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Understanding Change Orders in Construction Projects

Change Orders are essential tools in managing construction projects, allowing for adjustments that are necessary to complete the project as originally scoped. The primary types of permissible change orders include amendments to contracts, quantity adjustments, and changes arising from differing site conditions. Local Public Agencies (LPAs) cannot use local funds for work beyond the original scope. Proper documentation, including cost analyses and approvals, is crucial for successful management and justifications of change orders, ensuring all parties understand the necessary adjustments and associated impacts.

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Understanding Change Orders in Construction Projects

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  1. Change Orders

  2. Change Orders Build the project that was bid and awarded

  3. Change Orders Build the project that was bid and awarded

  4. Change Orders Build the project that was bid and awarded The ONLY permissible change orders are for changes required to complete the project as originally scoped

  5. Change Orders Build the project that was bid and awarded The ONLY permissible change orders are for changes required to complete the project as originally scoped

  6. Change Orders Build the project that was bid and awarded The ONLY permissible change orders are for changes required to complete the project as originally scoped LPAs cannot use local funds for work beyond the original scope

  7. Change Orders Build the project that was bid and awarded The ONLY permissible change orders are for changes required to complete the project as originally scoped LPAs cannot use local funds for work beyond the original scope

  8. Change Orders • Amend the contract • Adding or deleting work (quantity adjustments) • Additional costs for differing site conditions • Changes in the scope of work that affects: • Sequence • Method of construction • Efficiency of work • Changes for the convenience of the owner • Changes needed due to actions of others

  9. Elements of a Change Order Elements of a change order: • Face (Identification): • PROJECT - Quantity • C/R/S - Ref # • Fed # - Part Code • Fed Acceptance type - Item Code • CHANGE ORDER - Item Description • CO number - COST INFO • WORK INFO - Unit Price/Lump Sum • Units of measure - Total +/- and Total

  10. Elements of a Change Order • Body of Change Order • Reference Number, Extra Work Number, Part Code • Reason Code • Explanation of necessity • Problem/solution • Approach to change order pricing • Schedule impact • Signatures • Agency • Contractor

  11. Elements of a Change Order • Attachments • Approval by ODOT Construction Monitor (EVERY change order) • Authorization by internal controlling board (City Council, County Commissioners, etc.) • FHWA approval (on Federal Oversight projects) • Supporting documentation (letters to/from Contractor, ODOT, internal engineers) explaining change - Cost Analysis

  12. Change Order Pricing • Agreed unit price • Use prices already in the contract • Compare prices for similar work statewide • Similar quantities • Similar area of state • Available on website • Production rate calculations • Agreed lump sum • Force Account

  13. Change Order Pricing Force Account (C&MS 109.05) (ODOT’s least favored, Contractor’s favorite) • Work Force (name, class, hrs. reg., hrs. OT) • Equipment (“Blue Book”, type, model, age, capacity, hrs. worked, hrs. idle) • Materials (invoices: description, qty., price) • 3rd Party Billing (invoices) • Allowable markups (see C&MS 109.05) • Inefficiencies

  14. Change Order Pricing Changes to the plans involving extra or changed work could affect the schedule – delays turn into dollars. Project Schedule important tool. DOCUMENT, DOCUMENT, DOCUMENT Someone who knows nothing about the project should be able to come back five years later and with only the change order and attachments understand why and how a change order was processed.

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