Construction project and change order management contemporary affirm


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Construction project and change order management contemporary affirm

  1. 1. International Journal of Management (IJM), ISSN 0976 – 6502(Print), ISSN 0976 - 6510(Online), Volume 4, Issue 3, May- June (2013) 135 CONSTRUCTION PROJECT AND CHANGE ORDER MANAGEMENT: CONTEMPORARY AFFIRMATION OF THE RECENT LITERATURE AND FUTURE RESEARCH DIRECTIONS Farouk Saif yahya ahmed1 , Dr. Mrs. Madhuri Sunil Deshpande2 1 Research scholar at School of commerce and management, SRTMUN, Nanded, Maharashtra, India 2 Asst. Professor, School of Commerce & Management, SRTM University, Nanded - 431 606, India ABSTRACT In the last thirty years there has been massive work in the construction field. Globalization and economic impetus for wealth has created this huge demand. As a result of all this there has been rapid growth and transformations. Opportunities have been generated because of the high living standards of the people. Population and globalization has hastened the growth of towns. This in turn has called in for large and complex projects which have attracted contractors and construction companies. Many a times contractors and their companies lack good knowledge on social cultural issues that impact construction process. Present article will delve into the state of art in construction project change management and provide future research directions. Keywords: Construction Project Management, Change Request, Change Order Management, change formation path analysis, dynamic configuration management, construction planning, change request management, general construction. 1. INTRODUCTION Change is the name of the game in any construction project. Changes can happen for several reasons, owner would want a change in the design or market conditions may necessitate changes in the project. There may be technological changes which would call rework on the design by the engineer. These changes can improve and give precision to the design and the operation of the project. Also errors and omissions in engineering may call in INTERNATIONAL JOURNAL OF MANAGEMENT (IJM) ISSN 0976-6502 (Print) ISSN 0976-6510 (Online) Volume 4, Issue 3, (May - June 2013), pp. 135-144 © IAEME: Journal Impact Factor (2013): 6.9071 (Calculated by GISI) IJM © I A E M E
  2. 2. International Journal of Management (IJM), ISSN 0976 – 6502(Print), ISSN 0976 - 6510(Online), Volume 4, Issue 3, May- June (2013) 136 for changes. Several factors can demand changes which could prove expensive and would probably be disliked intensely by all parties. These occurrences have to be considered from initial stages till the final stages. In the best interest of the construction it’s better to add a change clause on the contract and also describe how the owner, consultant and contractor will handle the changes. Procedure should be in place describing process of change from conceptual development till it goes on to the field. Generally a hostile atmosphere exits between the parties in the construction industry. In such a scenario changes must be managed to bring the cost down. Huge schedule and consequences can bring in huge costs and schedule overruns. 2. NOMENCLATURE OF CONSTRUCTION PROJECT MANAGEMENT AND RESPONSIBILITIES 2.1 Construction Project Management Construction industry is very different from other industries like the automobile, consumer food and textile industry. Here we shall discuss what construction industry is all about. It’s process and how important it is for the national and international economy. 2.2 Peculiarities of the construction, its products, and its production processes Construction industry comprises of designing, constructing, maintenance and utilization of constructs. Also it includes modulation, modification, demolition and deconstruction of constructs [2]. This industry contributes majorly to the economy and is also responsible for environmental changes to an extent. We can conclude here that construction industry influences economic, social and ecological issues during the entire tenure of the constructed product. Construction industry can be bifurcated into two wide categories. One is the general building construction and the other is the engineered construction (see fig 1 [1]). General building construction has four further divisions: • Residential building (places where people reside) • Commercial construction (this includes stores, malls, offices, manufacturing units) • Institutional construction (hospitals, schools, Government buildings and stadiums fall in this category) • General building construction (large scale projects, heavy plants and factories) Contrary to the general building construction, engineered construction focuses more on functionality than aesthetics. Engineers prepare the design. These projects are generally owned by public entities and are related to public infrastructure. Such projects are funded with bonds, rates and taxes. Engineered constructions have two common subcategories. One is highway construction and other is heavy construction. Here highway construction includes special lightning and signage, installation of bridges, embankment constructions, and excavations. While heavy construction projects are construction of dams, tunnels, rapid transit systems, pipelines, airports, water lines and different utility works [1].
