What Are the Different Types of Change Orders for Construction?
From access change orders to value-engineered substitution requests, it’s essential to know the ins and outs of change orders in every type.
Let’s review the different types of change orders, their implications, and how they come up during the construction project lifecycle.
What are change orders (CO)?
Change Orders (CO) are legal documents that change the contractual agreement between the owner, architect, and contractor.
Change orders can alter design elements, the project scope, the schedule, and the delivery method. And as a result, they can be
- Additive—adding time or cost,
- Deductive—eliminating time or cost, or
Once the owner and general contractor approve the change order, it becomes legally binding and part of the construction contract.
What are the most common types of change orders?
The truth is all change orders modify the contract because they modify the project in some significant way.
And because there are numerous ways to make changes to the project, there are also many different forms a change order can take.
- Cost Change Orders: Most change events have associated costs, but not always. Any additional labor, materials, or services not listed in the original contract that impact the budget fall into this category.
- Scope Change Orders: Any change in the scope or specifications of the project not part of the original contract.
- Time Change Orders: Change events that alter the project’s timeline or completion date and affect the contract require a change order.
- Access Change Orders: Unanticipated site conditions that cause hardship, like contractor access, storage, or free movement, may result in a change order.
- Design Change Orders: Every design change or modification must be in writing, and a change order must amend the contract.
- Value Engineering: Contractors can submit alternative design ideas, project delivery methods, or material substitutions when they feel these changes will increase the project’s value or reduce the overall cost without sacrificing quality.
Construction Change Directive (CCD)
As with a change order, a Construction Change Directive (CCD) amends the construction contract. The difference is that a CCD is enforceable without the contractor’s agreement.
Change orders are agreements between the owner and prime contractor that modify the original construction contract.
But construction change directives work differently.
A CCD directs the contractor to modify the project’s schedule, materials, or design elements, just like a standard change order.
But instead of agreeing to the cost upfront, the contractor documents their cost and time burdens while executing the directive. Then, when the contractor completes the changes, the contractor, owner, and design team collaborate to reach a compensation agreement.
Construction Change Directives (CCDs) are most commonly used as an emergency effort when the traditional change order process would delay the project or cause undue risk.
CCDs sometimes cause disputes, especially if the contractor feels the architect or owner issued the directive without adequate cause.
That’s why it’s essential to accurately document every aspect of the process with a reliable project management system.
Change Order Requests, Potential Change Orders, and Change Events
The Change Order Request (COR), Potential Change Order (PCO), and Change Event (CE) are similar terms describing change order initiation.
The American Institute of Architects (AIA) does not offer official contract forms for any of these three distinctions, so the terminology can be by preference or dictated by your project management software.
Change orders often initiate due to the RFI process but not always.
Sometimes contractors make discoveries on the job site that require action.
In those instances, Change Order Requests (COR), Potential Change Orders (PCOs), and Change Events (CEs) serve as the starting point for the change order process.
As such, potential change orders, change requests, and change event entries follow the same workflow and require the same backup information:
- Explanatory narrative,
- Accompanying plan sheets,
- Markups, photos, videos, and relevant contract documents.
That’s helpful to know because if, after review, the owner or design team agrees there is sufficient cause for a change order, Linarc project management software merges the backup information and supporting documentation into a new change order with no additional data entry.
That means your change order process runs as smoothly as possible, minimizing delays no matter what caused the change order.
What are Prime Contract Change Orders (PCCO)?
Prime Contract Change Orders (PCCOs) are similar to standard Change Orders (CO), except PCCOs specifically address changes to the prime contract.
That means Prime Contract Change Orders change the agreement between the project owner and the prime contractor alone. But this is not to say the prime contractor (also known as the general contractor) cannot employ subcontractors to perform the work.
Many times, that’s precisely what happens.
And in those situations, the prime contractor will issue a Commitment Change Order (CCO). Commitment Change orders modify the agreement between the prime contractor and the subcontractor while still honoring their original contract commitment. But we’ll explore this more down below.
- PCCOs can be additive or deductive, just like standard change orders.
- They amend the contract by adding or reducing the contract value, and
- Extending or shortening the project schedule
- Prime Contract Change Orders can alter material requirements,
- Add, eliminate or modify design elements,
- Or change any element of the project’s scope.
With the number of change orders on construction projects, it’s imperative to have a robust workflow platform to keep the change order process on track.
Commitment Change Orders (CCO)
A Commitment Change Order (CCO) is just like standard change order in that it modifies the contractual agreement between two project stakeholders. And just like a standard change order, a CCO affects the project timeline, budget, and scope.
The difference is that Commitment Change Orders (CCO) are generally between general contractors and their subcontractors. In contrast, standard change orders are often between the project owner and the general contractor.
Examples of commitment change orders would include
- Modification or addition made to the project scope,
- Material changes or substitutions,
- Additional work or accelerated schedule,
- Eliminated labor,
- Variation in delivery terms, and
- Adjustments in construction costs.
General contractors typically initiate a Commitment Change Order (CCO) to maintain their commitment to the subcontractor while modifying the terms of their agreement.
Improve your change order process with automated workflows.
The Linarc project management system significantly improves the change order process.
Linarc provides a simple yet cost-effective solution to manage change, reduce risk, and keep your projects moving forward.
Reduce project completion times with an integrated project management system that keeps stakeholders informed and on task.
Get a custom demonstration of the Linarc project management system today—the intelligent, intuitive, easy-to-use tool for managing the complexity of today’s building projects.
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