Proper change management protects our profits and our stakeholders.
Today we discuss the importance of properly managing change orders. As elite contractors we know that we must strive to solve problems better and this is one area where we can really shine. Taking the right approach to managing change orders can set us apart from the industry.
Change Management is a process that encompasses all aspects of change on a project. It would include tracking, communicating and recording changes. For today’s discussion we are focusing on the Change Order portion of that process.
We want to be sure and handle all change that have a potential cost impact so that we can protect our profits, protect our stakeholders and most importantly provide a better journey for our client. It doesn’t matter if your client is a homeowner, developer, prime contractor or subcontractor, they will all appreciate having a partner that manages change orders properly.
So you have a change that you have determined to have a potential cost impact to your project. Now What?
The first thing to do is make sure you have a Potential Change Log or PCO Log. I’ve attached some templates below that you can use if you don’t already have one. This can also be accomplished in your collaboration tool. In my Basecamp application I set up a milestone called PCOs and then add a task for every PCO.
The next thing you want to do is communicate the potential change to all stakeholders, this includes all subcontractors and suppliers. We want to make sure we are protecting our client here and not having something come up later in the project. When communicating with your subcontractors and suppliers be sure to give them a deadline for response.
The last part is submitting a Change Proposal. When submitting a change proposal make sure you are clear and concise about the change and provide the proper back up. If you need a response by a certain time be sure to include that date along with the impact of not getting an answer in time. You also want to provide any potential solutions or value engineering in your Change Proposal.
Put these key tips into action and it will help you solve the problem better than your competition.
Take Action Items
Make sure you have a change management process in place
Maintain a PCO Log
Communicate quickly, openly and clearly
Change Order Management
What: We have determined that a change may have a cost impact – Now What?
- Properly managing change orders protects our profits
- This will also protect our stakeholders interests (client/subcontractors/suppliers)
- Improves the Journey – Solve the Problem Better
- Have a Change Management Process
- Cover proper notifications
- Potential Change Log – PCO Log
- Determine what goes on the log – have a system
- Maintain log and share with project team / stakeholders
- The log
- Item # or PCO #
- Estimated / actual value
- Ball in Court – responsible person