International Journal of Science and Engineering Research (IJ0SER),

Vol 3 Issue 4 April -2015

3221 5687, (P) 3221 568X

A Study On Impacts Of Change Order In

Construction Projects
M.Gokulkarthi#1, K.S. Gowrishankar#2
#1
PG Student (M.E Construction Engineering and Management),
#2
Assistant Professor, Department of Civil Engineering
Kongu Engineering College, Perundurai
Tamilnadu, India

Abstract-In construction projects, changes are very common and likely to occur at any stage of the project. Construction project is a
complex process, which requires close cooperation and coordination among the stakeholders. The process also consists of different
stages, which ultimately make it more complicated and difficult to manage. A good design will enhance value generation, reduce
dispute and improve the workflow. As the designing work begin undertaken there are tendencies for changes in design to happen.
These changes can take place right from the drawing stage up till the construction phase. The later the changes are made, the more
of it will affect the project. In the actual design environment, changes inevitably and continuously affect the properties of many
building components at various stages in a construction project. Such changes may occur due to the needs to satisfy the new or
modified requirements specified by the owner, to reduce project cost, or to rectify existing design mistake. To make things worse
most of the changes were made during construction stage. These will generate change orders, contractual disputes, cost overrun,
time delay, compromising on quality and frustration. In addition to that parties which are involved in the process of making the
changes into reality will need to submit fresh claims on the extra work done. This paper reviewed the various causes, effects, and
control procedure for changes based on the basic ideas, the legal aspects, the cost and pricing aspects, and the management and
administration of change orders. The outcome of this review may help the engineers and contractors to improve productivity, t o
control the changes in the field and to enhance the effective change management process and initiate further research in this field.

Keywords: Construction industry, Change, Change order, Causes, Effects, Change management

1. INTRODUCTION The following section summarize the various impacts of

construction change order process and provides some
Construction industry is one of the rapid growing sector in insightful thoughts on this topic.
India. A number of construction projects are currently
undergoing in various fields of civil engineering. Large and Definition
complex projects have been built which attracting contractors “In construction projects, a change refers to an alteration or a
and construction companies from all over the country. Most modification to pre-existing conditions, assumptions and
of the contractors and their companies lack sufficient basic information, or requirements (project or client)”
understanding of the local social, cultural and physical (EPSCR, 2004). It includes work, time, cost and method of
environment. During the development phases of any of the performance.
construction project, many decisions have to be made based Change of planned design, construction procedure and
on the incomplete information, personal experiences, contract terms during execution of work leads to the change
assumptions, or generally uncertain conditions which can order. A change order is a written order to the contractor,
lead to adjustment at a later stage of the project. Incomplete signed by the owner, and issued after execution of the
information on the project variables at the early stages of contract, authorizing a change in the work or an adjustment in
projects leads to inadequate knowledge of future conditions, the contract sum or the contract time.
This situation coupled with inexperienced owners has led to
inadequate design resulting in changes to plans, 2. OBJECTIVE OF THE STUDY
specifications, and contract terms. Consequently, it may
result in imprecise estimates arising from ambiguity in
project parameters. It may be inferred that the clients‟ The study is aimed to provide an understanding of what
dissatisfaction is likely caused by change orders running causes change order and their relative effects to the
through the construction projects. The effort of managing engineering consulting firms. In addition it will also look into
change orders has imposed a huge burden on project the nature of claims made by the construction professionals
management, and it is a nightmare that industry people and suggest some improvement on the current practice.
wished they never have to face. Changes in construction also
cause serious ethical problems and disputes. Change The main objectives of the study are
management is a pure application-oriented issue and requires
 Identify the main causes of construction change
engineering innovation to solve the problem. Based on our
orders.
investigation of the construction change order process, and a
pressing need from industry versus the scarcity of literature  Identify the severity of those causes.
and software tools in the domain, poses a promising  Test the hypothesis that construction professionals
opportunity for research and development in construction. disagree on the severity of causes.

Gokulkarthi,Gowrishankar…. (IJ0SER) April - 2015

International Journal of Science and Engineering Research (IJ0SER),
Vol 3 Issue 4 April -2015
3221 5687, (P) 3221 568X

