This is the third article of a five-part series exploring construction information management. This article explores the challenge with extra and changed work instances on a project.
Despite the best efforts of design professionals to establish a well-defined scope of work at the beginning of a project, there is no escaping the fact that extra work and changes will inevitably occur. How they are dealt with during the course of the work can have a major impact on cost and schedule. There are a few keys that can help expedite the processing of extras and changes and mitigate the development of prolonged disputes that can lead to substantial claims and schedule impacts.
1. Read the contract. This can’t be said often enough.
There are provisions for dealing with extras and changes, including those issues discovered by the contractor that are not identified via a change directive or change notice. If a contractor believes any work to be extra to its scope it has an obligation to notify the other party in writing with the pertinent details, usually within a specified time period. Pay particular attention to the timing requirements in the contract and if all details are not immediately available to submit a quote for the additional cost, give prompt written notice to the other party to reserve the right to claim while the issue is being investigated.
2. Produce proper documentation
Contractors need to be provided with enough detailed information on an extra/change request to estimate the level of effort and resources required as well as to obtain quotes from subcontractors and suppliers. Any ambiguities or missing information can result in a prolonged resolution process which can in turn impact the construction schedule. For their part, contractors and subcontractors need to provide any requests for further information or notices of schedule implications along with well-substantiated quotations in sufficient time so that the consultants and owner can act upon receipt of that information. Check the contract for any timing obligations with respect to submissions and responses.
3. Set up a tracking mechanism
Losing track of the status of extras/changes can happen. If not using project management software, keep a spreadsheet that captures the originating document date and number (i.e. change notice, change directive, request for information, etc.), quotation number and amount, date submitted, date response requested, potential schedule impact, date response received, and present-day status. Bring the list to meetings to enquire about any outstanding information or approvals, and be sure to follow-up with any required written notices of delay or claims within the time periods specified in the contract.
4. Address schedule implications and prioritize accordingly
Contractors should include on their quotations any anticipated impacts to the schedule including long lead delivery items, and identify when authorization to proceed is required in order to mitigate delays. Create a priority list of those outstanding extras/changes that are impacting or will imminently impact the schedule, and if necessary follow up with a notice of delay in accordance with the timing requirements of the contract. Be sure to include the extended time and extended duration cost on the final change order, or reserve the right to claim for those costs if the impact is not yet calculable. This can become important to support a future claim should scope issues remain unresolved or end up having an unforeseen impact on the schedule.
5. Expedite payment of extras and changes
Owners and general contractors should establish adequate contingency funds for extras and changes before construction to ensure that the contractor or subcontractor can be kept in a positive cash flow situation. Keeping a contractor and subcontractor financially fluid by expediting approval and payment incentivizes them, and relieves them of the burden of financing these additional costs.
All parties to a construction contract understand that extras and changes will happen; the key is for everyone to do their part to process them efficiently in order to avoid impacting the work progress and prolonging disputes, both of which that can lead to substantial claims at the end of the project.
Parts 1 and 2 of this series on Pro-Active Tips To Increase Your Success Rate of Claims can befound here: Part 1 and Part 2.
Adele Wojtowicz, FICCP, CEC, principal of ProEdge, is a construction claims consultant and has been working in the construction industry for over 32 years. For more information visit www.proedgecs.com. Send comments and Industry Perspectives column ideas to editor@dailycommercialnews.com.
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