  3. 3. International Journal of Management (IJM), ISSN 0976 – 6502(Print), ISSN 0976 - 6510(Online), Volume 4, Issue 3, May- June (2013) 137 Figure 1[1]: Segments of the construction industry 2.3 Characteristics of the construction industry The construction industry significantly differs from traditional manufacturing industries1, such as the automobile, consumer food, and textile industry. In the following, a common understanding of the peculiarities of the construction industry, its products, production processes and stakeholders is created and the relevancy of the construction industry for the national and international economy is discussed. 2.4 Peculiarities of the construction, its products, and its production processes The construction industry is that part of the economy which deals with the design, construction, maintenance, and utilization as well as with the modulation, modification and demolition or deconstruction of constructs [2]. It is a major sector in most national economies and a major contributor to environmental changes, both in terms of designing the built environment as well as in terms of anthropogenic effects on the environment. Thereby, it impacts economic, social, and ecological issues throughout the whole life cycle of a constructed product. The construction industry can be divided into two broad categories: general building construction and engineered construction, as depicted in Figure 1 [1]. The general building construction sector can further be divided into four types. The residential construction comprises buildings for human habitation, for example single-family dwellings, flats, multifamily townhouses or high-rise apartments. Retail and wholesale stores, shopping malls, office buildings or small manufacturing facilities belong to commercial construction. The institutional construction includes constructed assets such as hospitals, schools, government buildings or athletic stadiums. Especially institutional construction projects are often very complex and require more planning effort than general building construction projects. The fourth category of the general building construction is industrial construction in which large- scale projects are developed and executed. Unusually, these projects are also characterized by a high technical complexity. Examples for large-scale projects are manufacturing facilities, such as electric power-generating plants, petroleum refineries or other heavy manufacturing factories for the manufacturing of, for example, vehicles or rolling equipment. In contrast to the general building construction, projects of the engineered construction industry sector usually emphasize functionality rather than aesthetics. Thus, designs are prepared by engineers and not by architects. Projects in engineered construction are usually related to the public infrastructure, owned by entities of the public and funded with bonds, rates or taxes. Furthermore, two common subcategories can be differentiated. While highway construction projects typically include excavation, embankment constructions, installation of bridges or special lightning and signage, heavy construction projects refer to, for example,
  4. 4. International Journal of Management (IJM), ISSN 0976 – 6502(Print), ISSN 0976 - 6510(Online), Volume 4, Issue 3, May- June (2013) 138 dams, tunnels, pipelines, rapid transit systems, airports or different utility works like electrical transmission systems or water lines [1]. Immobility, complexity, durability, costliness and high degree of social responsibility are some of the traits exhibited by the construction industry [3]. Buildings are built at the construction site, which is also referred as point of consumption. The size of the finished product is massive hence transportation of this from the manufacture site is impossible. Therefore minus modular and mobile housing, construction products cannot be moved. Construct stems are complex because of the big amount and varied mixture of construction materials and components needed for construction as specified by the designers and the taste of the owners. Compared to manufacturing units where products are smaller, in construction scenario the products are immobile, big and have higher degree of standardization. Durability is another important aspect that distinguishes construction industry from manufacturing industry. End products in the construction industry have long life span starting from 10 to 100 years. Maintenance, repair, modification and repair also extend the lifespan of buildings. Depending on the durability the cost of the product will increase. This is why the expenditure in construction industry is very high compared to the ones in the manufacturing industry. Hence a computer or coffee equipment costs much less than a building. But the good news is that cost involved in the construction process can be decreased by employing standardization and innovative construction processes. But this uniqueness in the construction industry has not happened for various reasons like difficulty in research and development environment. For example in earthquake prone areas we can use materials which are conducive to build houses in such areas. In such cases we should also take care to see that materials used for construction do not pose any health hazard are safe for public, as there is an increased environmental awareness. This scenario is in contrast with the manufacturing units where products are manufactured in the vicinity of the manufacturing unit; they are small in size, mobile and has limited impact on general public. Construction industry has several phases like design, production, construction, use and occupation along with the end-of-life phase of construction. Construction projects include organizing and assembling the construction materials for the final building, while deconstruction refers to a process of bringing down the building at its end-of-life. This also opens up recovery or waste management. Figure 2: Typical building life cycle [4]