3. METHODOLOGY 3.1.1 Causes

This study started off with the problem identification The possible causes of change orders in construction of large
which done through unstructured interview and brief buildings are:
literature reading. Upon obtaining the identified problem
thorough literature review were conducted to provide in 1. Change of planes by owner.
depth understanding on the issues of change order, focusing 2. Owner financial difficulties.
on the causes and effects. The study will be limited to large 3. Owner change of schedule.
building construction projects in the southern region of India. 4. 1ll –defined project objective
It is focusing only on the causes and effects of changes and 5. Substitution of material or procedures.
change order. The study was conducted using questionnaire 6. Conflict between contract and document.
survey that was sent out to the engineering contractors. The 7. Change in design.
objective of the survey is to obtain more extensive coverage 8. The scope of work for the contractor is lll-defined.
on the issue of change order and claims made by the by 9. Error and omissions in design.
engineering contractors on extra works caused by change 10. Lack of coordination.
order. Upon obtaining the data desired, checking and sorting 11. Value engineering.
of data were done and followed by data analysis which was 12. Technology change
the main component of the study. Finally from the data 13. Differing site conditions.
analysis acquired conclusion and recommendation were 14. Contractor desire to improve his financial
made. The respondents involved were only the engineering conditions.
contractors. The suggestion made is only focusing on method 15. Contractor financial difficulties.
to reduce changes. 16. Unavailability of skills.
17. Unavailability of equipment.
3.1 Contents of the Questionnaire 18. Defective workmanship.
19. Safety consideration.
The questionnaire is divided into four sections. The first 20. Weather condition.
section contains general information about the respondents 21. New government regulations.
such as contact address, company size, type and the general
industry characteristics such as size, experience, amount of
change etc. Questions in the last two sections are posed in a 3.1.2 Effects
multiple choice question format. The second section
addresses causes leading to change orders. A list of major Effects of change orders that are usually encountered are:
causes of changes as read from the literature is presented and
the respondent is asked to state the frequency of occurrence 1. Decrease in productivity.
of these causes in his projects. Most frequent causes 2. Delay completion schedule.
correspond to „very often‟ whereas the least frequent 3. Dispute between owner and contractor.
correspond to „never‟ which denies existence of the condition 4. Decrease in quality.
as a cause. The causes were further grouped as owner 5. Increase in project cost.
originated, designer/consultant originated, contractor 6. Additional money for contractor.
originated or others for ease of analysis. Respondents were 7. Delay of material and tools.
given a chance to add other causes and rate them. A review of 8. Work on hold.
these causes is presented in section 4.1 above. The third 9. Increase in overhead expenses.
section addresses the possible effects of change orders. This 10. Delay in payment.
list was developed from the literature review. A review of 11. Demolition and re0work.
these effects is presented in section 4.2. Responses in this
section are given on a 5-point scale starting with VERY
3.1.3 Controls
OFTEN and ending with NEVER.
This Section review the common control procedures used to
minimize the effects of change order. This includes measures
The last section in the questionnaire addresses the taken prior to start of construction and before generation of
normally adopted controls of changes in the construction change orders and measure taken to minimize impact of
industry and the administrative procedures set to minimize change orders after they have been generated:
their impact. A review of these controls is presented in
1. Clarify change order procedures
section 4.3. Likewise, responses in this section are given on a
2. Quick Approval
5-point scale.
3. Ability to Negotiate changes
4. Approval in writing
5. Change order Scope

Gokulkarthi,Gowrishankar…. (IJ0SER) April - 2015

International Journal of Science and Engineering Research (IJ0SER),
Vol 3 Issue 4 April -2015
3221 5687, (P) 3221 568X

6. Pricing of indirect effects Table 4.1.1: Importance Indexes of Causes

7. Justification of changes
8. Review of contract document
Importance
9. Freezing Design Mean
10. Team effort Source or Cause of Change
Index (II)
Order
11. Use of WBS
26.86 70.59
3.2 ANALYSIS 1. Change of plans by owner
26.18 42.65
Causes, Effects, and Controls are scored as follows to come 2. Owner‟s financial problems
up with an Index to indicate its importance, or utilization as 28.11 36.75
3. Owner‟s change of schedule
in the case of controls of each:
4. The objective of the project is 22.58 30.88
Very often = 100% not well defined
5. Substitution of materials or 24.81 52.94
procedures
Often = 75%
6. Conflict between contract 24.63 42.65
documents
Sometimes = 50% 7. Change in design by 12.5 50
consultant
Seldom = 25% 8. The scope of work for the 25.18 36.74
contractor is not well defined
Never =0% 9. Errors and omissions in 26.60 60.29
design
Importance Index, Prevalence Index and Utilization Index of 10. The lack of coordination
26.69 36.75
each causes, effects and controls are calculated as follows: between contractor and
consultant
23.29 33.82
IIc1 = 100 x1 + 75x2 + 50x3 + 25x4 + 0x5 / (x1 + x2 + x3 + x4 + 11. Value engineering
x5) 16.60 30.88
12. Technology changes
Where: 13. Differing site conditions
26.43 41.17

