20.1 Introduction

PURPOSE

The purpose of this Procedure is to provide an overview of the change order process. Change orders are used to implement and document changes to the construction contract. A change order is a document issued to the Contractor to identify required changes to the original plans, specifications, or other contract documents. Upon successful negotiation of the associated changes in project scope, cost and schedule, the final change order with the proper signatures becomes a legal amendment to the construction contract.

REFERENCES

N/A

RESPONSIBILITIES

• Project Manager (PM): The PM is responsible for monitoring both the frequency and scope of change orders and their impact on the project’s budget and schedule. When required, especially for change orders in excess of $100,000 or for changes that exceed the project contingency, the PM is responsible for obtaining authorization from the Program’s Oversight Committee and the Board of Public Works. In addition, the PM is responsible for monitoring errors and omissions through the review of change orders to possibly assign liability to the design consultant at the project’s end.

• Construction Manager (CM): The CM is responsible for initiating, processing, and finalizing change orders as described in Procedures 20.2 through 20.4 of this manual. It is the CM’s responsibility to ensure that change orders are processed in a timely, efficient, and proper manner. The CM must also verify that change order records are properly kept. Only the CM can direct the Contractor to proceed with changes to the contract. The CM has the lead responsibility for assigning a specific change order to one of the Bureau’s three standard categories: changed/unforeseen conditions, errors and omissions, or changes in scope.

• Project Engineer (PE): The PE may be involved in producing the revised contract drawings and/or specifications that may be required to complete a change order.

PROCEDURE

Change orders may be required for a variety of reasons, but most often result from changed/unforeseen conditions, errors and omissions, or changes in scope. These are the three change order categories used by the Bureau. Change orders may be requested by the Designer, Owner, Contractor, or may be initiated directly by the CM.

The Bureau’s procedure for initiating and processing change orders is summarized in the attached Change Order Flowchart (Attachment 20.1-1). Within this Procedure, distinct responsibilities and tasks are assigned to various parties, as noted in the attached “Task Description” (Attachment 20.1-2). Emphasis must be placed on the key role of the CM throughout the change order process.

The key elements of the change order process depicted in the attached flowchart are as follows:

1. Identify and define the required change.

2. Prepare a Change Order Initiation (COIN) Form that includes a preliminary cost estimate and an estimate of the impact to the project schedule.

3. When required, obtain authorization for the change from Bureau Management, the Program’s Oversight Committee, and the Board of Public Works.

4. Issue one of the following types of change orders:

   1. Preliminary Change Order (PCO) to request a lump sum cost quotation and Time Impact Analysis (TIA) from the Contractor for the proposed change prior to starting the work.

   2. Emergency Change Order (ECO) to direct the Contractor to start work prior to negotiating the cost when the change is urgent. The ECO shall specify a not-to-exceed dollar amount.

   3. Time and Materials Change Order (T&M) to authorize the Contractor to proceed with the work within a specific not-to-exceed dollar amount, while documenting daily labor, material, and equipment costs.

5. Negotiate all cost and time changes with the Contractor.

6. If the lump sum negotiations fail or the Contractor refuses to perform extra work on a T&M basis and the change is necessary, issue a Unilateral Change Order (UCO). A UCO is issued to the Contractor to immediately proceed with the requested change in the amount determined reasonable by the CM. UCO’s shall be used only when absolutely necessary since the Contractor will likely dispute the amount set by the CM and proceed with the changed work under protest.

7. Issue a final Change Order (CO) to finalize each of the change order types listed above.

For detailed instructions regarding the change order process, refer to Procedures 20.2 through 20.4 of this manual.

As noted above, the CM has the lead responsibility for assigning one of the Bureau’s three standard categories to each specific change order. Monitoring the change order amounts in each category is an important tool to assess whether design quality and clarity are being achieved in the Bureau’s designs. Further, it is Bureau policy to conduct an evaluation of errors and omissions should the total value of such equal, or exceed, 3% of the Construction Value (CV). Refer to Chapter 6.8 for further information on the latter.

RELATED PROCEDURES

• Procedure 6.8 – Managing Consultant Performance

• Procedure 20.2 – Initiating Change Orders

• Procedure 20.3 – Processing Preliminary Change Orders

• Procedure 20.4 – Finalizing Change Orders

LINKS / ATTACHMENTS

Links

• BOE Master Specifications, General Conditions, Article 0500 – Changes and Extra Work

• BOE Master Specifications, General Requirements, Section 01251 – Change Order Requests and Section 01254 – Change Orders

• BPW Policy for All Time & Materials Work – Board Report Adopted March 14, 2003

• BPW Revised Policy – Motion Adopted February 11, 2008

Attachments