  5. 5. International Journal of Management (IJM), ISSN 0976 – 6502(Print), ISSN 0976 - 6510(Online), Volume 4, Issue 3, May- June (2013) 139 Manufacturing industry has consistent production process and the outcome is high. The scenario in the construction industry is different. Here there is one of its kind products. Mass production and joint-production is not possible, also mass production economy cannot be achieved here. Construction sometimes suffers from unstable demand cycles also construction is a combination of local production for intermediate products as well as on-site construction for final assembly. Project based production includes long design phase and is usually customer driven. As products in construction industry are one of its kinds, the cost involved here is very high and is heavily dependent on local production. Moreover the process of production is spilt due to subcontracting. Many times subcontracting leads to low margins. Construction projects are impermanent organizations; hence all participants here are temporary. Due to this factor it is difficult to apply improvements through learning, conviction and collaboration [5] [6]. Supply chain and material management are further more complicated by low homogeneity, standardization of construction of materials and significantly high number of materials and components. Also design changes in the later stages of the project will further aggravate the situation [7]. Added to this there are other issues like incompetent communication and information practices between the project partners that add to the risk of the construction projects [8]. Due to these unique natures, planning in the construction industry becomes very difficult. There is no certainty that Project will work when principles in practice are applied and also procedures developed from manufacturing industries cannot applied here without modifications. Planning gets extremely difficult for all the reasons cited above. Project performance is not assured by the styles applied in practice. Also alterations are very important here as you cannot apply methods that are developed for production process in the manufacturing industries. Methods have to be balanced and reconsidered. 2.5 Characteristics of construction projects and project delivery systems Project management has many definitions for term project. Projects are characterized by following elements [9, 10, 11 and 12]: - Objective: Output referred to expenses, eminence and timing of the project and its activities. - Uniqueness: Every project is unique. Construction of building with same specification will differ because of different resource consumption and environmental conditions. - Complexity: There are various sub-activities performed to achieve goals. The relationships between these sub-activities are very complex. - Temporary: Every project has a commencement and a finish date. Resources should be used intensely to carry out the project. The length of the project is restricted and once the project is complete it is terminated. - Resources: Resources here imply budget, man power and equipment. Resources to realize the project is generally constrained. - Uncertainty: Every project comes with some amount of uncertainty attached. Causes for uncertainty can include disparity in the performance of resources, imprecise data and inexperience. - Life cycle: Every project has a lifecycle. Conceptual project design, project definition, project planning, project execution, and project termination are the five phases of a lifecycle.
  6. 6. International Journal of Management (IJM), ISSN 0976 – 6502(Print), ISSN 0976 - 6510(Online), Volume 4, Issue 3, May- June (2013) 140 There are various levels of complexities involved in construction work. From designing to contracting organizations various particularities are involved. The main ones are dependency on seasons, time/ resource trade off, simultaneous run of various projects, unfavorable planning environment, shifting production sites, legislation specific to construction and spatial constraints. A construction project manager performs the role of organizing construction work, which could be projects such as hotels, factories, office blocks, home unit developments, schools, hospitals and large housing units [13]. To be able to deliver his job responsibility on time a project manager must, - Be aware of the plans, guesstimate costs and amount of material needed - Prepare the construction methods and procedure - Synchronize the supply of labor and materials - Supervise the construction and direct his subordinates to see that the construction happens as planned - Be aware of building documents and discuss with building owners and subcontractors - Take care of all payments - Check that all obligatory regulations, standards and by-laws are implemented in the building - Seek advice from architects, engineers and other technical workers that specifications are met. Traditional practice calls in for change management. Inappropriate considerations to accept the change order significantly sways time, cost and profit. Deprivation of change order also impacts the accuracy, social and business relations. Change management is an important factor in construction project management due the impenetrability in reengineering. This has attracted vast majority of managerial research. Further we formulate up to date verified literature on change management in construction project. 3. CONTEMPORARY AFFIRMATION OF THE RECENT LITERATURE IN CHANGE (ORDER/ REQUEST) MANAGEMENT Change request is instrumental in recommending and evaluating change also in addition or deletion to a project. Change request is formed as an exclusive item and linked using trace relationships to the necessities and other items associated with the proposed change. It’s important to supervise change effectively and this is crucial for the project’s scope. Cost and schedule should not go out of control. Many large organizations fail due to this. Change control process will facilitate the team to detect, assess, and endorse the said changes to the project. The aim of formal change control process is to foresee, identify and envisage changes before they can do any damage. Put a stop to deviations. Estimate and comprehend the impact of changes on the project. Make certain that changes are approved at the proper level in the organization. The process that approximates the impact of change, facilitates, documents the decision and incorporates the change is called as change management process. Change is unavoidable and needed most of the times. The change management process should recognize and make note of all modification from contract drawings, terms and provide a process for approval and authorizations of the project.