II : Importance Index (C1 denotes cause 1 in this case) 14. Contractor‟s desire to improve 26.52 25
his financial situation
X1 : Number of respondents answering (VERY OFTEN) 15. The contractor‟s financial 26.52 25
difficulties
16. The required labor skills are 20.67 23.53
X2 : Number of respondents answering (OFTEN) not available
17. The required equipment and 20.22 20.59
X3 : Number of respondents answering (SOMETIMES) tools are not available
18. Workmanship or material not 24.81 27.94
X4 : Number of respondents answering (SELDOM) meeting the specifications
26.43 33.82
19. Safety considerations
X5 : Number of respondents answering (NEVER)
24.81 27.94
20. Weather conditions
4. RESULTS AND DISCUSSION
20.78 19.12
21. New government regulations
Causes, effect and controls categorization criteria are
different for each of them as follows:

 Data analysis about causes are categorized by

Importance Index (II)
 Data analysis about effects are categorized by
Prevalence Index (PI)
 Data analysis about controls are categorized by
Utilization Index

4.1 Causes of Change Orders

The data provided by contractors is examined and that
will be the basis for case selection. For these cases, minimum
and maximum values and the standard deviation is reported
to see the dispersion of data. Importance Index (II) is also Fig 4.1.1: Importance Indexes of Causes
calculated.

Gokulkarthi,Gowrishankar…. (IJ0SER) April - 2015

International Journal of Science and Engineering Research (IJ0SER),
Vol 3 Issue 4 April -2015
3221 5687, (P) 3221 568X

The overall ranking of the top five causes of changes among 2. Increase in project cost
all contractors is as follows: 3. Increase in contractor‟s overhead
4. Decrease of productivity of workers
1. Change of plans by owner. 5. Additional revenue for contactors
2. Substitution of materials and procedures.
3. Errors and omissions in design. 4.3 Controls of Change Orders
4. Owner's financial problems. Similarly, the responses from contractors about the
5. Change in design by consultant. controls of change orders in large building construction
projects were examined and the results were reported.
4.2 Effects Of Change Order
Table 4.3.1: Utilization Indexes of Control
Here , minimum and maximum values and the standard
deviation is reported to see the dispersion of data. Prevalent Mean Utilization
Index (II) is also calculated. Controls of Change Order
Index ( UI )

1. Early setting of change 35.29 66.18

order handling procedures
Table 4.2.1: Prevalent Indexes of Effects 2. Timely approval of change 26.43 58.82
order
Mean Prevalence 3. Negotiation by 16.47 76.47
Effect of Change Order knowledgeable people
Index ( PI ) 4. Appropriate approval in 25.72 73.53
writing
1. Decrease in productivity 33.00 58.82 5. Clarity of scope of change 17.41 77.94

2. Delay in completion 23.19 72.06 6. Giving consideration to 32.51 44.12

schedule indirect effects in change
3. Dispute between owner 26.60 39.71 order pricing
and contractor
4. Decrease in quality of 20.67 26.47 7. Checking and review of 33.14 64.71
work design changes for
5. Increase in project cost 20.78 69.12 feasibility
8. Review of gray areas in 35.22 47.06
6. Additional revenue for 21.83 57.81 contract documents
contractor 9. Freeze of design 25.09 35.29
7. Delay of material and 10.72 51.47
tools 10. Team effort between 33.21 61.76
8. Work on hold in other 24.16 51.47 parties
areas 11. Work-break down structure 33.62 48.53
9. Increase in contractor‟s 23.48 60.29
overhead
10. Demolition and re-work 24.63 57.35

11. Delays in payment to 27.62 42.65

contractor

Fig 4.3.1: Utilization Indexes of Control

In order to eliminate or minimize the impact of change

orders, contractors have utilized the following controls:

Fig 4.2.1: Prevalent Indexes of Effects 1. Clarity of the scope of work of the change order.
2. Appropriate approval in writing.
From the contractor‟s point of view, the top five effects on 3. Negotiation by knowledgeable people.
change orders listed in ascending order are: 4. Review of design changes for feasibility before
approval.
1. Delay in completion schedule 5. Team effort among construction parties.

Gokulkarthi,Gowrishankar…. (IJ0SER) April - 2015

International Journal of Science and Engineering Research (IJ0SER),
Vol 3 Issue 4 April -2015
3221 5687, (P) 3221 568X

4. Awad S. Hanna, P.E; Richard Camlic; Pehr A. Peterson; and Erik

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3221 5687, (P) 3221 568X

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26, pg no: 1303–1311

Ug College : Jansons Institute Of Technology, Karumathampatti,

Coimbatore.Cgpa : 7.48Academic Year : 2009-2013.
Doing M.E Construction Engineering and Management
Kongu Engineering College, Perundurai,Tamilnadu, India

Gokulkarthi,Gowrishankar…. (IJ0SER) April - 2015