Impact of Change Orders on Small Labor-Intensive Projects

In today’s construction, small projects can be just as important if not more important than the larger projects. However, small projects are usually fast track projects, which often involve overlapping design and construction time. Subsequent modifications may be required for the sections that are already under construction. These disruptions to the ongoing project are labeled as change orders. The impact due to changes has been described as the adverse effect upon the unchanged work due to changes in the contract. For this study, 34 projects were selected to develop a statistical model that estimates the amount of labor efficiency lost due to change orders for small projects. The variables in the final model are percent design related changes, percent owner initiated changes, the ratio of actual peak labor to estimated peak labor, the ratio of actual project duration to estimated project duration, and project manager’s percent time on the project. The results of this paper are of value to owners, electrical and mechanical contractors, and construction managers. The model quantifies the impact of change orders by introducing the most important variables that bring the largest disruptions.     

Avoiding Change Orders in Public School Construction

Increased student enrollment and the current poor state of the educational infrastructure require the construction of more school buildings and the renovation of many of the existing ones. The large number and magnitude of change orders in these projects constitute an impediment to the rapid and economic delivery of these projects. A total of 6,585 change orders filed in a school district’s projects in the 5 1/2 year period from 1999 to 2004 were analyzed in five categories including owner-directed changes, code compliance issues, errors/omissions in contract documents, discovered or changed conditions, and others. The results of the study indicate that the dollar value of change orders relative to the original contract can be reduced if preventive measures are taken. These measures include choosing the right construction management firm, emphasizing the definition of project scope early in the project, and effectively managing the precontract activities by conducting value engineering and constructability reviews. The results indicate that school projects can be completed with change orders not exceeding 5% of the contract value if these measures are taken. This study is of relevance to practitioners involved in school design and construction projects.     

Cumulative Effect of Project Changes for Electrical and Mechanical Construction

Change is inevitable on construction projects, primarily because of the uniqueness of each project and the limited resources of time and money that can be spent on planning, executing, and delivering the project. Change clauses, which authorize the owner to alter work performed by the contractor, are included in most construction contracts and provide a mechanism for equitable adjustment to the contract price and duration. Even so, owners and contractors do not always agree on the adjusted contract price or the time it will take to incorporate the change. What is needed is a method to quantify the impact that the adjustments required by the change will have on the changed and unchanged work. Owners and our legal system recognize that contractors have a right to an adjustment in contract price for owner changes, including the cost associated with materials, labor, lost profit, and increased overhead due to changes. However, the actions of a contractor can impact a project just as easily as those of an owner. A more complex issue is that of determining the cumulative impact that single or multiple change orders may have over the life of a project. This paper presents a method to quantify the cumulative impact on labor productivity for mechanical and electrical construction resulting from changes in the project. Statistical hypothesis testing and correlation analysis were made to identify factors that affect productivity loss resulting from change orders. A multiple regression model was developed to estimate the cumulative impact of change orders. The model includes six significant factors, namely: Percent change, change order processing time, overmanning, percentage of time the project manager spent on the project, percentage of the changes initiated by the owner, and whether the contractor tracks productivity or not. Sensitivity analysis was performed on the model to study the impact of one factor on the productivity loss (%delta). The model can be used proactively to determine the impacts that management decisions will have on the overall project productivity. They may also be used at the conclusion of the project as a dispute resolution tool. It should be noted that every project is unique, so these tools need to be applied with caution.     

Strategies Adopted by International Architectural, Engineering, and Construction Firms in Southeast Asia

There are many business opportunities for international architectural, engineering, and construction firms to work in Southeast Asia (SEA) due to its high volume of construction demand and its growing economy. Before entering the region, these industry practitioners need to decide on the appropriate market entry modes and business strategies. The objectives of this research are to investigate the effective market entry modes and business management strategies that industry practitioners can adopt for SEA projects. The research method is based on a structured questionnaire. The study found that the most effective market entry modes are: setting up wholly owned foreign subsidiaries and forming project joint ventures with local firms. The most effective business strategies are: providing a superior product or service and paying great attention to client satisfaction. It is recommended that industry practitioners place emphasis on customer satisfaction by considering all aspects of the client’s requirements and the proposed project’s usage throughout its intended life cycle, to differentiate itself from its competitors.     

