Research in Construction Industry Assignment Help
Changes in the projects are inevitable especially in the construction projects (Cooper 2015). The likelihood of their occurrence is always high hence one can never be fully prepared to handle them appropriately without causing significant alteration on the project outcome. The changes have a huge impact when made during the construction phase. The change for this research is defined to be a modification of a parameter already defined in the scope of the project. Some changes become Change Orders while other changes requested are eliminated due to their unsuitability for the project outcome. According to Cooper (2015) & Clare (2008), a formally written document for approved change by the clients turns it into a Change Order (CO). The change order is then signed further by the contractors and subcontractors and then added into the contract (Doyle, Molnar & Brown 2008; Goldsmith 2016). The clients are the owners of the project who are also financing the project. The contractors are responsible for the implementation of the project as well as the Change Orders. The consultants are the advisors who are part of the project and provide the project manager, client and contractor with suggestions based on their experience and expertise in that relevant field (Clare 2008; Cooper 2015).
According to Antoni et al. (2015), there are different types of Change Orders such as design change, change in scope, government regulations and policies change, change in standards and unforeseen conditions causing changes. The new parameters are then analysed in accordance to the change type. The Change Orders vary in sizes as well as in impact which they have on the project outcome (Antoni et al. 2015; Chang, Shih & Choo 2011). There are different factors responsible for causing these changes to happen. Antoni et al. (2015) described the factors causing design change to be divided into external and internal. The external factors consists of political situation, economic stability, natural environment, advance in technology and third party whereas the internal factors are the clients having the highest ranking, design consultants, construction management consultants and contractor (Antoni et al. 2015). Chang, Shih and Choo (2011) also concluded the reasons for the design change to be either because of owner’s demands, designer’s modification or reasons which are beyond control. Serag et al. (2010) also defined in his model about different reasons of change order be (1) huge quantity differences; (2) unforeseen circumstances; (3) change in limits of the construction to meet the site criteria; (4) to enhance project performance; (5) project damage after design phase. These are some of the more reasons and causes of the Change Orders. The impact of each reason is different from others as they vary in size as well as the amount of importance they possess in the project (Serag et al. 2010).
Integrated change management comes under Project Integration Management which is one of the ten (10) knowledge areas of Project Management Body of Knowledge (PMBOK). It is considered to be of great importance while planning and executing the project (PMI 2013). There are 5 project management process groups mentioned in the PMI (2013), which are (1) initiating process group in which the initial limits and baseline for the new project are set along with the authorization of the scope defined, (2) planning process group which consist of forming a course of action to achieve the objectives of the new project, (3) executing process group which involves taking actions and implementing physically the plans prepared in the planning process group, (4) monitoring and controlling process group consist of those process required to track, review and orchestrate the progress and performance of the project, (5) Closing process group is to formally complete the project and when this process occurs the project or project phase is redeemed to be completed. According to PMI (2013) the integrated change management is a part of the monitoring and planning process group of the Project Integrated Management. This process group is responsible to identify the changes to the plans formulated and initiate the changes where required. It helps to keep track of the project performance at regular intervals.
As stated in PMI (2013), a project is a temporary unique endeavor which has a start and a finish date with limited resources to deliver a unique product. The projects which will be considered for this research are the construction projects. The range of the projects considered for this research are commercial, residential and road constructions from all around the world. Change management in the project is very important. It has been observed that no matter how much pre-planning and precautionary measure the project manager take, still the project undergoes the change management process to deal with a change (Stasis, Whyte & Dentten 2013). This management plan comprises of a process to handle the change irrespective of their cause of occurrence. Unfortunately there is no standard or generic process which can serve as a guideline. Every company, in fact every project has its own change management process which is prepared by keeping in mind the project limitations. Zink, Steimle and Schröder (2008) describes the change management process to consist of the following steps:
- Change request is made by the contractors or clients depending upon the circumstances of the project.
- The request is escalated to be reviewed and analyzed by the team members.
- The risks related to the change requested are evaluated and other parameters of the project are also measured against the change request.
- A report is then presented to the Change Control Board (CCB) for discussion.
- After the discussion the change is either approved or rejected by the client as client is the one to decide and give the final decision.
- If the change request is approved then a formal written document is released which turns the change request into a Change Order (CO).
