Similar to any risk assessment, assessing the exposure of change orders risk on a capital construction project requires assessing the likelihood of the risk occurrence as well as the impact that this risk could have on the project’s completion date and budget should it occur. To improve the occurrence likelihood and impact assessment of change order risks, each entity needs to create a trustworthy database to calculate the risk occurrence probability and the impact of the incurred delays and additional cost of change orders on the project.
Achieving this requires the entity to have a robust solution to capture all needed details from all change orders that have occurred on their complete projects’ portfolios. The captured data should include what has caused each change order, which of those change orders were approved, rejected or withdrawn, or disputed, which contractor issued the change order, who was the project’s design consultant, who was the supervision consultant, and project management consultant on the project, what was the extension of time and additional cost claimed by the contractor and was the extension of time and additional cost proposed by the project owner, what actions were taken to respond to the change order and how successful those actions. In addition, there is a need to capture the project communications that were used to either support the approval or the rejection of each change order.
Capturing this data will enable the entity to transform their experience in managing the change order business process into knowledge to provide a meaningful, objective, and unbiased assessment of the change order risks as well as provide a repository of valid, effective, and proven response actions that could mitigate the occurrence as well as the negative impacts of those risks. This is the organizational asset that each entity should strive to have.
Achieving this requires having a 100% web-enabled solution that can enable an entity to manage all change orders encountered across their complete projects’ portfolio at all project life cycle stages. The solution should also enable capturing communication records of all types of business processes managed on a project that could be related to any type of change order. Those communications for which the majority if not all are formal communications would include for example Request for Information, Work Inspection Requests, Daily Reports, Safety Violations, Safety Incidents, Submittal, Non-Conformance Reports, Confirmation of Verbal Instructions, Engineer’s Instruction, Site Work Instruction, Interim Payment Certificate, Meeting Minutes, Correspondence and others.
In addition, using such a solution to capture change orders across the complete project life cycle stages, the occurrence likelihood of the causes of change orders can be also assessed in an unbiased and objective format. The solution will enable identifying the occurrence frequency of those causes during a project’s duration which is needed when assessing the probability of those change orders risks to occur.
Regardless of how comprehensive and complete the template used to capture change order details could be designed to cover, to ensure having a comprehensive knowledge more data fields are needed to know if the change order could have been prevented and what actions should have been taken as well as what actions were taken to respond to the change order to mitigate its cost and schedule impact. Therefore, each change order form should have the text data fields needed to capture this information. Using “Text Cloud” visuals will provide the team analyzing the captured text with an interactive report to analyze the content that could correlate to actions to be taken. This visual can be configured to exclude unnecessary words so it can focus on more critical words.
In addition, understanding who were the project team members involved in the review and response process to each change order is also of great importance. The skills that project team members have in dealing with and responding to change orders do vary from one individual to another. In addition, the comments and remarks made by those project team members could provide additional knowledge for the entity when it comes to managing change orders on current and future projects.
Using a Project Management Information System (PMIS) solution like PMWeb, the entity will have a single 100% web-enabled platform to manage the change order business process needed to generate the trustworthy data required to produce the reports displayed above. PMWeb allows capturing all issued change orders across the complete projects’ portfolio and for each contract within a project that an entity could have.
The default out-of-the-box template for the change order business process has all the data that is usually required to report on each approved, rejected or withdrawn, or disputed change order. The change order form comes ready with the fields needed to identify the cause of issued change orders, claimed change order amount, and extension of time as well as approved change order amount and extension of time. For the cause and building system fields, the PMWeb selection lists module be used to populate those fields with all possible values to select from.
In addition, all project communication records and documents that are associated with each change order will be attached to its relevant change order input form. As a best practice, all those records and documents need to be uploaded and stored in the PMWeb document management repository where folders and subfolders will be created to better organize those records and documents as well as restrict access to them to only those authorized to do so.
For the different types of communication records generated on a capital construction project, there is also the option to create a link to those records if PMWeb was used to generate transactions for each business process. The input template for those business processes can be either one of PMWeb default input templates or one of those created using PMWeb custom form builder.
There is no limit to the additional user-defined fields that can be added to the change order business process in PMWeb. This data will help in enriching the captured experience in performing the change order business process. For example, a group will be added to identify the business process or processes that the attached or linked records relate to. The list will identify all types of project communications that are usually associated with change orders. For each change order, there will be a need to select the business process category with the option to add clarification notes if needed. This association with other business processes could also prove to be of great importance when analyzing the correlation that business processes have with change orders.
Another group of users defined fields will be created to report on the particulars of how a change order could have been prevented and the effectiveness of the response action made against the change order. For example, the data fields to be captured could include a field to determine to what extent the change order could have been prevented and details of why or why not it could have been prevented. In addition, there could be data fields to capture to what extent the response to the change order was effective with details on how it was effective. Of course, more data fields can be added to provide improved insight on each managed change order transaction.
Finally, the details of all those involved in reviewing and responding to a change order transaction along with the actions taken and comments made will be captured in the workflow tasks assigned to the change order business processes. The workflow register captures the complete history of each review and approval or rejection task along with the comments made and input requested from other project team members.
About the Author
Bassam Samman, PMP, PSP, EVP, GPM is a Senior Project Management Consultant with 40-year service record providing project management, project controls services, and project management information systems to over 200 projects with a total value over the US $100 Billion. Those projects included Commercial, Residential, Education, and Healthcare Buildings and Infrastructure, Entertainment, Hospitality, and shopping malls, Oil and Gas Plants and Refineries, Telecommunication, and Information Technology projects. He is thoroughly experienced in complete project management including project management control systems, computerized project control software, claims analysis/prevention, risk analysis/management (contingency planning), design, supervision, training, and business development.
Bassam is a frequent speaker on topics relating to Project Management, Strategic Project Management, and Project Management Personal Skills. Over the past 40 years, he has lectured at more than 350 events and courses at different locations in the Middle East, North Africa, Europe, and South America. He has written more than 300 articles on project management and information systems featured in international and regional magazines and newspapers. He is a co-founder of the Project Management Institute- Arabian Gulf Chapter (PMI-AGC) and has served on its board of directors for more than 6 years. He is a certified Project Management Professional (PMP) from the Project Management Institute (PMI), a certified Planning and Scheduling Professional (PSP), and Earned Value Professional (EVP) from the Association for the Advancement of Cost Engineering (AACE) and Green Project Management (GPM).
Bassam holds a Masters in Engineering Administration (Construction Management) with Faculty Commendation, George Washington University, Washington, D.C., USA, Bachelor in Civil Engineering – Kuwait University, Kuwait and has attended many executive management programs at Harvard Business School, Boston, USA, and London Business School, London, UK.