It is said that project change is inevitable.
According to the Fort Worth Star-Telegram (TX), the Dallas/Fort Worth Airport's Terminal C renovation project budget was raised from $650 million to $2.7 billion (USD). Chief Executive Sean Donohue shared that "there has been over 30 scope changes to the entire project."
Fly northwest to Washington State and you'll find North America's largest tunnel boring machine known as "Bertha" is stalled but unlikely to begin chewing up rocks underneath downtown Seattle until a rather large change order is complete.
Project change management is often at the epicenter of project success and failure. Projects start with a great plan when contracts are signed, but change orders can provoke us to throw out our original baseline and completely start over.
You don't have to. Fact is, your goal shouldn't be to prevent change orders, but to embrace them and manage changes effectively. If you're wondering how to manage project change orders or want to learn a few best practices for change management on your capital project, then read on...
5 Simple Steps of Effective Change Order Management
The largest strategic infrastructure project in the UK managed by Crossrail processes over a thousand change order requests every month yet across the entire portfolio, they were cited in the UK news as being on-time and under budget. How is that possible?
Changes at that volume would cripple most projects by driving up administrative costs and leading to large delays. However, they have been successful by using some of these best kept secrets of change management. Perhaps these tips can help you stay on top of it all too!
Step 1: Embrace Changes, Don't Fight Them
Let's get over it now. Changes happen. It is what you do with them that counts. Set a tone on the project that you expect and plan for changes. Avoid condemning people for requesting a change. It's better to create openness than to fight over changes in claims.
Step 2: Be the First to Speak Out
Unlike fine wine, project issues do not improve with age. Be the first to communicate it whether you are the owner, the contractor or the engineer. Call it out as a change. Everyone will work as a team if you are all working under the assumption that it is a change.
Step 3: Establish Contingency Funds for Changes
Be transparent (at a senior management level) with your contingency funds. Use these funds for just 2 reasons: to fund changes and to pay for risk mitigation. Do not use these funds to pay for delays or to catch up lost time.
Step 4: Automate the Change Request & Authorization Process
Use integrated cost management software like ARES PRISM G2 to automate the workflow process. Cost management systems can follow one process for small change orders and a multi-step process for larger change orders. It needs to be in a cost management system because all of the impact is measured in cost (even schedule as it ultimately is measured in cost).
Step 5: Set Goals & Improve
Measure the cycle time it takes for a change order to go from Change Order Request (COR) to completing the Change Authorization Process (CAP). Use your change management board early and often in the beginning of the projects where changes cost the least. After the bigger changes are handled, move to a tiered authorization process and aim to keep the cycle time of changes to a target number of days. You'll only improve what you measure.
Best-in-class organizations use integrated cost management software to manage the change order process through an automated workflow system. They embrace changes and proactively fund them through proper use of contingency funds. Changes are brought to the table as quickly as possible, especially early on in the project, so they can minimize both the cost and time impact that the change will have.
Ready to learn more? Change orders are the root cause of project delay and when unmanaged, the impact can be detrimental. Learn more about how to master the change management process and eliminate the chaos of processing change orders.