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PM : Change Orders

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  • 1. Monitoring & Reducing CHANGE ORDERS p r e s e n t a t i o n
  • 2. Presentation Outline
    • Introduction
    • Identify Issues
    • Identify Goals
    • Collect Data (Macro)
    • Analyze Results (Macro)
    • Collect Data (Micro)
    • Analyze Results (Micro)
    • Strategy of Improvement
    • Conclusion
  • 3. Introduction
    • Change Order: Description
      • Written instruction to the contractor issued after execution of the agreement which authorizes an addition, deletion, or revision of the contract sum , contract time , or both .
      • AIA Document G701
        • I:FormsAIA FormsAIAG701 Change order.pdf
        • Executed by the Owner (prepared by Architect)
        • Agreed to by ALL : Owner, Contractor & Architect
  • 4. Introduction
    • Types of Modifications:
      • Requires a change to the contract sum or time
      • Does not require a change to the contract sum or time
      • Examples:
        • Owner:
          • Design change
        • Contractor:
          • Suggests a change to facilitate construction
          • Suggests a product substitution
        • Design Team:
          • Clarify documents
          • Errors or Omissions
        • Field:
          • Unforeseen conditions require a modification
        • Others:
          • AHJ (code interpretation)
  • 5. Introduction
    • Initiating Modifications in the Work
      • Design Team
        • CB : Construction Bulletin (EUA- ism)
          • I:FormsArchitectConstruction Bulletin - Milwaukee.dot
          • S:Studio2GeneralDetail-Technical LibraryConstruction Bulletin.dot
        • PR : Work Changes Proposal Request (AIA G709 )
          • I:FormsAIA FormsG709 - Final.pdf
        • CCD : Construction Change Directives (AIA G714 )
          • I:FormsAIA FormsG714 - Final.pdf
        • ASI : Architectural Supplemental Information (AIA G710 )
          • I:FormsAIA FormsG710 - Final.pdf
        • FO : Field Order (CSI Form 13.4A )
  • 6. Introduction
    • Initiating Changes in the Work
      • Contactor
        • RFI : Request for Information ( Interpretation )
        • COR : Change Order Request (Proposal) (CSI Form 13.6A )
      • Owner
        • Correspondences to Design Team and/or GC/CMGC
      • Others
        • Vendors / Suppliers
        • Code officials
        • Others?
  • 7. Identify Issues
    • Tracking C.O.'s by Project
      • Process & format: What do EUA PM’s use?
        • File search:
          • Change Order.xls (Excel): 9 files
          • Change Order.mdb (Access): 0 files
          • Change Order.doc (Word): 0 files
      • No “global” database of C.O.'s
        • By EUA
          • Future: Part of Vision
        • By studio
          • Future: Building Type
  • 8. Identify Goals
    • Reduce quantity and cost of C.O.'s
      • Tangible Measurement of Project’s QC Process
      • Utilize results as a……
        • Marketing Tool
        • Budgeting Tool
        • Client & GC ranking system
  • 9. Collect Data (Macro)
    • Historical Information
      • PM’s supply data for (2) of their projects
        • Projects completed in 2004/2005
        • Project’s Construction Cost
        • Total C.O. Quantity (in $)
  • 10. Collect Data (Macro)
    • Historical Information
      • PM’s supply data for (1) of their projects
        • Total C.O. Quantity (in $)
          • Design Team: Error or Omission
          • Owner: Scope Change
          • GC/CMGC: Field (Unforeseen Conditions)
  • 11. Collect Data (Macro)
    • Categorize C.O.’s by Project’s Construction Cost (CC)
      • Less than $500K
      • More than $500K,
      • Less than $2.5M
      • More than $2.5M,
      • Less than $10M
      • More than $10M
  • 12. Analyze Results (Macro)
    • Problem?
      • C.O. totals do not tell the “total” story
        • Contingency
        • Additions vs. New
        • Design Schedule
        • E/O : too encompassing
        • Others???
