Comparative Study on Change Orders in Building Projects

Abstract

This research aimed to contribute to the small but growing empirical literatures and studies on Change Orders in building construction industry in selected cities in the National Capital Region (NCR), Philippines. Using descriptive/survey research method specifically expert sampling method, key informant interviews, actual site observations and desk reviews of project documents (e.g., contract documents, plans and specifications, etc.), this study investigated and compared the causes and effects of Change Orders in public and private building construction projects and formulated recommendations and guidelines in order to address the problems brought about by Change Orders. Moreover, the existing change order management control practices being implemented by the contractors, consultants, and clients in response to the issuance of construction Change Orders were also identified and investigated. Based on the results of the study, it was found out that the major causes of Change Orders in building construction projects in the Philippines were related to change of plans and scope by the owner, adjustment of schedule, unpredictable weather conditions, unforeseen site conditions, change of schedule by the owner, long waiting time for approval of construction drawings, complexity of construction projects and external factors which are beyond the control of the contractors, consultants, and clients. Consequently, Change Orders have resulted to project time extension and delay in project completion, increase in the overall cost of the project, changes in the cash flow and loss of earnings, additional payments to the contractor, and increased time and material related charges. Generally, the management control practices being undertaken by both the public and private sector in dealing with Change Orders were as follows: (i) all changes in the design documents were checked, reviewed, and justified by the designers and consultants; (ii) coordination and cooperation among the contractors, consultants, and clients were encouraged; (iii) project personnel take proactive measures to promptly settle, authorize, and execute Change Orders in construction projects; (iv) involvement of knowledgeable persons or representatives during the change order negotiation and approval (v) a written approval of both parties should be made with clear scope of change before executing the requested changes or variations; and (vi) the use of various techniques in order to track cost of changes.