  7. 7. International Journal of Management (IJM), ISSN 0976 – 6502(Print), ISSN 0976 - 6510(Online), Volume 4, Issue 3, May- June (2013) 141 Not only should this document identify the cost impact, but should also know the schedule, quality and safety considerations. These are very important in the decision making process. Changes should be dealt with in the required time frame. On approval the change should be incorporated into the project scope of work. Changes can sometimes get difficult and cost beyond estimation of individual change orders. 4. CAUSES AND EFFECTS OF CHANGES Changes are caused by events or conditions that directly activate change in the construction. A survey was carried out by Chan and Kumaraswamy [15, 19] in Hong Kong to know the causes of delays in construction projects. Parallel surveys were also conducted in other places around the world [14, 16, 17, 18, 20, 21, 22, 23 and 24]. Survey identified design level and external factors as causes for change. Reasons devised under managerial and operational level, design level and non contextual level are also significant. Client and contractor were also identified as causes for change. Survey results [14, 15, 16, 17, 18, 19, 20, 21, 22, 23, and 24] showed the following causes for changes: At operational and managerial level factors, this can be a cause of change: o Complexity in project completion o Lack of depth in decision making involving all teams o Poor communication between client, consultant and contractor o Sluggish movement of information o Inapt overall structure linking all design teams o Disagreements/clash o Safety and security considerations o Intricacy of the project o Restrictions and delays The design level factors, which can be a cause of change: o Insufficient specification o Imperfection in design and planning o Impediment in design information o Design changes do not match with site conditions o Faulty design information o Lack of experience in design team o Discrepancies between drawings and site conditions o Irregularity between drawings and site conditions o Mistakes in design documents o Variations in work External factors o Decision making authority changes o Regulations change o Policy and legislation changes o Geological conditions, local residents, natural disasters o Other organization, political pressure o Unanticipated ground, site and weather conditions
  8. 8. International Journal of Management (IJM), ISSN 0976 – 6502(Print), ISSN 0976 - 6510(Online), Volume 4, Issue 3, May- June (2013) 142 Contractor or client related o Alteration in construction method o Construction changes as per clients requirements o Delay in work at various other levels o Insufficient contractor experience and managerial skills o Not enough planning o Improper control over site resource allocation o Deficient scheduling, site management, supervision and workmanship o Unrealistic and unsuitable conditions The changes in the construction project can lead to modifications in the following aspects: The finishing time of the project, expense involved in the project, status of the organization, manpower and finally the quality. Change will directly or indirectly influence various aspects of the project. Though some changes will cause positive benefits, mostly changes just hamper the flow of the project. 5. OBSERVATIONS We conclude that change can be identifies the key challenge in the construction project scenario. Changes can be vigorous and complicated making its evaluation difficult and requires exact recognition of concepts and formation process for them. Enhancement and execution of change management before the project commences is good. So it is obvious that managerial activities are essential to handle change impacts. Effect of change can be restricted by the project manager by knowing the facts of design, client agreement and contractor selection level. Therefore the aptitude of foreseeing the possible cause that warrants change is a necessary advantage at managerial level activities. Predictability can be improved by knowledge discovery prospective in this regard. This in turn can facilitate in assessing the changes caused by managerial and operational factors. Using this approach it will not be possible to predict change impacts related to design and contract level. This can be helped by a dynamic configuration management. The accuracy of change impact predictability can be improved by change formation analysis. 6. CONCLUSION A construction project can be successful if the team has the ability to make inescapable changes during the project. Change is definitely a deviation in the project. This deviation could be because of design and specification, work schedule or the cost. Knowing change will result in good change management. Lot of research is happening in this area with large number of outputs. Construction activities come with a lot of uncertainties. A combination of these uncertainties can lead to changes. Causes of changes were identified through questionnaire surveys, case studies and project documentation reviews. Factors causing changes were also categorized. The impact of these changes can be managed at the designed and agreement level. Possible changes and their impacts can be improved by considering knowledge discovery, dynamic configuration management and change formation path analysis to improve the managerial level prediction ability.
