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CHANGE ORDERS IMPACT ON PROJECT COST

ABSTRACT

Change orders occur frequently in most construction projects. Changes occur not only because of

errors and omissions, but also for other reasons such as scope of work changes, or changes

because of unforeseen conditions encountered on the site; a problem which is very common in

most heavy construction projects. Several studies have attempted to quantify the impact of

change orders on the project cost. Almost all of the studies in this area were sponsored by

contractors’ organizations, where statistical model used to quantify the impact of the change

orders on the project cost was based on data supplied by the contractors; a situation that lead to

owner-contractor disagreements related to the quantification method used. Also, resulting change

order models didn’t rely on the actual plans, specs, daily productivity and changes of the project;

rather they relied on the reply of the contractor filling survey.

The study addresses the need for a statistical model to quantify the increase of the contract price

due to change orders from verifiable site data such as owner’s daily reports, change orders,

drawing, and specifications. A model is developed and validated to quantify the percent increase

in the contract price due to the change orders. This model will provide the owner with an

estimate of the cost of the changed work, where it can be used for forward pricing or

retrospective pricing of the change orders

INTRODUCTION

Change orders are frequently encountered in any construction project. Contract modifications

that increase the contract value from 5 to 10% are expected in most construction projects1. The

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Serag, E., & Oloufa, A. (2007, June), Change Orders Impact On Project Cost Paper presented at 2007 Annual Conference & Exposition, Honolulu, Hawaii. 10.18260/1-2--3044