Model for Quantifying the Impact of Change Orders on Project Cost for U.S. Roadwork Construction

Change orders are very common in almost every construction project nowadays, often resulting in increases of 5–10% in the contract price. Understanding the consequences of such trends, several studies have attempted to quantify the impact of change orders on the project cost. Most of the studies aimed at the quantification of the change orders were sponsored by contractors’ organizations, where statistical models used to quantify the impact of the change orders on the project cost were based on data supplied by the contractors; a situation that can lead to owner-contractor disagreements related to the quantification method used. In addition, most of the studies tackled commercial and electromechanical work, and very rare studies tackled the field of heavy construction; a field that suffers from change orders because of errors and omissions, scope of work changes, or changes because of unforeseen conditions. This study addresses the need for a statistical model to quantify the increase of the contract price due to change orders in heavy construction projects in Florida. The model is based on data collected from 16 Florida DOT projects with contract values that ranged between $10–$25 million, and that encountered an increase in the contract price from 0.01 to 15%. Eleven variables were analyzed to test their impact on the cost of the change orders. The study concluded that most significant variables that impact the value of the change order, which are (1) the timing of the change order and (2) when the reason for issuing the change order is unforeseen conditions. Two regression models are developed and validated as follows: (1) a model to quantify the percentage increase in the contract price due to the change orders that increase the contract price from 0.01 to 5% and (2) a model to quantify the percentage increase in the contract price due to the change orders that increase the contract price from 5 to 15%. Those models will provide the owner with a retrospective or forward pricing of the change orders, and hence, allow the owner to estimate and utilize contingency amounts.     

Causes of Delay in Building Construction Projects in Egypt

Delay in construction projects is considered one of the most common problems causing a multitude of negative effects on the project and its participating parties. This paper aims to identify the main causes of delay in construction projects in Egypt from the point of view of contractors, consultants, and owners. A literature review was conducted to compile a list of delay causes that was purged based on appropriateness to Egypt in seven semistructured interviews. The resulting list of delay causes was subjected to a questionnaire survey for quantitative confirmation and identification of the most important causes of delay. The overall results indicated that the most important causes are: financing by contractor during construction, delays in contractor’s payment by owner, design changes by owner or his agent during construction, partial payments during construction, and nonutilization of professional construction/contractual management. The contractor and owner were found to have opposing views, mostly blaming one another for delays, while the consultant was seen as having a more intermediate view. Results’ analyses suggest that in order to significantly reduce delay a joint effort based on teamwork is required. Furthermore, causes of project delay were discussed based on the type and size of the project.     

Quantitative Definition of Projects Impacted by Change Orders

Change, defined as any event that results in a modification of the original scope, execution time, or cost of work, is inevitable on most construction projects due to the uniqueness of each project and the limited resources of time and money available for planning. Change may occur on a project for a number of reasons, such as design errors, design changes, additions to the scope, or unknown conditions. For each change, contractors are entitled to an equitable adjustment to the base contract price and schedule for all productivity impacts associated with the change. Changes may or may not have an impact on labor productivity. Existing literature uses subjective evaluation to determine whether the project is impacted. Projects impacted by change cause the contractor to achieve a lower productivity level than planned. The focus of this paper is to quantify whether an electrical or mechanical project is impacted by a change order. Through statistical hypothesis testing, groups of factors that correlate with whether a project is impacted by change orders were identified and used to develop a quantitative definition of impact. Logistic regression techniques were used to develop models that predict the probability of a project being impacted. The results of this research show that percent change, type of trade, estimated and actual peak manpower, processing time of change, overtime, overmanning, and percent change related to design issues are the main factors contributing to the project impact.     

