Quantifying the Cumulative Impact of Change Orders for Electrical and Mechanical Contractors
Change, defined as any event which results in a modification of the original scope, execution time, or cost of work, is inevitable on most construction projects due to the uniqueness of each project and the limited resources of time and money that are available for planning. Change may occur on a project for a number of reasons such as design errors, design changes, additions to the scope, or unknown conditions. For each change, contractors are entitled to an equitable adjustment to the base contract price and time for all impacts associated with the change.
Adjusting the contract for the materials, labor, overhead, and profit directly associated with the changed work is relatively straightforward. However, the disruptions caused by the change orders can have a ripple effect throughout the entire project, decreasing the crew productivity and resulting in impacts on activities not directly associated with the changed work. For example, it is difficult to track and quantify the loss of productivity associated with crews waiting for directions from their supervisors or the field engineer, with the demobilization at the location of the changed activity and the mobilization at the new location, or with the crews performing out of sequence work.
The focus of this research project was to quantify the cumulative impact that change orders have on the overall project productivity, including the effect on the base contract, for mechanical and electrical construction. The research was limited to projects with a conventional, consulting engineer plan and specification, bid, and construction process (design-bid-build) and a lump sum contract. The scope was also limited to projects with between 2,000 and 240,000 work-hours.
The research had four main objectives:
- Investigate how change orders impact labor efficiency at the macro productivity level. (i.e. cumulative impact)
- Determine the characteristics of projects that are impacted by change.
- Develop a definition of impact that can be used by owners and contractors to determine if a project has been impacted by change orders.
- Develop a method to predict the cumulative impact of project change.
Through statistical hypothesis testing, groups of factors that correlate to whether a project is impacted by change orders were identified. Based upon these project characteristics, recommendations are made to owners and contractors to help them decrease the likelihood that a project is impacted by change. These characteristics were also used to develop a quantitative definition of impact. Logistic and linear regression techniques were used to develop models that predict the probability and the amount that a project is impacted. The following are the significant factors in the models: renovation work, percent change, estimated/actual peak manpower, A/E coordination of the design issues prior to construction, manpower shortage during construction, change order processing time, absenteeism of craftsmen, overmanning, overtime used for change orders, peak/average manpower, percent design complete prior to award of contract, percent of change orders related to design issues, percentage of time the project manager spends on the project, size of the project, percentage of the changes initiated by the owner, and the tracking of productivity. Estimated and actual manpower loading charts may also serve as supporting evidence for the impact.
The results of the study show that projects that are impacted by change orders consistently show a loss in productivity while projects not impacted by change orders maintain estimated productivity.
The models can be used proactively, before or during the project, to determine the potential impacts that management decisions will have on the overall project productivity. They may also be used at the conclusion of the project as a dispute resolution tool. Every project is unique, so these tools need to be applied with caution.
