- Get a handle on change and you’ll cut your risks.
- If you go looking for assumptions you’ll find the precursors to change.
- Track changes separately, notify owners early, and share information quickly to reduce change risks.
People often describe construction projects as exercises in managing risk. One of the biggest sources of risk is change. Whether it’s a change in climate, a change in safety consciousness, or a change order, these shifts all add up to new risks. Here are ways to tell whether your projects are hemorrhaging time and profits because of change, and what to do about it.
We often only see the effects of change after it’s happened, but it doesn’t need to be that way. You can see change coming when you tune in and become more aware of its signs. Very often you can see the potential for change just by closely scrutinizing the project scope. An ill-defined scope always leads to more change simply because project planning wasn’t robust enough. Changes to the scope once construction is underway lead to more extensive change orders, both in depth and breadth.
Another harbinger of change is the contract. A contract that’s not very clear about the deliverable will foretell not just a rash of change orders, but also the possibility of delays, damages and disputes. As you study the plans and the contract, question anything that seems incomplete, redundant or unclear.
You fall into the assumption trap
The design team made assumptions about the site, access and availability of resources early in the project. All of those assumptions foretell change because there’s easily a 50/50 chance some of the assumptions are wrong.
You’ve experienced this if you’ve ever encountered a soil type different from what was assumed. A buried oil pit, a major labor drought, or key resources that are an hour away from the site also foretell unpredictable outcomes. When something comes out differently than predicted, it’s a change. As soon as you recognize something as a potential cause of change arising from the project’s design, contract and engineering, begin tracking it.
You don’t use controls
Project change also comes from your workforce’s productivity, adaptability, and behavior in the face of routine changes. There are also the things that sneak up like bad weather, or changes in macroeconomic conditions. But it’s the way people respond to disruptive events that has the biggest impact on projects once construction is underway.
Owners and contractors don’t make decisions in a vacuum. Instead, you are constantly exchanging information, negotiating and deciding before taking action. Finally, when you do take action, you’re not doing it alone.
When an owner issues an acceleration order without allowing the needed time, you accelerate under unfavorable conditions.
Suppose you see productivity dropping and delays ahead. You respond by taking action to prevent the problems. Simultaneously, the owner is also taking action. All of these actions have a cause and effect relationship to the work. When an owner issues an acceleration order without allowing the needed time, you accelerate under unfavorable conditions. Worst case, you end up with work site congestion from trade stacking, which further degrades productivity.
People and their decisions are the biggest wildcards you face in the battle with change. Try establishing controls on project aspects with the greatest risks. Request timely notifications about planned actions from owners. Require approvals on materials and methods used for high-risk project aspects. You stand a greater chance of lining up decisions with project objectives when you can stay on top of the picks and rolls people are planning to make and why.
Gaze into your crystal ball
Recognizing sources of change early is the first step in managing it. When you actually begin seeing the changes occurring, it’s time to make corrections to mitigate their effects. Maintain strong communications with all participants so people have the latest, most accurate information to work through the change. Then, consider these tactics to reduce the risks from change.
- Track the costs of the change separately from the larger budget. Be sure to break out costs in detail. Knowing costs for each resource used will provide more than just a monetary cost breakout. When using time tracking tools you can assign a cost code to the change to make it easy for people to record time, materials and equipment used.
- Have workers use cost codes rigorously. When your people track their time using very granular cost codes you’ll be able to see the indirect costs like time spent staging and restaging materials and delays owing to rework. You will also spot costs of quality issues in adjacent work, administrative costs, and many others. If you create a master list of cost codes for tracking these changes, you can make sure nothing is left out.
- Notify the owner of changes ASAP. It is critical that as soon as a change is evident you provide notice to the owner. Make your RFIs and submittals fast and accurate, and run a tight ship on the communications end. Everyone involved needs the most up-to-date information, and they need it in a timely manner. With accurate records, you’ll quantify the change costs quickly, and that will serve you well if you have to file a claim.
Like smoke and fire, change and risk come in a package—so it’s not about separating them. Instead, look for the potential for change, and then address it early, quickly and thoroughly.