Before breaking ground on a new project, a construction executive can be certain of only one thing: there will be changes. Contracts generally are written with the expectation that changes will occur, but when events do not go according to plan, most construction organizations still are unable to avoid or minimize delays, understand how different circumstances will affect costs or effectively communicate how the changes will impact stakeholders.
For the most part, construction firms do not manage change proactively, but instead work feverishly to react as changes wreak havoc on schedules, resources and costs. There is no reason for changes to creep up on project managers in the form of an urgent phone call from the field. The early warning signs of impending problems often are readily available, but go unnoticed. Organizations miss the window of opportunity to prepare, adapt and mitigate the impact on delivery time and cost.
In addition, once change is under way, few project stakeholders have the systems in place to really understand the impact on their day-to-day work. A lack of such organization hinders project managers from ensuring that new requirements don’t jeopardize a project’s overall success.
Managing change involves the collation of an enormous amount of information: field observations, design files, schedules, cost analyses and more. A paper-based system prevents organizations from implementing proactive change management because it traps records in hard-copy documents and slows down the process of providing information to stakeholders. Amid the furor of active construction, project managers are unlikely to notice the spike in RFIs that could reveal unforeseen problems with the site or an uptick in submittal rejections. These are typically the source of a serious disconnect between field operations and designers.
Once changes are put in motion, it is all too easy for a paper document that requires a signature to languish on a desk, causing further delays as project managers spend valuable time working to determine what is holding up the process. By the time stakeholders receive project updates, the information likely will be out of date. And in a paper-based world, documenting changes so they stand up in the face of any future claims is a laborious and time-consuming task. At modern construction sites, paper-based systems simply cannot keep up with the pace of business.
Technology
Technology can help, but only if the platform is comprehensive, integrated across multiple functions and standardized for all participants. Any change order is a revision of the contract that must be documented and reconciled with the budget and schedule. A technology solution that manages only the contract, for instance, cannot show an executive how changes will impact total project deadlines and costs. Likewise, a system that manages only schedules or costs cannot reflect the changes back to the original contract. To be effective in managing change, a project management software system must integrate the schedule, cost accounting and the contract so a single, accurate version shows how changes to one aspect of the project will affect the entire endeavor.
It also is critical that all stakeholders—the owner, builder, designer and subcontractors—work in either the same solution or a fully interoperable solution. If subcontractors, for instance, still submit reports, RFIs and change orders on paper or in some incompatible electronic format, the entire project does not gain the full benefit of a project management technology solution.
Standardization on a single platform ensures stakeholders can access the same information, which facilitates speedy approvals and ensures everyone is informed about the impact of any pending or current changes. In addition, with all parties using a common system, the technology platform can serve to gain further efficiencies in the procurement process, such as automating progress payments.
Once a platform is in place, all information resides in a central location. Because new information is submitted electronically, project managers have a complete, up-to-date view of the entire project. Teams can set up alerts to flag unusual activities that could serve as early warning signs of change. When changes occur, the software continuously documents all communications and keeps project managers informed of how the change is progressing. By catching potential changes early, stakeholders can minimize disruption. And with a common communications platform, negotiations are facilitated to help avoid costly claims.
Project managers and executives with these systems in place also can create what-if scenarios that lay out the probable outcomes of several options so they can choose the best course of action. And, if an owner does not sign off on required approvals within a reasonable amount of time, a project manager can immediately see where the process has stopped and who is responsible.
Process
Technology alone will not bring proactive change management to an organization. Unless a project team has built a sound change management business process ahead of time, a project management software solution will only reinforce ineffective policies.
Every project is different, and no single process is appropriate for every situation. However, teams can follow some general guidelines to build their own process.
- Identify the contract requirements. The contract requirements for scope, schedule and budget must be identified first because a change is essentially a deviation from these requirements.
- Identify the potential change. Project managers should not wait to respond until it is certain a change will occur. Information on baseline requirements, how new events or requirements differ from the baseline, and analyses of the potential change’s effects on cost and schedule should be gathered as early as possible.
- Determine the entitlement, measure the effect and calculate the cost of the change. As early as possible in the process, project managers should begin determining whether the contractor is entitled to the recovery of the additional time and costs requested.
- Negotiate and execute the change order and avoid disputes. A detailed set of responsibilities should explain what information is required to initiate a change, to whom the information should be sent, how long the owner can review the information and, if accepted, how the change order will be generated. If it is rejected, the process should guide the contractor and owner on how to negotiate the matter until they agree on acceptable cost and time extensions.
- Maintain complete records of the executed change. Documenting changes is a key responsibility of all project management personnel. At the beginning of a project, the staff should create standardized forms, procedures and logs for contract documents, issues and RFIs to maintain detailed records and document changes that arise during the project.
With the help of technology and a sound, well-constructed business process, a project team can identify potential changes long before they become problems—preventing delays, cost overruns and claims, and ensuring a successful delivery for all stakeholders.