Feasibility Study of an Automated Tool for Identifying the Implications of Changes in Construction Projects

Because of the fragmented nature of project information, decisions on changes in construction projects are usually based on project design instead of project requirements. This research proposes a new approach for coping with changes in construction projects: A change control tool (CCT) that will identify implications of a change as soon as it is proposed. The tool will ensure that the stakeholders involved in the decision process in which change proposals are evaluated will know in advance if a change could cause the project to stray from its original goals, as expressed in the requirements. The proposed CCT uses the building program as a link between client requirements and the building design and traces the different relationships that exist between the requirements in the project. The relationships are traced using requirement traceability capabilities on the level of a specific space in the project and on the level of the entire project. A preliminary CCT model was developed and pilot studies implementing the model have been conducted. The pilot studies have given positive results, indicating that the CCT could identify the scope of the proposed changes’ implications.     

Comparative Study of the Variables in Construction Project Briefing/Architectural Programming

Briefing is the process by which client requirements are identified, clarified, and articulated in the early design stage of construction projects. It is crucial to the successful delivery of construction projects. Considerable research has been conducted in briefing during the past two decades. However, researchers consider many current briefing practices to be inadequate, and little research has been done in sufficient depth to explore briefing variables in the construction industry. This paper introduces a comprehensive framework of the variables that have an impact on construction project briefing. A questionnaire survey was conducted to validate these variables among project managers and architects in Hong Kong, the United Kingdom, and the United States. The results indicate that although no significant differences existed between the samples in the United Kingdom and the United States on the variables for construction project briefing, the views of the samples in Hong Kong deviated from the two Western countries. The Western professionals have more positive answers to most statements in the questionnaire. The findings have significant implications for industry practitioners in producing their guidelines for the briefing process and for writers in drafting how-to briefing guide for construction projects.     

Whole Life Performance Assessment: Critical Success Factors

Whole life costing (WLC) has become the best practice in construction procurement and it is likely to be a major issue in predicting whole life costs of a construction project accurately. However, different expectations from different organizations throughout a project’s life and the lack of data, monitoring targets, and long-term interest for many key players are obstacles to be overcome if WLC is to be implemented. A questionnaire survey was undertaken to investigate a set of ten common factors and 188 individual factors. These were grouped into eight critical categories (project scope, time, cost, quality, contract/administration, human resource, risk, and health and safety) by project phase, as perceived by the clients, contractors and subcontractors in order to identify critical success factors for whole life performance assessment (WLPA). Using a relative importance index, the top ten critical factors for each category, from the perspective of project participants, were analyzed and ranked. Their agreement on those categories and factors were analyzed using Spearman’s rank correlation. All participants identify “Type of Project” as the most common critical factor in the eight categories for WLPA. Using the relative index ranking technique and weighted average methods, it was found that the most critical individual factors in each category were: “clarity of contract” (scope); “fixed construction period” (time); “precise project budget estimate” (cost); “material quality” (quality); “mutual/trusting relationships” (contract/administration); “leadership/team management” (human resource); and “management of work safety on site” (health and safety). There was relatively a high agreement on these categories among all participants. Obviously, with 80 critical factors of WLPA, there is a stronger positive relationship between client and contactor rather than contractor and subcontractor, client and subcontractor. Putting these critical factors into a criteria matrix can facilitate an initial framework of WLPA in order to aid decision making in the public sector in South Korea for evaluation/selection process of a construction project at the bid stage.     

Perceptions of Construction Professionals Concerning Important Skills of Effective Project Leaders

The purpose of this study was to identify the most important skill of an effective project leader as perceived by the significant actors in the construction industry. A total of 120 questionnaires drawn from six construction-related professionals, comprising architecture, building, civil engineering, mechanical and electrical engineering, estate surveying, and quantity surveying were collected and used for the study. These professionals were employed in clients’ organizations (N = 40), consultancy firms (N = 48), and contracting firms (N = 32). Frequency counts of the responses were computed, from which the mean item score for each skill was calculated to obtain the relative importance index. The relative importance indices were then ranked from the highest to the lowest for the clients, the consultants, the contractors, and the weighted average. The results showed that the most important skill is decision making for the client and for the three groups combined. The consultants agreed that leadership and motivation is the most important skill for the project leader. This is followed by decision making. The contractors ranked communication as the most important skill of an effective project leader. In the overall analysis, there is no significant difference in the perceptions of the three significant actors regarding the ranking of the skills. The implications of these findings for practice and research are analyzed and discussed, herein.     