- All the other plans and documents are updated then delivered to the contractors and consultants.
- The Change Order is then implemented as per defined in the updated documents with new limitations of time, cost and quality (PMI 2013; Stasis, Whyte & Dentten 2013).
The process for executing the change order is also described in quiet similar manner by Charoenngam, Coquinco and Hadikusumo (2003) in a journal for managing change orders in construction projects. (Clare 2008) explained that in change order review process the owner needs to take a suitable time frame to review the change and its impact on the project as well as on the owner as well. During the process the owner and the contractor needs to have a trust and respect relationship as both the parties needs to understand that they are going to work with each other for several other projects too. According to Clare (2008) communication, proper documentation and the level of detail picked up to review the change order plays a significant part to not only decide whether to accept or reject a change order but also has an impact on the contractor and owner relationship.
Hajdu et al. (2014) identified that frequent change orders, design changes and reworks cause the cost overrun of the projects. From literature it is observed that the major cost overrun and delays of the projects are because of the occurrence of Change Orders especially during the execution phase of the project. The reason of the Change Order have a share in determining the impact on the amount of delay and overspend of the project (Serag et al. 2010). Hence it is still unclear and not proved yet that all the Change Orders are bad and have a negative impact on the project. The Change Orders for the project can be both beneficial and detrimental. Oyewobi et al. (2016) states that the beneficial Change Orders may bring benefits to the project which can be the cost reduction, improved quality or less time spend and most important the client’s satisfaction while the detrimental ones may impact the project outcome negatively causing cost inflation, delays, poor quality and unsatisfied end users. An outcome with such a negative impact may redeem the project as a failure. Moreover it has not been clearly stated anywhere about the acceptable range of the Change Order in the construction projects. The agenda is that there is no boundary defined in regard to the acceptable limit of Change Orders. The discussion involves the type of Change Orders which are considered adequate while executing them during the project and the type of Change Order which are not welcomed and put the reputation of the project at stake.
The research purpose is to achieve and describe an acceptable limit of Change Orders for the project. This can be done by gathering data from literature review and other online resources. A change is initiated either by clients/ owners, contractors, consultants and design team. It then follows the change management process to get approved and become a Change Order. After it becomes a Change Order, it is then implemented as per the updated documents. The updated version of the documents now has changed time schedule, cost variables and even the scope of the project (Chang, Shih & Choo 2011; Goldsmith 2016). This research will help in finding out the effects of the Change Orders in the project in respective of their causes. This analysis will help to determine the acceptable limit of the Change Order. It is a common observation that if a change is made in the scope of the project during the execution phase, it will cause a disturbance not only in the area where the change is being introduced but it will also have an impact on the overall project (Ibbs 2012). It will result in the change of management plans, productivity will be effected, labor force will change, and new plans for the procurement of the project will be evaluated. All these factors will be re-calculated on the arrival of a Change Order. Despite of all these changes, some Change Orders prove to be beneficial and profitable for the project. The objective is to analyze the reasons and impact of Change Orders and determine the boundaries for an acceptable and unacceptable Change Orders in projects.
This research will be helpful it creating a new classification of the Change Orders. One of the impact of Change Order is cost compromise which can result in the cost overrun or underrun depending on the analysis in regard to change proposed. Spending more than actually planned on the project because of the Change Orders doesn’t make it really a bad thing. The cost increases as well as it takes more time because extra time is required to work with the new changes, plan them and then implement them by making adjustments with the tasks already defined in the planning phase of the project. The time schedule also gets extended because of the Change Order, still these reasons or effects are not sufficient enough to entitle a project with inadequate or unacceptable remarks. This research will help to look for the criteria which can be introduced in creating and implementing a technique for categorizing the Change Orders to be acceptable or unacceptable. It is significant enough because it will help to differentiate between the projects even if they are similar in respect to the project outcome such as both the projects are increased in cost, time and quality, there will be a differentiating factor which will be able to categorize them under the acceptable and unacceptable classification.
