which these milestones must be achieved. Change orders can significantly affect both of these elements by introducing new tasks, altering the scope of existing tasks, or even changing the entire project timeline.


For example, the addition of a new task may cause a delay in the completion of a specific milestone, which in turn affects other tasks and milestones that depend on its completion. Similarly, changes in scope for a task may require more time to complete, leading to missed deadlines and delays in other project elements. Change orders may also result in the tightening or extension of deadlines, which can significantly impact the scheduling or progress of a project.


To mitigate these effects, it is essential for project managers to carefully analyze and assess the potential impacts of change orders on milestone dates and deadlines. They should also communicate these impacts to all relevant stakeholders and work together to find solutions that will help keep the project on track.



Alterations in Resource Allocation and Availability


Another aspect of project scheduling influenced by change orders is resource allocation and availability. Resources can refer to human capital, equipment, budget, or any other asset required to complete a project. Change orders can create significant disruptions in the planned allocation and availability of resources, as they may introduce new tasks that require additional resources or cause existing resources to be pulled away from other tasks or projects.


In cases where resources become unavailable due to change orders, project managers may need to adjust tasks and timelines to accommodate workarounds, or even find alternative resources to ensure milestones are met or deadlines are achieved. This re-allocation of resources may require making tough decisions, such as postponing or deprioritizing specific tasks or parts of the project.


To preemptively manage these challenges, project managers must actively monitor resource usage and availability and develop contingency plans that outline possible scenarios and solutions when resources are impacted by change orders.



Supply Chain Disruptions and Delays


Finally, supply chain disruptions and delays can also be a significant consequence of change orders on project scheduling. In many projects, supplies and materials are sourced from various suppliers who must provide these resources within a specified timeline. However, change orders can often lead to unforeseen changes in the required materials or quantities, causing disruptions in the established supply chain.


For instance, if a task's scope is altered, it may necessitate a change in the types or amounts of materials required, leading to adjustments in orders with suppliers. These adjustments may cause delays or even the need to find new suppliers, consequently affecting the project's timelines.


To mitigate the impacts of change orders on supply chain management, project managers should maintain a strong relationship with suppliers and engage in clear communication about potential changes and their impacts on delivery timelines. Establishing alternative suppliers and maintaining a buffer of essential materials can also help in mitigating the effects of change orders on supply chain disruptions and project scheduling.


In summary, change orders have a significant impact on project scheduling and should be carefully considered and managed by project managers. Addressing the effects of change orders on milestone dates, resource allocation, and supply chains will go a long way in ensuring that projects remain on schedule and achieve their objectives.



Impact of Change Orders on Project Costs


Change orders are an unavoidable aspect of the construction process. They typically arise due to design changes, site conditions, or other unforeseen circumstances, which can cause disruption and delays in the project. Change orders usually have a direct bearing on project costs, affecting not only the overall budget but also the contractors, suppliers, and subcontractors involved. In this article, we will discuss the impact of change orders on project costs, exploring the direct cost implications for contractors, the cost ramifications for suppliers and subcontractors, and the indirect costs associated with delays and reiterations.



Direct Cost Implications for Contractors


For contractors, change orders can have several direct cost implications. Primarily, a change in design or scope requires resources to review and implement the changes, which translates to additional labor, materials, and equipment costs. Furthermore, change orders may necessitate adjustments in project schedules, and in some cases, contractual penalties for time overruns may be applied. This can lead to increased costs for contractors as they need to reorganize resources and expenditure to accommodate these changes.


Additionally, depending on the complexity of the change order, contractors may need to engage external expertise in the form of consultants or specialists, which further increases the project costs. Contractors must also factor in the administrative costs associated with reviewing, negotiating, and processing change orders, which can be significant in the case of complex or numerous changes.


Moreover, the financial risk associated with change orders is often borne by the contractors, who need to revise their project budgets and cash flow projections accordingly. This can lead to elevated costs related to financing, as well as potential disputes with other stakeholders like clients, suppliers, and subcontractors, which may result in legal and resolution costs.



Cost Ramifications for Suppliers and Subcontractors


Change orders can also have direct cost implications for suppliers and subcontractors, as they need to adapt to the altered project requirements. This can result in increased costs in the form of additional materials, labor, equipment, and the need for subcontractors to modify their methods and strategies.


If suppliers or subcontractors are unable to accommodate the change order or its implications, they may face financial penalties or even cancellation of the contract. In such cases, the supplier or subcontractor might have incurred costs related to pre-production, procurement, or other preparatory work, which they may need to absorb or pass onto other parties.


