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What is a Balanced Change Order in Construction?

A balanced change order in construction refers to a formal document that outlines modifications or additions to a construction project's initial scope, cost, or schedule. It aims to maintain fairness and equilibrium between the construction contractor and the client by ensuring that changes are reasonable and adequately compensated. Understanding the concept and benefits of a balanced change order is crucial for successful construction projects. Below, we explore its positive aspects, benefits, and suitable conditions for its use.

Positive Aspects of a Balanced Change Order:

  1. Transparency:

    A balanced change order promotes transparency by clearly documenting any changes made to the construction project. It helps all parties involved understand the adjustments, preventing misunderstandings and potential disputes.

  2. Fairness:

    By emphasizing balance, a balanced change order ensures fairness between the construction contractor and the client. It establishes a platform for negotiations and compensation, helping to maintain a positive working relationship.

Benefits of a Balanced Change Order:

  1. Mitigates Project Disruptions:

    Construction projects often encounter unforeseen circumstances or design modifications. A balanced change order allows for seamless integration of changes, minimizing disruptions to the project's progress.

  2. Cost Control:

    A balanced change order provides a mechanism for evaluating and adjusting the project's costs. It ensures that

The contractor prepares a "change order proposal" quoting a price for the extra work. Once the owner and contractor have agreed on scope, price, and schedule, a formal, written change order is prepared and signed by all parties. Then, the contractor proceeds to perform the changed work.

How do you handle change orders in construction?

A Quick Guide to Managing Change Orders in Construction
  1. Get Clarity on Scope of Work.
  2. Review the Construction Contract.
  3. Get Written Approval for All Change Orders.
  4. Communicate With Stakeholders.
  5. Understand the Impact of Change Orders.
  6. Final Thoughts on Change Orders.

Can a change order be verbal?

If the contractor and the owner orally agree that written change orders are not necessary the courts will treat the provision as being rescinded by the parties.” This clause is saying that, legally, you can waive the need for changes in writing if both parties can verbally agree on the changes and conditions.

What is the first proper step for a change order on a project?

Regardless of who initiates a potential change, the first step is for the project owner and contractor to discuss what the change is, why it's being requested and how it will impact the project's cost and timeline.

What are the five steps of the issue and change control procedure?

5 Stages of the Change Control Process
  • Initiate change request. In this stage, there is a clear need for change due to business process inefficiencies, technological advancements, and evolving customer needs.
  • Evaluate the change request.
  • Develop a change management strategy.
  • Implement change.
  • Close change request.

What is a balancing change order?

The purpose of this Balancing Change Order is to revise the contract amount to reflect the final installed quantities based on actual field conditions and deductions from the contract for items not performed and/or required to complete the work. This change order also indicates the final contract amount.

What are change orders in construction?

A change order is a document used to alter the original agreement on a construction project. It details the changes in the scope of work, cost, and schedule that are required. In many instances, the construction contract dictates the change order process.

Frequently Asked Questions

What are the three categories of change orders?

Change orders typically consist of three parts: the project information, the changes to the contract, and the change in cost and time for performance.

What is a PCOs in project management?

PCOs are a means of gathering information to make a decision regarding changes that are being considered but have not yet been fully adopted by the stakeholders on the project. PCOs are not considered part of the contractual agreement. Therefore, they do not update in the budget.

What is a PCO in construction management?

A PCO or Potential Change Order is a tentative or informal Change Order created to track a work condition that has potential to be over and above base contract. A PCO does not create a legal and binding contract between the owner of the project and contractor.

Why is a change order important on a construction project?

Change orders are essential for construction contractors. They protect contractors from being pressured into doing extra work beyond the agreed-upon terms of the contract. This can be a big deal if your client asks you to add more work without being agreeable to paying for it.

What is the change order clause in construction contract?

What is a Change Order? "Change order" is just the industry term for an amendment to a construction contract that changes the contractor's scope of work.

What three things must agreed upon for a change order?

