Construction Information Management: Proactive Tips to Increase Your Success Rate of Claims, a 5-Part Series – Part 3
Part 3: “Extra, Extra, …!” – Dealing with Extra and Changed Work
Despite the best efforts of design professionals to establish a well-defined scope of work at the beginning of a project, there is no escaping the fact that extra work and changes inevitably occur. How they are dealt with during the course of the work can have a major impact on cost and schedule. Here are a few keys that can help expedite the processing of extras and changes and mitigate the development of prolonged disputes that can lead to substantial claims and schedule impacts.
1) Read the Contract. This can’t be said often enough
There are provisions for dealing with extras and changes, including those issues discovered by the contractor that are not identified via a change directive or change notice. If a contractor believes any work to be extra to its scope it has an obligation to notify the other party in writing with the pertinent details, usually within a specified time period. Pay particular attention to the timing requirements in the contract and if all details are not immediately available to submit a quote for the additional cost, give prompt written notice to the other party to reserve the right to claim while the issue is being investigated.
2) Produce Proper Documentation
Contractors need to be provided with enough detailed information on an extra or change request in order to estimate the level of effort and resources required, as well as to obtain quotes from subcontractors and suppliers. Any ambiguities or missing information can result in a prolonged resolution process and delay the implementation of the change or extra work, which can in turn impact the construction schedule. For their part, contractors and subcontractors need to provide the consultants/owner with any requests for further information or notices of schedule implications along with well-substantiated quotations in sufficient time so that the consultants and owner can act upon receipt of that information. Check the contract for any timing obligations with respect to submissions and responses.
3) Set up a Tracking Mechanism
Losing track of the status of extras/changes can happen. If you’re not using some type of project management software, keep a spreadsheet that captures the following:
- originating document date and number (i.e., change notice, change directive, request for information, drawing number & revision, etc.),
- quotation number and amount,
- date quotation submitted,
- date response requested,
- potential schedule impact,
- date response received and nature of response (approved, revise & resubmit, rejected, etc.),
- and present-day status.
Update your tracking record weekly and bring the list to meetings to inquire about any outstanding information or approvals. Also, be sure to follow-up with any required written notices of delay or claims within the time periods specified in the contract.
4) Address Schedule Implications and Prioritize Accordingly
Contractors should include on their quotations any anticipated impacts to the schedule including long lead delivery items, and identify when authorization to proceed is required in order to mitigate delays. Create a priority list of those outstanding extras/changes that are impacting or will imminently impact the schedule, and if necessary follow up with a notice of delay in accordance with the timing requirements of the contract. Be sure to include the extended time and extended duration cost on the final change order, or reserve the right to claim for those costs if the impact is not yet calculable. This can become important to support a future claim should scope issues remain unresolved or end up having an unforeseen impact on the schedule.
5) Expedite Payment of Extras and Changes
Owners and general contractors should establish adequate contingency funds for extras and changes before construction commences in order to ensure that the contractor or subcontractor can be kept in a positive cash flow situation. Keeping a contractor and subcontractor financially fluid by expediting approval and payment incentivizes them, and relieves them of the burden of financing these additional costs.
All parties to a construction contract understand that extras and changes will happen; the key is for everyone to do their part to process them efficiently in order to avoid impacting the work progress and prolonging disputes, both of which that can lead to expensive and contentious claims at the end of a project.
This blog was authored by ICCP Fellow, Adele Wojtowicz, Construction Claims & Risk Management Consultant, ProEdge Construction Services Inc.
Related articles written in this series on Proactive Tips To Increase Your Success Rate of Claims can be found here:
- Part 1: Dear Diary…
- Part 2: Consistency is Key – The Value of a Work Breakdown Structure
- Part 4: “…Read All About It!” – Get Your Issues Minuted
- Part 5: Submittals and Responses: Prioritize, Track and Notify