Page 72 - IEC Insights Sept-Oct21
P. 72
FEATURE
A mistake that is commonly made is to consider
How can we turn this around the higher labor rates or additional mark ups
and use change orders to
our advantage? on change order as ‘extra money’ and a ‘safety
The key is to reduce and ideally mitigate cushion’ for the job and its profitability.
the additional risk associated with the
change request. This can be done by
ensuring a concentrated effort to clarify
and confirm any possible questions
regarding the change as early as possible.
This can be done by:
1. Ensure the whole project team
recognizes the change order timely
2. Identify and escalate any schedule
impacts timely
How to make it happen? A Change recognizes the change order, escalates
3. Make sure that the actual work can get Order Checklist and guidelines turn out schedule impacts and quickly works
performed with high productivity to be most helpful. The best way to start for higher productivity on all aspects of
creating such a checklist is to hold a the job. This together with the usage of
To be able to accomplish these three items, Kaizen event with your most experienced the Agile Construction® tools like JPAC®
specific tools can be used to increase the field leads and project managers. The and SIS®, that use the Standard for Job
visibility of the change orders. Through checklist should be frequently reviewed, Productivity Measurement in Construction,
the use of Agile Construction® Tools; that discussed, and adjusted to assure that it ASTM-E2691, will allow every project team
use the Standard for Job Productivity stays up-to-date, and the items will be to make the change orders visible before
Measurement in Construction, ASTM-E2691; addressed. Below is an example checklist: they greatly impact the job. This allows
like Job Productivity Assurance and the project team to react properly to earn
Control (JPAC®) and Short Interval • How do you recognize a change? the expected profit and the money to be
Scheduling (SIS®), the impact of change • When does the GC or the customer need made from change orders.
orders can be identified actively (through to be notified about the changes?
SIS®) and indirectly (through JPAC®). The • Does the entire project team know and
changes will become tangible and visible understand the scope, effort, risks and Dr. Heather Moore is vice president of
through a loss of labor productivity in the limitations involved with the change order? operations for MCA Inc. and has taught
week the change order starts to impact • How will the change order be numerous classes for the construction
the job site. Using the Agile Construction® performed? Create a separate Work industry and has contributed to several
Tools will help to recognize and identify Breakdown Structure (WBS) for the research projects for ELECTRI, MCAA, NHF
possible changes or change order work on- change order and use the WBS to and NAW. She holds a Ph.D. in Construction
site. The project team can use the signals manage the 3Ms (Manpower, Material, Management from Michigan State
and data to follow-up and to make ensure Money) most effectively and efficiently University. Additionally she holds an MBA
everything gets captured and clarified • Did Bid-day negotiations make up for and a B.S.E. in Industrial and Operations
timely. The project team does not have additional overhead and operational effort? Engineering, University of Michigan.
to rely on the risk of one single person to She specializes in process design and
recognize and think about addressing the • How do we make sure we are getting operations research. Dr. Heather was a
change order. Recognition, identification, paid timely and correctly contributor to the ASTM Standard E2691,
and escalation are very important but • Do you know the overall flow of the and she currently holds the position of
equally important is to make sure that the change orders throughout the project? vice chair of ASTM Subcommittee E06.81
on Building Economics. She has also co-
actual work can be performed with high • Do we know how to distinguish and authored four books on the Industrialization
productivity. A mistake that is commonly apply Approved, Pending and Not of Construction® and the future of the
made is to consider the higher labor rates Approved COs industry, and co-authored the industry’s
or additional mark ups on change order as own “Prefabrication Handbook.” Dr.
‘extra money’ and a ‘safety cushion’ for the Recognizing the technical, business, Heather has experience working with the
job and its profitability. More often than and integration risk for each change construction industry, and currently works
not, this creates a perception of safety, order is key. The three steps mentioned with contractors and distributors across
reducing the incentive to stay productive above will help to reduce the risk of the country on process improvement
or even better get more productive. change orders: the whole project team and productivity measurement.
70 Insights Magazine | September/October 2021 | www.ieci.org