GUIDELINES FOR CHANGE ORDERS
: In stock
- Revision: 2003 Edition, January 1, 2003
- Published Date: January 2003
- Status: Active, Most Current
- Document Language: English
- Published By: Sheet Metal and Air Conditioning Contractors National Association (SMACNA)
- Page Count: 104
- ANSI Approved: No
- DoD Adopted: No
Description / Abstract:
As a construction project moves from planning to implementation, the owner and its architect or construction manager develop the "scope of work" for the overall project. The "scope of work" describes the overall job to be done, as well as the work to be performed by each discipline or trade. That "scope", as embodied in the plans and specifications, is then used by the general contractor and upper tier subcontractors to define the nature of the work at the lower tier levels. It is a rare project that comes in on time and on budget without a well-defined scope of work.
As the construction industry has evolved, the methods of design and construction have also changed. Along with the traditional approach of bidding on detailed plans and specifications, there has been increasing reliance on design/build methodology, as well as on "fast track" construction methods. The use of a single general contractor has been supplanted, in many cases, by the bidding of major components of a project directly to the owner, who then employs a construction manager to coordinate the overall effort. Each of these approaches raises distinct issues in defining the scope of work and how scope-related matters are to be addressed. However, any contractor's biggest challenge with regard to scope remains the inevitability of changes to the work.
Many factors can result in changes during a project. A poorly-defined scope of work or gaps in the scope may mandate corrective changes. Unforeseen conditions or delays related to the conduct of other parties may trigger significant changes in schedule or cost. A re-design may radically impact the scope. A subcontractor may go bankrupt and its work be reassigned to other project participants. The only certainty is that contractors and subcontractors must deal effectively with change in order to survive and be profitable.
The purpose of these Guidelines is to raise awareness of the factors that increase the likelihood of significant changes and to provide tools that will allow SMACNA members to effectively manage project changes. The management of change on each project is a process that begins at the bid preparation phase and continues until final close-out and payment. It requires a constant awareness of current project developments and the ability to anticipate future problems. It tests the capabilities of the subcontractor as a problem-solver, record-keeper, communicator, and negotiator. The trends in the construction industry (particularly the decline in the quality of plans and specifications) will only increase the challenge to subcontractors in effectively managing change.
It has long been reported by SMACNA members that, in the performance of changed work, they incur significant costs that are not compensated. It is the goal of these Guidelines to assist the SMACNA member in effectively pursuing compensation for all of the costs incurred in performing a change to the initially-contemplated work. Such costs may be directly related only to the changed work, but often are the result of the "impact" or "ripple effect" of a change, where the real cost includes the effect of the change on unchanged work. The forms and procedures recommended in these Guidelines will, if carefully and pragmatically applied to individual project circumstances, put the SMACNA member in a favorable position to pursue fair compensation for changes that are mandated by the owner or its representatives or by the circumstances of the project.
These Guidelines focus primarily on the position of the subcontractor in dealing with the higher tiers on a construction project. Those interactions will inherently involve some give-and-take. The HVAC/sheet metal contractor will be staking a claim to dollars that the higher tiers would prefer to keep. However, the need to resolve change issues does not have to translate to legal conflict. In fact, the timely and effective resolution of change-related issues can be a key factor in achieving the cooperative approach to construction that SMACNA has endorsed.
Each chapter of these materials begins with a scenario. The fictional company in the scenarios, ZZZ Sheet Metal, has been featured in SMACNA's Contract Bulletins for a number of years. These scenarios are intended to illustrate the various principles that are discussed in each chapter. For the benefit of SMACNA members, there are also links to various Contract Bulletins on particular topics. Finally, these Guidelines include forms and references to other industry resources that go into greater detail on issues related to changes and change compensation. Hopefully, these Guidelines will be both a useful reference for the experienced contractor and a training tool for those still learning how the construction industry functions.
: Sheet Metal and Air Conditioning Contractors National Association (SMACNA)