Page 72 - IEC Insights Sept-Oct21
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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.



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