Contributors to Construction Debris from Electrical and Mechanical Work in Hong Kong Infrastructure Projects

The crucial problem of construction debris is of increasing concern in Hong Kong. In the construction industry, the electrical and mechanical (E&M) installations in the infrastructure, for example, buildings, tunnels, or dams, are some of the major and usually complex components. Difficulty in coordinating the various trades affects productivity in general, and has a major impact on the quantity of construction debris. By identifying the sources of waste at each stage of E&M engineering work, some of the construction debris can be eliminated at the source during production. This paper investigates the critical production shortcomings in the E&M sector in Hong Kong. The study is based on a survey that includes a preliminary questionnaire survey, brainstorming exercises with a focus group, structured interviews with experienced frontline supervisors, and a second focus group exercise to test findings and proposed measures. The principal findings are that “poor coordination” and “design changes and/or errors” are major contributors to variations or change orders and rework, which in turn result in a high volume of construction debris. The results also indicate that construction debris can be minimized in the E&M sector of the construction industry, if the material wastes from incidental work are reduced and also controlled better in a new work process flow pattern through recommended construction project management improvements for reducing critical production shortcomings.     

Contractors’ Views of the Potential Causes of Inconsistencies between Design and Construction in Saudi Arabia

The study identifies the causes of inconsistencies between the design and construction of large building projects. To achieve the study objectives, a questionnaire survey was carried out to collect information on potential causes of inconsistencies at the project design and construction interface. Responses from 27 contractors were analyzed. The results suggest that the involvement of designer as consultant, communication gap between constructor and designer, insufficient working drawing details, lack of coordination between parties, lack of human resources in design firm, lack of designer’s knowledge of available materials and equipment, and incomplete plans and specifications were considered as the most important causes of the project design and construction interface inconsistencies. On the other hand, project management as a professional service, weather conditions, nationalities of participants, involvement of the contractor in design conceptual phase, unforeseen problems, involvement of the contractor in design development phase, and government regulations were the least important causes of inconsistencies between professionals at the project design and construction interface in large building projects.     

Can Design Improve Construction Safety?: Assessing the Impact of a Collaborative Safety-in-Design Process

This paper analyzes the impact of a large-scale safety-in-design initiative during the design and construction of a semiconductor manufacturing facility in the Pacific Northwest of the United States. Drawing on multiple data sources including individual interviews, group interviews, construction documentation, and an expert panel involved in the initiative, the writers identify 26 potential design changes on the project and assess the importance of timing, trade contractor involvement, and the type of design change in determining whether a proposed design change was ultimately integrated into the final construction plans. The writers further consider whether adopted design changes would have occurred in the absence of the safety-in-design initiative and whether the accepted design changes ultimately impacted construction site safety on the project. This analysis of a full-scale safety-in-design initiative provides important insights into how injury prevention efforts in the construction industry can begin upstream by involving designers, engineers, and trade contractors in preconstruction processes.     

Risk Allocation by Law—Cumulative Impact of Change Orders

Change, defined as any event that results in a modification of the original scope, execution time, or cost of work, is inevitable on most construction projects due to the uniqueness of each project and the limited resources of time and money available for planning. There are many factors that may cause a change such as design errors, design changes, additions to the scope, or unknown conditions in the field. For each change, contractors are entitled to an equitable adjustment to the base contract price and schedule for all productivity impacts associated with the change. The focus of this paper is to outline the types of changes that can occur on a construction project and also to spell out the financial recovery possibilities that exist for the contractor for each type of change. There are many historical and current court decisions that shape the outcomes of such claims and determine who holds the risks associated with various project changes. Also, an effective cumulative impact claim contains certain vital elements upon which the final outcome will be determined by the legal system. Last, there are certain actions that a contractor and owner can do to either enhance or mitigate the effectiveness of a potential cumulative impact claim.     

