Change order for construction contracts
In project management, a change order (or variation order) is a component of the change management process in which changes in the scope of work (or project brief) agreed to by the client, contractor and architect are implemented.
A change order is work that is added to or deleted from the original scope of work of a contract, which alters the original contract amount and/or completion date. A change order may force a new project to handle significant changes to the current project.
Change orders are common to most projects, and very common on large projects. After the original scope (or contract) is formed, complete with the total price to be paid and the specific work to be completed, a client may decide that the original plans do not best represent their definition for the finished project. Accordingly, the client will suggest an alternate approach.
Common causes for change orders to be created are:
- The project's work was incorrectly estimated.
- The client or project team discover obstacles or possible efficiencies that require them to deviate from the original plan.
- The client or project team are inefficient or incapable of completing their required deliverables within budget, and additional money, time, or resources must be added to the project
- During the course of the project, additional features or options are perceived and requested.
- The contractor looks for work items to add to the original scope of work at a later time in order to achieve the lowest possible base bid price, but then add work items and fee back on once they have been appointed. This is an exploitative practice.
A project manager then typically generates a change order that describes the new work to be done (or not done in some cases), and the price to be paid for this new work. Once this change order is submitted and approved it generally serves to alter the original contract such that the change order now becomes part of the contract.
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