PM : Change Orders

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PM : Change Orders

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

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