Impact of Change Orders on Labor Efficiency for Mechanical Construction

Change orders have become an everyday occurrence in construction. It is widely accepted by both owners and contractors that change orders have an effect on the labor efficiency, but these effects are difficult to quantify and frequently lead to disputes. Data from 61 mechanical construction projects were collected to develop a statistical model that estimates the actual amount of labor efficiency lost due to the change orders. The input variables needed in the model are as follows: (1) The original estimated labor hours; (2) impact classification; (3) total estimated change hours; (4) number of change orders; and (5) the timing of changes. The results of this study show that impacted projects have a larger decrease in labor efficiency than unimpacted projects. Additionally, the later a change order occurs in the life of a project the more impact it will have on the labor efficiency. The results appear to be consistent with the intuition of experienced professionals. Although each project has unique characteristics, the resultant model provides owners and contractors with a baseline measure of lost labor efficiency.     

Effects of Delivery Systems on Change Order Size and Frequency in Mechanical Construction

Change orders represent one of the largest sources of cost growth on building construction projects. Field generated, or “unforeseen” change orders can also be highly disruptive to field productivity. Design-build delivery methods can potentially help minimize change orders on construction projects. This study was performed to closely examine the effects of delivery methods on the frequency and magnitude of change orders in mechanical construction, and how design-build business practices can be used to minimize the frequency of field generated chance orders. In a study of 598 change orders occurring on 120 construction projects performed by the same contractor, the total number of change orders was found to be close to the same on design-build and design-bid-build projects, however an 87% decrease in the average number of unforeseen change orders was observed on design-build projects versus design-bid-build projects. In addition, the average size of unforeseen change orders was 86% smaller on design-build projects. A detailed and qualified presentation of the research methodology and resulting data is provided. Key attributes and business practices leading to the results are discussed and practical applications of this research for owners and contractors are provided.     

Viability of Designing for Construction Worker Safety

Designing for construction safety entails consideration of the safety of construction workers in the design of a project. Research studies have identified the design aspect of projects as being a significant contributing factor to construction site accidents. Designing to eliminate or avoid hazards prior to exposure on the jobsite is also listed as the top priority in the hierarchy of controls common to the safety and health professions. Widespread implementation of the concept in the United States by engineering and architecture firms, however, is lacking due to perceived industry and project barriers. Given its absence from standard design practice, a question arises as to the viability of designing for safety as an intervention in the construction industry. This paper presents a pilot study that was conducted to investigate the practice of addressing construction worker safety when designing a project and to determine the feasibility and practicality of such an intervention. Through interviews of architects and engineers, the study found that a large percentage of design professionals are interested and willing to implement the concept in practice. Among the perceived impacts of implementation, project cost and schedule were mentioned most often along with limitations being placed on design creativity. The results of the pilot study indicate that designing for safety is a viable intervention in construction. The factors that impact the consideration of safety in the design of a project do not entirely prohibit its implementation or make its implementation extremely impractical and therefore not feasible. Additionally, the outcomes of implementation provide sufficient motivation to implement the concept in practice. The paper describes the key changes needed for implementation of the concept in practice which include: a change in designer mindset toward safety; establishment of a motivational force to promote designing for safety; increase designer knowledge of the concept; incorporate construction safety knowledge in the design phase; utilize designers knowledgeable about design-for-safety modifications; make design for safety tools and guidelines available for use and reference; and mitigate designer liability exposure.     

Impact of Change Orders on Labor Efficiency for Electrical Construction

Change orders are a source of many disputes in today's construction industry. The issue at hand is whether or not the execution of change orders work has a negative impact on overall labor efficiency on a construction project. Previous literature demonstrates evidence that change orders affect labor efficiency. Attempts have been made to quantify these impacts by many researchers, with limited success. Using the electrical construction industry, a research study has been conducted to quantify the impacts of change orders on labor efficiency. In this paper, results of hypothesis testing and regression analysis are presented. A linear regression model that estimates the loss of efficiency, based on a number of independent variables, is also presented. The independent variables used in this model are (1) qualitative and quantitative criteria used to determine whether projects are impacted by changes or not; (2) the estimate of change order hours for the project as a percentage of the original estimate of work hours; (3) the estimate of change order hours for the project; and (4) the total number of years that the project manager had worked in the construction industry. Additional projects were used to validate the model, with an average error rate of 5%. The results of this research study are useful for owners, construction managers, general contractors, and electrical specialty contractors, because they provide a means to estimate the impact of a change order under certain project conditions. This research also identifies factors, which, when understood and effectively managed, may be used to mitigate the impact of a change order on project costs and efficiency.