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King Fahd University of Petroleum & Minerals

King Fahd University of Petroleum & Minerals. Construction Engineering &Management Department. Construction Contracting. Dr. Suliman Al mohawis. Causes & Effects of Change orders on Construction Projects. Presented by: Mohammed Abu Neamah. Outline:. Introduction. Objective.

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King Fahd University of Petroleum & Minerals

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  1. King Fahd University of Petroleum & Minerals Construction Engineering &Management Department Construction Contracting Dr. Suliman Al mohawis

  2. Causes & Effects of Change orders on Construction Projects Presented by: Mohammed Abu Neamah

  3. Outline: • Introduction. • Objective. • Reason for issuing Change Order. • Effects of Change Order on Construction Projects. • Parties benefits and losses through Change Order. • Recommendations.

  4. Introduction: • Change : is any event lead to modification in the original scope of the work, in the completion time of project, and in the cost of project and become part of most construction project. • Change Order: Is a formal document that deal with changes in project.

  5. Objective: • Determine causes & effects of changes on project. (Productivity, Time, and Cost) • offer recommendations to reduce negative impacts on future projects.

  6. Reason For issuing Change Order: • Changes related to Owner. • Changes related to Consultant. • Changes related to Contractor. • Other Changes..

  7. Changes related to Owner: • Budget problems. • Objective of project. • Change in specifications. • Supply material and equipment. • Nature of the owner

  8. Changes related to Consultant: • Errors in design. • failure to delineate best alternative design. • Change in specifications. • Information about material and equipment is not available. • Complexity of the design. • Details in drawings are not sufficient

  9. Changes related to Contractor: • Change in quantities. • Financial of contractor. • Skilled labors and equipment required.. • Profit desired. • Involvement in design process • Mature contractor.

  10. Other changes: • Weather conditions. • Economical conditions • Social conditions. • Unexpected conditions.

  11. Effect of Change Order on Projects: • Productivity. • Cost. • Time.

  12. Productivity: • Productivity : is the amount of work produced refer to amount of resources consumed. • Change order lead to negative impact on labor morale and efficiency. • It is very difficult to quantify productivity loss due to changes.

  13. Productivity Cont.: • Factors associated with change order and effect on productivity: • Number of change order. • Time of change order. • Type of work. • Type of impact.

  14. Productivity Cont.: • Productivity can be measured using either: • Micro level of productivity • Macro level of productivity. • The term delta can be used to measure productivity loss. • Delta: is difference between actual labor hours to complete project and the estimated labor hours plus approved change order hours.

  15. Productivity Cont.:

  16. Productivity Cont.: • Positive value for delta indicate that actual productivity is less than planned. • Negative value for delta indicate that actual productivity is higher than estimated

  17. Effect of change order on Cost: • Contract price is adjustment: • Cost associated with material procurement. • Decreasing in labor efficiency. • Losses in profit. • Increases in indirect cost.

  18. Effect of change order on Time: • Negative outcomes of change order related to time: • Delay in progress payment. • Delay in Procurement of material and equipment • Schedule compression. • Logistic delay.

  19. Parties benefit & losses: • Each part of contract can benefit and loss at the same time • Contractor: • Contractor earned money due to increasing in work and variation of quantities. • Contractor encounter damage in his reputation.

  20. Parties benefit & losses Cont.: • Owner: • Owner obtain his requirements without defects after modification. • Owner revenues will be delayed due to delay in project completion time. • Consultant: • Consultant earned money due to time extension and adjustment to design.

  21. Recommendations: • Owners should select qualified and experienced consultant and contractor. • Owner need to determine his requirements within his budget . • Consultants should demonstrate the effect of changes on project to the owner.

  22. Recommendations: • Reduce processing time of change order . • Monitoring productivity during construction. • Update project schedule regularly. • Involve contractor in the design phase

  23. Thank You For listening

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