..are a part of any construction and development project. Whether the changes come from an element we did not foresee, or something that we changed our mind about, the development process seems very similar to the way a friend used to describe how she skied the moguls--"It is a series of linked recoveries"
This chart breaks out the cause of changes as a portion of total cost overages.
1. Design errors and omissions are the elements a prudent designer would have included in a set of contract documents. Examples are modifications to one location that do not ripple through to details, or changes in architectural drawings that were not picked up in structurals or MEP's.
2. Trade Contractor Coordination is the cost of performing work that falls in the gap between trade contractor contracts. Kitchens are prime examples of where these gaps could occur. Cabinet maker's boxes do not align correctly with architectural woodwork, or HVAC, or appliance connections. Coordinating plumbing--ie roof drains--with interior framing is another example. Architectural drawings show intent, Structural drawings show member sizes, and it is left to the general contractor to get it all to fit.
3. Unforeseen conditions</strong> are those uncharted items that are discovered only upon opening up the work area. Examples include dry rot discovered after demolition of a building interior, a geothermal hot spring discovered where a winery's underground chai, or barrel storage, facility is to be built, or soils conditions materially different from the soils investigation provided.
4. Excessive change order pricing occurs when changes or additional work is ordered outside of the natural progression of the work, many times restricting the optimum pace and intensity of work being put into place. Excessive pricing also occurs when a vendor is trying to make up lost margin over incomplete pricing. Going to a sole vendor gives more pricing power to that vendor.
5. Code compliance is the cost of implementing corrections or changes to the work after an inspection by the authorities having jurisdiction over the work. Obtaining final signoff on permits is often at the discretion of the authorities, and sometimes gaining this signoff requires additional work not in the contract.
6. Owner scope changes are qualitative changes to finishes, or components. Additional cost also comes from additions to the scope of work through added systems, or changes in the critical path necessary to incorporate these new requirements. Qualitative changes ripple through a finish schedule, driving other changes to maintain a contextual relationship. For example, basements are often an afterthought in the design process, but the intensity of building systems on this level and the fact it is the first part of the building constructed can trigger a lot of scope change early in the project.
The challenge is maintaining the pace and intensity of the work while folding in these changes. We've met this challenge by:
- "building" the project on paper first through good scheduling and understanding the finish schedule
- making the general contractor responsible for any trade contractor changes. If it is shown in the documents, the Owner is entitled to it. Performance specification acceptance on waterproofing and acoustical aspects of the building.
- establishing a joint contingency account for design errors/omissions, unforeseens, and code compliance. Motivation to resolve these changes faster/better/smarter is achieved through splitting funds left in this account at the end of the project--money goes straight to the builder's bottom line
- establishing unit costs for installation at the time of writing the initial contract provides protection against excessive change order pricing, or at least a basis to understand where the pricing difference lies.
Owner scope changes are managed through our instant feasibility testing to provide a quick cost/benefit check before the builder spends any time pricing or implementing a change. Limiting cost plus reimbursement on qualitative changes to tasks only on the critical path. Owner supplies materials to keep on-time. Coordinating building systems in the basement level by constructing this level on paper first with all players working together.
Changes make projects more expensive and run more lethargically than most realize. Keeping our projects on-time and on-budget requires a roll-up-your-sleeves cooperative attitude to understand the real impact of any changes and the real benefit
There is realistically only so much recovery that can happen on a project before burnout occurs. Keeping focus on achieving quality at the intended pace and intensity eliminates a great deal of contemplated changes before they start to slow things up. Build it twice--the first time on paper.
Remember, oftentimes your first solution is much closer to the end result than you think.