Change orders are an integral part of the construction projects. Sometimes the decisions made are as a result of knowledge based on assumptions, incomplete data or unforeseen circumstances which are not present at the time of decision making. It is also a fact that no amount of planning, engineering and design can completely eliminate the probability of the construction changes during the execution phase (Cooper 2015). The project change is very important to understand as it may not directly add, subtract to the work being performed in a particular area but can also have an effect on those area where the change order is not accounted. There are different types of change order such as design change, change made by the owner, scope change, site conditions change and schedule change (Cooper 2015; Ibbs, Nguyen & Lee 2007).
Bröchner and Badenfelt (2011) conducted a survey research in Sweden for finding the reasons of the contractual changes due to the change orders. Sixteen contractual relationships between the client and provider were studied. There were a total of nine reasons against which the frequency for the changes were measured. Two of the reasons were client associated which involves error and omission in the original specification and changes on client’s demand and request, three of them were from the supply side which consists of better understanding of clients requirements, advance in providers technology and changes suggested by subcontractor to the client due to change in technology, two of them were identified to be due to unknown error in system and lack of communication between the parties, two were the external factors comprising of unexpected natural events and unexpected social influence on the project. Bröchner and Badenfelt (2011) concluded that among contracts for different types of project the most high frequency of the reason was the client’s demands and request for making a change in the project.
Sun and Meng (2009) described the taxonomies of the change order to be in four phases (1) start up: development of a change management plan at the start of the project; (2) Identify and evaluate: the team should keep in mind the potential change reasons which can occur at various stages of the project; (3) Approval: after the change is approval then it needs to be escalated to the relevant parties with updated and proper documentation; (4) implement the change: the change then needs to be implemented by the contractor. The project team then review it and identify the lessons learned from this change event.
Serag et al. (2010) explained that there are eleven variables which need to be considered while performing a Change Order. These variables are:
- The timing of the change order, it is observed that the cost of changes is more if the change order is introduced in the later stage of the project execution. It also have a significant impact as there is less time left for the completion of the project and the changes needs to be implemented as soon as possible to deliver the project on time schedule. Serag et al. (2010) found that almost 40% of the changes are recognized a little earlier in faster projects while they are identified late in the slower projects.
- The reason for change, there are different reasons of changes which can be attained from the literature as different researchers have identified different reasons. But the most common among all of them are client initiated changes, design changes, contractors oriented changes, policies and standards alteration, unforeseen circumstances, lack of communication, weather conditions and advance in technology etc. (Anees, Mohamed & Razek 2013; Antoni et al. 2015; Chang, Shih & Choo 2011; Goldsmith 2016).
- The person responsible for implementing the change order, it is observed that the party or individual responsible for implementing the change order also has an impact on determining the time taken for its completion. Suppose if the change order is to be completed by the subcontractor then it will take much more time than if it was being completed by the main contractor or consultants (Serag et al. 2010).
- Work stoppage, the work on the site is stopped for a specific interval of time whenever a Change Order is received to the contractor. This is done in order to recalculate the manpower and resources required additionally by the contractor to carry out that change order.
- Change order Specification, it is important to know what the change order is about and how it impact on the cost and time of the project. Whether it is about performing a task of an already completed activity, addition or subtraction of an activity or idle labor. It is important to known the change order specification for effective implementation and re-calculation of triple constraints (Serag et al. 2010).
- The course of action in which the change order is approached, it is observed that the contractor sends a cost proposal to the owner for the changed work carried out. The contractor not only include the extra cost for performing the work but also the cost of inflation, profit and overhead. It also includes the cost which is spend on the other activities which are affected by the changed work. Serag et al. (2010) explained that the approach is of three type which are (1) unit price, if the contact bid is in unit price then the proposal is also presented using the unit price by the contractor; (2) time and material: in some cases the contractor is given the authority to perform the changed work and provide the owner with the details of the cost of material and time spend; (3) lump sum: change order can be paid to the contractor by direct cost with an addition of overhead and profit. Anees, Mohamed and Razek (2013) found that 26% of the projects used unit price, 11% used adjusted unit price, 14% actual cost + margin and 49% used the negotiated fixed price as a compensation method.
- Restricted Access, sometimes it happens in a project that the owner restrict the number or resources to be used while executing a change order this results into less productivity with respect to time and hence cost more.
- Change Order work season, the time of the year in which the contractor plans the bid is very important because while evaluating the days of work it is essential to take into consideration of the weather and environmental changes for that period of year and season. If the plans are in accordance with the summer season and for some reason the construction is carried away until the start of winter then the cost will be more as certain parameters were planned for summer and not winter, hence increasing the contract price (Serag et al. 2010).
