Changes are part of delivering any project. To keep the project on schedule and within its budget, those changes have to be managed. A change order (or an amendment) is a mechanism that identifies, defines and tracks those changes in a way that is acceptable to all parties. That includes whatever added costs or time required to implement the change.
Having a change order and a change order log are especially key documents in construction project management, where contracts between the owner of the project and the various contractors working to execute the plan are vital to a project’s progression. But a contract change order can apply to many industries.
What Is a Change Order?
A change order is a document that addresses any change in the project scope, detailing what needs to happen, how much it’ll cost and when it can be expected to reach completion.
The change order is a means to modify existing contracts and, in effect, adjust the price and timeline of the project. Because of these changes to budget and schedule, change orders are not acted upon until both the owner of the project and the contractor responsible for the change agree on terms and conditions. There are two types of change orders: additive and deductive.
An additive change is one that could be as simple as a different color of paint or moving a structure from one place to another on the project site. They don’t take anything away from the project, they just simply change a part of the execution.
On the other hand, if you’re requesting the deletion of a portion of work, that’s a deductive change order. Unlike the additive change order, a deductive change will more likely result in a reduction of costs and could even shave some time off the project schedule.
Change orders are often part of a process that begins with a request for information (RFI), which is a document that responds to any questions that may arise over the course of executing a construction project. It is used to clarify something or ask for additional information. This can often lead to a change in the contract, which will then trigger the change order form.
Why Use a Change Order?
A change order is used when a change is requested. No plan is made in stone, especially construction projects that are complex endeavors. Project managers can prepare for risk, but it’s impossible to anticipate everything that might happen.
As these two kinds of changes that can impact scope show up in a project, there’s a need to control and manage them. That’s why using a change order form is so important. It captures the details of the requested change, how much it’ll cost and the time involved, so all parties can make the decision whether to go ahead or not.
What is a Change Order Log?
If the change is approved, it then requires a change order log. A change order log captures changes that are made in a project and ensures they’re going as scheduled. It’s also a place where all the change orders are collected, as there is usually more than one over the course of a project. With a change log, these changes are less likely to be lost in the execution of the project.
The change order log also helps you choose which changes to initiate, and keeps that process organized by giving each change order a number. The type of change can be identified, defined and the cause of the change request noted.
The change order log is a place to write down how the change will impact the project, which helps in making the final decision as to whether to move forward or not. Other details from the change order form are collected here, such as the date the change order was created, who created it, what its status is (if approved), who approved it (or why it was rejected) and the actions needed.
Example of a Change Order Form Template
ProjectManager.com has a library of blog posts and tutorial videos that focus on every aspect of project management, including dozens of free project management templates, including our change order form template.
Our change order form template has space to capture internal information about the owner and the project, as well as what opportunities can be made from taking on the change. There’s also space to explain what the change is and how it’ll impact the project.
Further on, there’s space to collect the specifics, such as details of the change and how costs will be impacted. The bottom of the form has a signature and date line for when the change is either approved or denied. Plus, it’s customizable to suit your specific needs.
Best Practices for Construction Change Orders
The point of a change order is to manage changes and deliver your project on time and within its budget, while giving both the owner and the contractor a chance to agree on terms and avoid any disputes later on.
To make sure your change orders are fulfilling these functions, and to manage the process for the best results in the overall project, it’s important to follow best practices. The following are a few suggestions that can help you keep your change orders doing what they’re supposed to do.
Know Your Original Contract
The change order amends the contract you have already agreed on; therefore, it’s important that you’re very familiar with that original contract. The scope of work agreed on will let you analyze the change and help you determine how comfortable you are making that change (and taking on more costs).
Agree on Costs Before Doing Work
The project budget will be impacted by the change order, but unless those costs are identified and agreed on, there can be trouble. For example, small changes might be considered just part of the original project. It’s critical that everyone is on the same page before any work is done.
Get Your Change in Writing
It might sound obvious, but a change order form is created to avoid miscommunications. Therefore, a handshake or a verbal agreement is not a change order. It can be the spark that sets the change order in motion, but any decisions must be detailed on paper and agreed upon.
Have a Process in Place
Without a process to deal with change orders, you’re going to have problems with contractors, budgets and schedules. A change order log is the first step in organizing your process, but creating and tracking them can be streamlined with project management software.
How ProjectManager.com Helps Process Change Orders
ProjectManager.com is award-winning project management software that organizes projects and teams and keeps your processes running efficiently. Our tool has unlimited file storage, which makes it the ideal hub to centralize all your project documents—including change order forms.
To simplify the process, create your change order form in our software. Using the kanban tool, which visualizes workflow with cards as tasks and columns as the stages of production, make your change order a card. Kanban cards can have attachments, tags for priority and more, detailed descriptions and then be assigned.
You can track the hours logged on the change, and even streamline the payment process by using our timesheets. They can be auto-filled for recurring tasks and, once sent in for payment, are locked for security. Because our software is cloud-based, your crew can update their status on site and progress is reflected in real-time. Managing your change orders is easy when the progress stays in one tool.
ProjectManager.com is a cloud-based tool that keeps your teams working collaboratively. Manage every aspect of the project from planning with online Gantt charts to monitoring progress and performance on a real-time dashboard, then keep stakeholders updated with easy reporting features. See how we can control your project changes and more by taking this free 30-day trial today.