In the complex world of construction, change orders are practically inevitable. They are modifications to the original contract that can occur due to unforeseen circumstances, alterations in design, or changes to the scope of work. While change is a natural part of progression, it’s important to understand how change orders can significantly impact your construction budget.
The Impact of Change Orders
Change orders often lead to an increase in project costs. The reasons for this can range from the need for additional materials, labor, or equipment, to extensions in project timeframes that escalate overhead costs. Occasionally, change orders can lead to a decrease in costs, but this is generally the exception rather than the rule.
Managing Change Orders
Understanding how to manage change orders effectively can limit their impact on the overall budget. This starts with careful planning during the pre-construction phase and continues throughout the project lifecycle. Having a robust change management process in place can help ensure that any changes are addressed promptly and efficiently.
During the planning phase, it’s crucial to anticipate potential changes and account for them in your budget. This involves understanding the project’s scope and identifying any areas that might be prone to alterations. For example, if you are renovating an old building, it’s prudent to account for potential issues that might arise once the work starts, such as the need for additional structural support.
Once construction is underway, it’s critical to have a process in place for handling change orders. This involves understanding what triggers a change order, who can authorize it, and how it will be documented. Having a clear process helps manage expectations and prevent disagreements or misunderstandings.
After a change order has been implemented, it’s crucial to re-evaluate the project’s budget and timeline. This involves updating your cost and schedule estimates to reflect the changes. It’s also important to communicate these changes to all stakeholders to ensure everyone is on the same page.
In conclusion, while change orders are often a necessary part of construction, understanding their potential impact on your budget and managing them effectively can help ensure your project stays on track. By taking the time to plan, implement, and re-evaluate, you can navigate the change process successfully and maintain control over your construction budget. If you need ongoing or permanent financing for your construction project, contact the team at Kenbry today.