- Stacking of Trades, this occurs when the labor is hired from two different trade and are made to work in same area. This is not very common and not mostly observed during the construction period. This has very few records and is not considered that essential.
- Approved Change Order Hours, this consists of the hours which are approved by the owner to conduct the Change order. It consists of the labor and equipment hours which will be on site whether operating or idle but will be in respect to the change order approved by the client.
- Extension, according to Serag et al. (2010), the cost of the change order also depends on the amount of delay which that change order will cause. For excusable and non-compensable change order only the delay is taken into account but the cost remains the same. No extra cost if allocated for that change order. If a change order affects a critical activity then it is provided with an extra time and money.
Out of these eleven variables Serag et al. (2010) found that the variables having the highest impact on the cost of the change orders were the timing of the project and when the change order is conducted due to unforeseen conditions.
The root causes of change order identified by Doyle, Molnar and Brown (2008) are design errors or defective specification, owners requested change which leads to a revised scope of work, discovered undisclosed existing conditions, regulatory mandated changes, changes in market conditions and discrepancies in the contract documents. Anees, Mohamed and Razek (2013) also found that the top most important cause and reason behind the change orders in the construction projects are because of the clients/ owners which may be due to their change of mind, unclear brief and budget constraints. All the changes when approved and ready to implement needs to be written in a legal document with owner’s authorization as a proof. This signed documents forming the updated version of the project scope is then escalated to all the relevant stakeholders in the project mainly consisting of contractors and consultants (Chang, Shih & Choo 2011). After the approved document is released it consists of all the factors recalculated such as new risk analysis regarding to the approved change, cost difference, schedule delay, new procurement orders to be places with the modified quality and specifications.
Motawa, Anumba and El-Hamalawi (2006) formulated a fuzzy logic model with the help of which the impact of the changes can be quantified along with the causes which are likely to bring changes. The impact and the severity of a change occurrence can be then calculated with the help of that model to prevent a high level negative impact on the project and also to mitigate the risk factors which can rise from the changes being introduced. Motawa, Anumba and El-Hamalawi (2006) states that this model has certain limitations but it gives an estimate and idea for the potential risks which can be caused due to the changes about to happen at the later stage of the project. Among these the clients changing requirements had the highest impact not only increasing the risk factor but also resulting in more cost and time.
Hajdu et al. (2014) conducted a survey and attained a sample size of 78 questionnaire. 38 factors causing delays were identified and then grouped into 7 major categories such as time-related, risk-related, cost-related, quality-related, contract-related, human resource-related, communication-related. It was identified that frequent change order during the construction phase increase the impact of the cost overrun to a significant level. Hsieh, Lu and Wu (2004) conducted a survey for 90 metropolitan public projects and studied the change orders in Taipei and Taiwan. Changes initiated by clients, planning and design errors, changes in the regulations and policies, safety conditions and natural incident were the causes identified which were categorized under two main divisions the construction needs and administration needs.
Koushki, Al‐Rashid and Kartam (2005) states that the owner oriented change order are a major cause of delays and cost overrun in projects. They performed a study in Kuwait and came up with the results that the change orders by clients caused the most delays in project and were ranked 4th in case of cost overrun. Sweis et al. (2008) conducted a survey in Jordan for construction delays in residential projects. A questionnaire survey was filled by experienced individuals which involved 29 consultants, 36 contractors and 26 clients. They were asked to rate the causes on a frequency from 1= never to 5= continual. From the result it was found that the most common cause of the delays in the projects was financial difficulties faced by the contractor and was given the highest ranking from the viewpoint of contractor and second highest rank from the viewpoint of consultants and owners. The other important cause was too many change orders from the owners which was ranked second from contractor’s point of view and third from the viewpoint of consultants (Sweis et al. 2008).