  9. 9. International Journal of Management (IJM), ISSN 0976 – 6502(Print), ISSN 0976 - 6510(Online), Volume 4, Issue 3, May- June (2013) 143 REFERENCES [1] Bennett, F.L. (2003) The Management of Construction: A Project Life Cycle Approach, Butterworth Heinemann: Amsterdam. [2] Rußig, V., Deutsch, S. and Spillner, A. (1996) Branchenbild Bauwirtschaft: Entwicklung und Lage des Baugewerbes sowie Einflussgrößen und Perspektiven der Bautätigkeit in Deutschland, Ducker&Humboldt: Berlin-München. [3] Nam, C.M. and Tatum, C.B. (1988) Major characteristics of constructed products and resulting limitation of construction technology. Construction Management and Economics, 6(2), pp. 133148. [4] Lutzkendorf, T. and Lorenz, D.P. (2006) Using an integrated performance approach in building assessment tools. Building Research & Information, 34(4), pp. 334356. [5] Cox, A. and Ireland, P. (2006) Strategic purchasing and supply chain management in the project environment - Theory and practice. In: Lowe, D. and Leiringer, R. (Eds.) Commercial Management of Projects - Defining the Discipline, Blackwell Publishing: London, pp. 390416. [6] Dainty, A.R.J., Briscoe, G.H. and Millet, S.J. (2001) New perspectives on construction supply chain integration. Supply Chain Management: An International Journal, 6(4), pp. 163173. [7] Ibn-Homaid, N.T. (2002) A comparative evaluation of construction and manufacturing materials management. International Journal of Project Management, 20, pp. 263270. [8] Cheng, E.W.L., Li, H., Love, P.E.D. and Irani, Z. (2001) An e-business model to support supply chain activities in construction. Logistics Information Management, 14(1/2), pp. 6877. [9] Klein, R. (1999) Scheduling of Resource-Constrained Projects, Kluwer Academic Publishers: Norwell, USA. [10] Slack, N., Chambers, S., Harland, C., Harrison, A. and Johnston, R. (1998) Operations Management, Pitman Publishing: London. [11] Shtub, A., Bard, J.F. and Globerson, S. (1994) Project Management - Engineering, Technology, and Implementation, Prentice Hall: Englewood Cliffs [12] Spinner, M.P. (1997) Project Management - Principles and Practices, Prentice Hall: Englewood Cliffs. [13] Abeyasinghe, M.C., Greenwood, D.J. and Johansen, D.E. (2001) An efficient method for scheduling construction projects with resource constraints. International Journal of Project Management, 19(1), pp. 2945. [14] Hsieh T, Lu S, Wu C. Statistical analysis of causes for change orders in metropolitan public works. Int J Project Manage 2004;22(8):679–86. [15] Chan DWM, Kumaraswamy MM. An evaluation of construction time performance in the building industry. Build Environ 1996;31(6):569–78. [16] Frimpong Y, Oluwoye J, Crawford L. Causes of delay and cost overruns in construction of groundwater projects in a developing country: Ghana as a case study. Int J Project Manage 2003;21(5):321–6. [17] Assaf SA, Al-Hejji S. Causes of delay in large construction projects. Int J Project Manage 2006;24(4):349–57. [18] Wu C, Hsieh T, Lu S, Cheng W. Grey relation analysis of causes for change orders in highway construction. Constr Manage Econ 2004;22(5):509–20.
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