Once the owner and contractor have agreed on scope, price, and schedule, a formal, written change order is prepared and signed by all parties. Then, the contractor proceeds to perform the changed work.

FAQ

How do you manage construction change orders?
A Quick Guide to Managing Change Orders in Construction
  1. Get Clarity on Scope of Work.
  2. Review the Construction Contract.
  3. Get Written Approval for All Change Orders.
  4. Communicate With Stakeholders.
  5. Understand the Impact of Change Orders.
  6. Final Thoughts on Change Orders.
How do you respond to a change order in construction?
How to deal with change orders
  1. Write everything down. At a minimum, everything should be written down.
  2. Revise the scope of work and include updated pricing. A change order needs to answer the same questions as an original contract.
  3. Keep track of your costs.
  4. Communicate changes clearly and plan ahead.
How do you control change orders?
Change Order Process
  1. Review the Contract and Identify the Reason for the Change Order.
  2. Create a Change Order Request.
  3. Reach an Agreement About the Change Order Proposal.
  4. Get Approval On the Change Order and Adjust the Contract.
  5. Use a Change Order Log to Keep Track of Change Orders.
How do you mitigate change orders?

Change orders on any project can be reduced by improving collaboration between team members earlier in a project's development, increasing visibility among stakeholders to the information that could impact project cost and schedule, and implementing a tight process to manage change.

What is the difference between a change order and a construction change directive?

With change orders, either party will present the other with a proposed change, and then both the owner and the contractor will agree on how to make that change, as well as other adjustments to the price and the schedule. Change directives aren't an agreement or a request to make a change — they're mandatory.

What are examples of change orders in construction?

Classic examples of change orders include the owner's desire to move the location of a wall to accommodate some other design element, adding a window where there was none in the original plans, or changing the finish of the floors from tile to terrazzo.

What is a balanced change order in construction

What does changed conditions mean in construction?

Generally, a changed condition clause in a construction contract will detail a contractor's liability in bearing any additional cost that stem from unforeseen changes in the condition of the construction site.

What is an executed change order?

A change order is a written amendment to an existing contract after the effective date that alters the work, the contract sum, or the contract time. While contracts are intended to be the final word for projects, sometimes things need to change.

What are the types of change on a construction project? Examples of the most common changes include:
  • Changes in means and methods or material to be installed.
  • Differing site conditions not envisioned in the original contract price.
  • Modifications that change the planned work sequence as originally envisioned.
What is a change in construction contract?

Contract Changes means any change or modification to the Services or this Agreement, including without limitation, changes or modifications to any Statement of Work, other than Operational Changes.

What is an example of change in condition? Whenever a long-term care resident develops an acute illness, such as a urinary tract infection, pneumonia, or a fall in blood sugar, for example, the individual is said to be undergoing a 'change in condition'(COC).

  • What is a deductive change order in construction?
    • What are Deductive Change Orders? A deductive change order is when the customer reduces the scope of work that was originally agreed upon in the contract. These can be small reductions or can result in the deletion of a substantial portion of work.

  • Who signs a construction change directive?
    • Typically, a Construction Change Directive is signed by only the owner and architect. It will describe the changed work and may propose an adjustment to the Contract Sum and the Contract Time.

  • Who initiates a change order?
    • A change order is simply an addendum or amendment to the original construction contract and scope of work and can be initiated by the owner or the contractor.

  • What is the fundamental difference between changes that are initiated by the owner and a changes claim brought by a contractor?
    • Owner initiated changes are a means of design flexibility without having to renegotiate the contract. Contractor changes seek increased compensation and/or time with which to perform a project which now allegedly differs from what the contractor had originally agreed to build.

  • What is the difference between a construction directive and a change order?
    • With change orders, either party will present the other with a proposed change, and then both the owner and the contractor will agree on how to make that change, as well as other adjustments to the price and the schedule. Change directives aren't an agreement or a request to make a change — they're mandatory.

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