Most delays in the project are caused due to different reasons but mostly the delay is because of the changes which are made suddenly by the owners, contractors or clients. According to Al-Momani (2000), one of the reasons of the delay is the change in the design. They have studied the delays of around 120 projects and they found that mostly the delays are caused when the project brief changes and thus effects the time schedule as it takes more time than planned to escalate the changes, seek approval and then implement them. In a research conducted by Anees, Mohamed and Razek (2013), they found that 49% of the projects increase in schedule from 10-20% and 44% of the projects increase from 21-50%. It means the no matter the cause of the change order or whether it is a good or a bad change, most of the projects results in getting delays on an average of 20% of the estimated time schedule. Aziz and Abdel-Hakam (2016)
According to Oyewobi et al. (2016) the change orders have an impact on the project performance as well as the stakeholders of the projects. On research they confirmed that the top most impact of the change order in on the cost of the project with score of 82 and a total escalation of 33.95% from the original cost of the project. For schedule of the project, it was with a score of 79 and the escalation from the original time to be 29.45%. Oyewobi et al. (2016) conducted a research in Nigeria and concluded 13 main factors with further classifications of causes, forming a total of 48 potential causes which were considered to be responsible for the change orders and out of those the changes in plans and scope initiated by the clients, poor contract positions, poor information use, quality deviation, error in design and many project going on simultaneously are identified to be significant (Oyewobi et al. 2016).
Keane, Sertyesilisik and Ross (2010) studied the cause and effects of change orders in the construction projects. They found different causes of the change order which were classified into four categories such as owner-related, consultant-related, contractor-related and others causes. The effects of the change orders are cost-related, quality-related, time-related, organization and its reputation-related and other effects. A case study was observed to analyze change order in real-life construction projects and the results are as follows:
|Change Order||Cause||Cost increase ($)||Time Schedule|
|Change Order 1||Lack of coordination||9,061||+ 5 days|
|Change Order 2||Clients requirement||10,390||Nil|
|Change Order 3||Design error||1,574||+ 3 days|
Together these change orders formed a cost overrun of $21,207 and delayed the project by eight (8) days. This shows that one of the change order was client oriented and it didn’t impact on the duration of the project but increased the cost of the project to a significant amount (Keane, Sertyesilisik & Ross 2010).
Ibbs (2012) calculated the impact on the cost of the project due to the change order and he found that 20% of the projects had a cost overrun of more than 45%, whereas 10% of the projects had a cost overrun of 83%. For schedule it was found that 7% of the project overran the original schedule by almost 50% and 15% of the project finished ahead of schedule. It was also stated by Ibbs (2012) that around 40% of the projects face less productivity index which decrease their chances for a successful project.
Another research was conducted by Aziz and Abdel-Hakam (2016) through questionnaire of 389 respondents which included contractors, owners and consultants on the causes for delays in road construction projects in Egypt. They concluded 20 most common occurring delays causing factors for the projects. Among those top 20 projects the design change order by owners was on rank 17 with the index of 0.783 as compared to the highest index to be 0.886. Altogether it explained 293 factors which caused project delays (Aziz & Abdel-Hakam 2016). Sometimes the changes are positive and good for the project and sometimes the changes have a negative impact on the project. One should be prepared for these changes and if things are to be implemented before the start of the project then it is more likely to be completed on time and not get delayed (Aziz & Abdel-Hakam 2016; Bröchner & Badenfelt 2011). Another research done by Abd El-Razek, Bassioni and Mobarak (2008) in Egypt found that design changes order by clients is the top most reason among the projects increased cost and delays. It was found that design changes was ranked 3rd with a value of 62.67 and in groups formation the changes group was also entitled as rank four (4) with an index of 47.47 whereas the highest index was 64.30. The construction projects consists of housing, tourism and commercial. (Abd El-Razek, Bassioni & Mobarak 2008) also found that change orders of design was also a significant cause for cost overrun of projects less than 5,000,000 EGP and greater than 24,000,000 EGP.