In some instances, the change orders may lead to additional opportunities for suppliers and subcontractors, such as if the revised scope includes additional work or if the project timeline is extended. However, these opportunities can come with associated costs, such as potential need for additional funding or resources.



Indirect Costs Associated with Delays and Reiterations


Beyond the direct costs associated with change orders, there are indirect costs that can arise due to delays and reiterations in the project. For example, an extended project timeline can lead to increased interest and financing costs for the contractor and other stakeholders, as well as pressure on existing cash flows and financial resources.


Delays and changes can also negatively impact productivity, as workforces need to adapt to new project conditions, designs, and timelines, which can cause decreases in efficiency and increased labor costs. Furthermore, the need for rework can contribute to waste in terms of materials and resources, leading to overhead costs and environmental consequences.


Change orders can also have less tangible impacts, such as reputational damage for contractors and other stakeholders, which can result in reduced competitiveness and increased difficulty in securing future projects. Additionally, employee morale can be negatively affected, which can lead to longer-term issues like increased employee turnover and decreased performance.


In summary, change orders can have a significant effect on the costs of construction projects, both directly and indirectly. Contractors, suppliers, and subcontractors all need to manage these impacts effectively, ensuring that changes are addressed proactively and that stakeholders communicate and collaborate efficiently to minimize the associated costs. With effective management and communication, the impact of change orders on project costs can be effectively mitigated, allowing projects to remain within budget and on schedule.



Effect of Change Orders on Project Quality


Change orders are modifications to the original construction contract that alter the project's scope, time, or cost. They are a usual part of any construction project, as project managers inevitably encounter unforeseen circumstances or requested changes by the stakeholders. However, change orders can significantly impact project quality for several reasons. This article will explore these effects, including compromised construction quality, impacts on project scope and complexity, and quality assurance and control challenges.



Compromised Construction Quality Due to Change Orders


One of the primary concerns regarding change orders is the potential compromise in construction quality. A change order may push the project team to circumvent standard procedures to fast-track the changes, which can lead to errors, oversight, and less than optimal quality outcomes. This is particularly concerning when the change orders are submitted during the later stages of the project when the majority of construction is already completed.


Moreover, change orders can necessitate additional work within a short time frame, leading to excessive pressure on the project team. This can result in cutting corners, substandard workmanship, and failure to adhere to the original quality specifications. Additionally, frequent change orders can lead to confusion and miscommunication among team members, which can negatively impact the overall project quality.



Impacts on Project Scope and Complexity


Change orders can significantly impact the project's scope and complexity. When changes to the original plan are made, the project team needs to adjust and accommodate these changes within the existing project framework. This can lead to a larger project scope and increased complexity, which complicates the coordination and execution of construction activities.


A larger and more complex project could put more strain on the project's resources, such as labor, time, and budget, making it more difficult for the team to maintain the desired quality standards. Furthermore, changes to project scope can also expose the project to new risks and uncertainties, which can negatively impact the project's quality, safety, and overall success.



Quality Assurance and Control Challenges


The introduction of change orders can significantly impact the quality assurance and control processes in construction projects. Quality assurance refers to the proactive measures taken to guarantee that the established quality standards are met, while quality control is a reactive process that involves the inspection and testing of construction materials, processes, and finished products to ensure compliance with the quality specifications.


Change orders can cause uncertainties and ambiguities in the quality assurance and control processes, making it more challenging to ensure that the changes are executed correctly, and the overall project quality is maintained. Some of the issues that could arise include:

  1. Inconsistencies between the original contract documents and the updated versions, which could lead to confusion and misinterpretation by the project team and result in errors or omissions.

  2. Unclear or poorly documented change orders can hinder the project team's understanding and implementation of the changes, leading to potential quality issues down the line.

  3. A high volume of change orders can overwhelm the project team, leaving them with insufficient time and resources to carry out thorough quality assurance and control activities.

  4. Change orders may require additional resources, such as materials, subcontractors, or equipment, which can affect the quality of work performed if these resources are not properly vetted and monitored.


To minimize the adverse effects of change orders on project quality, it is essential for project managers and stakeholders to carefully review and assess the potential impacts of change orders before approval. Clear communication, which you can track through ConGenius, efficient change management processes, and regular monitoring and evaluation of project progress can help ensure that quality standards are maintained despite changes in project scope or complexity.

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© Copyright 2024, All Rights Reserved by ConGenius, LLC

© Copyright 2024, All Rights Reserved by ConGenius, LLC

© Copyright 2024, All Rights Reserved by ConGenius, LLC

© Copyright 2024, All Rights Reserved by ConGenius, LLC