Change Order Impacts (Archived)

In 1989, the CII Change Order Impact Task Force decided to study the impacts of changes in projects related to costs and schedules. The intent of the research effort was to study multiple completed construction projects as a group at the macro level, rather than study any one particular project at the micro level. The primary objective of the research was to identify factors which are known prior to the commencement of construction, and which can be early warning signs of project cost and schedule growth.

Analysis of the data was separated into two categories: projects which were administered by a fixed price method of contracting and projects which were administered by a cost reimbursable method. This separation was necessary because the project strategy is significantly different between the two types of contracting. Generally, fixed price contracts are selected for projects when minimal changes are expected or when the risk is low, whereas cost reimbursable contracts are selected when scope is ill-defined and extensive changes are anticipated or when schedule is a main driver.

The team concluded that the predominant warning signs for cost and schedule growth can be found in the following categories:

For Fixed Price projects:

• Money Left on the Table: The difference between the low bid and the next higher bid
• Number of Bidders
• Execution Format: Construction Management, Design/Build, or Design/Bid/Build
• Bid Solicitation: Approved Bidders List or Open Bids
• Owner Type: Private or Government

For Cost Reimbursable projects:

• Primary Driving Factor: Quality, Cost, or Schedule
• Execution Format: Construction Management, Design/Build, or Design/Bid/Build
• Work Distribution: Direct Hire or Subcontract