  • 13. Analyze Results (Macro)
    • Example A: Health Care Addition
      • $10M Const Cost
        • $1M Contingency (10% of Const Cost)
      • Delivery: GC (Design-Bid-Build)
      • Owner requests numerous scope changes during const
        • C.O.'s = $750K
      • Owner’s viewpoint: Successful
        • Owner happy with project
        • Added scope + $250K left in contingency
        • Hires EUA again
      • On paper: Unsuccessful
        • 7.5% C.O.'s of Const Cost (more than EUA benchmark)
  • 14. Analyze Results (Macro)
    • Example B: New apartment building
      • $10M Const Cost
        • $500K Contingency (5% of Const Cost)
      • Delivery: CMGC (Design-GMP-Build)
      • Error & Omissions + Field Issues
        • C.O.'s = $500K (adds)
      • Owner “VE” interior finishes
        • C.O.'s = -$300K (deducts)
      • Total C.O.'s = $200K
      • Owner’s viewpoint: Unsuccessful
        • Owner unhappy with project
        • VE finishes = Reduced Sales
        • Never hires EUA again
      • On paper: Successful
        • 2.0% C.O.'s of Const Cost (less than EUA benchmark)
  • 15. Analyze Results (Macro)
    • Successful Project
      • Profitable
        • EUA/Design Team
          • Minimal rework
          • Where does profit evaporate:
            • CA Phase
        • Owner
        • GC & Subcontractors
      • Risk Management
          • Minimal (no) litigation (by owner/GC)
          • Minimal (no) claims (paid by design team)
      • Future Work
        • Referrals to other clients
        • Repeat work for that client
  • 16. Collect Data (Micro)
    • Dissect the reasons WHY C.O.'s occur
    • Collect more detailed C.O. information
    • C.O. Log
      • WHY?
        • Identify cause of C.O.
      • WHO?
        • Requests change: Design Team / Owner / GC
      • WHAT?
        • Description of change
      • WHEN?
        • Origination – Review – Sign-off
      • WHERE?
        • By building system (Uniformat, BIM – future)
  • 17. Collect Data (Micro)
    • C.O. Log (CA Log?)
      • Format: Access or Excel ?
      • Related information (links?)
        • RFI (Request for Information)
        • COR (Change Order Request)
        • CB (Construction Bulletin)
        • ASI (Architectural Supplemental Information)
        • CCD (Construction Change Directive)
      • Semi-related information (links)
        • Construction Budget
        • Contingency & Allowances
        • Pay Application
      • Non-related information
        • Submittals + Addendum
  • 18. Analyze Results (Micro)
    • Important to EUA
        • Continuous Improvement (staff, process, etc)
        • Risk Management (reduce)
        • Profitability (increase)
    • Important to Staff Development
        • EUA Design Team involvement in project
          • PD (Pre-Design): Designer
          • SD-DD: PM & (1) support staff
          • CD: PM, PAR, (2-3) support staff
          • CA: PAR
          • PC (Post Construction)
  • 19. Strategy of Improvement
    • Identify “problem” areas
        • Example A:
          • 50% of C.O.'s are MEP Coordination issues
          • Fix: Improve “light table” process
        • Example B:
          • 40% of Bldg System C.O.'s are B. Shell-related
          • Fix: Focus in-house training sessions
    • Training of EUA Staff
    • Improve Project-Related Info Mgmt
        • Track issues during design process
        • Connect decisions made during SD-DD-CD with issues that occur during CA
  • 20. Strategy of Improvement
    • PROJECT INFORMATION
    CA Log CO’s CB’s PR’s CCD’s ASI’s RFI’s Others? PROJECT SUMMARY (per Vision's Info Cntr) General Location Project Scope Cost Submittal Log Design Issues Code Check PROGRAM P.P.D.
  • 21. Conclusion
    • Q uestions???
    • C omments???
    • C oncerns???
    • S uggestions???
  • 22. T H A N K Y O U Monitoring & Reducing CHANGE ORDERS