According to Hao et al. (2008) the following table explains the changes which are likely to occur at various stages of the project during construction phase. It also includes the stakeholders involved and what impact as well as actions needs to be taken for that specific change.
|Stage||Stakeholder||Types of changes||Impact||Action|
|Specification||Owners/ Clients/Users||Changes to specification, scope, design, brief||Changes in design and construction process||Detailed specification document before bidding|
|Design||Design/ Engineering Consultant||Inconsistent drawings, design changes,||Rework of design, change order||Better control of design variation, site investigation|
|Construction||Contractors||Material / equipment not available, quality defect,||Rework, change orders, change in design||Quality control, coordinated documents and drawings|
Hao et al. (2008) also explained that the primary cause of change orders is owner-initiated changes and designers errors and omissions. Researchers distinguish changes into 3 kinds mainly as rework, change order and construction change directive. Change order is due to unanticipated causes such as design change, scope change from owners, materials or operational failures (Erdogan et al. 2005). The time taken by the relevant stakeholders in communicating the change leads to delay in the project. The coordination between the project relevant stakeholders and providing an updated and verified written approval by project manager from the clients to the contractors takes up a lot of time if the form of communication is not efficient and quick. (Erdogan et al. 2005; Hao et al. 2008)
Anastasopoulos et al. (2010) formulated a model through which he concluded that the contract award amount and duration depends on the frequencies of the change orders. There is a linear relationship between the change orders and the duration of the project. Whereas the contract award amount is related to the frequencies of change order received. Anastasopoulos et al. (2010) states that the greater the frequencies of change order, the award amount will be increased. Hence the award amount and the number of change order doesn’t have a linear relationship (Choi et al. 2016). This relationship is furthermore affected by the size of the project. The small contract size will show sharp incremental for the change increased change order frequencies whereas a big size project will not have that much of an incremental for change order frequency.
The change requirements during a project execution disturbs a lot of other factors as well which includes the schedule overrun, more cost, more labor, quality degradation, delay in procurement orders and sometimes rework or demolition. Thus these factors takes up more time in project completion than expected (Hao et al. 2008; Hwang & Low 2012). Another survey done in Saudi Arabia about the reasons of delay according to the owners, contractors and consultants concluded that the change order was a common factor in reference to all these major stakeholders involved. It was believed by Alnuaimi et al. (2010) that the contractors benefits the most from the change orders as they receive more cost and have more time to complete the work. It is also observed that miscommunication of the change order may result in further delays and also cause the project to exceed a significant amount of time overrun which can in turn result in project failure (Assaf & Al-Hejji 2006; Aziz & Abdel-Hakam 2016).
Larsen et al. (2016) found the causes of the project delays, cost overrun and quality issues. It was found that the change orders was ranked third among the reasons which were to increase the cost of the project whereas it showed little to none effect on the time and quality of the project. This factor was a common cause of most of the projects and is likely to occur almost in in every other projects (Larsen et al. 2016; Sun & Meng 2009).
Change management is very important in construction as changes constitute a major cause of delay, disruption and quality compromise on project. These effects are accepted by both the owners and contractors but still changes in the projects can never be completed avoided as there are various factors which cause these changes (SangHyun, Peña-Mora & Moonseo 2005). The frequency and cause is difficult to quantify and mitigate them. In order to decrease the impact on the change order which it can have on the project overall outcome Motawa et al. (2007) suggested two feedback processes i.e. reinforcing and balancing loops which can fast track the process and reduce time and cost.
An important factor highlighted by Odeh and Battaineh (2002) in the journal depicts that lack of communication of change orders was causing a significant delay in the projects. The parties which were studied for this research includes contractors and consultants. It was known that the delay in the construction projects are inevitable and needs proper management and planning (Odeh & Battaineh 2002). Every variable associated for the construction project for desired outcome can be linked with the effective and early project planning and scheduling (Lim et al. 2016). Planning is required at the initiation phase of the project. Good scheduling and cost performance contributes to a reasonable extent in the project success (Baker, Murphy & Fisher 2008).
Sun and Meng (2009) explained the changes effect and causes in the journal. It was explained that the success of the construction projects depends mainly on the team’s ability to manage the changes which can be caused due to owner’s demands or design change. Hwang and Low (2012) discussed the effects of change order and concluded that the detrimental change orders have nine major impacts on the project which includes (1) Change in project cost; (2) Recruiting New Professionals; (3) Increase in overhead expenses; (4) Quality degradation; (5) Decease in labor productivity; (6) Delay in procurement process; (7) Rework and demolition; (8) Safety conditions; (9) Delay in completion schedule. It was also concluded by Ibbs, Nguyen and Lee (2007) that the change order have a negative impact on the labor productivity hence reducing it causing a significant impact on the project overall outcome (Goldsmith 2016).
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