Change Order Manual For Project Managers 22708 PMsrev22708 Rev1

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CHANGE MANAGEMENT CHANGE ORDER GUIDELINES AND REQUIREMENTS FROM
FACILITIES AND CONSTRUCTION MANAGEMENT DIVISION- SCHOOL BOARD OF BROWARD
COUNTY ( SBBC )
Gu i d e t o
C h a n g e O r d e r s
V o l u m e
1
SCHOOL BOARD OF BROWARD
COUNTY- FACILITIES AND
CONSTRUCTION MANAGEMENT
DIVISION- CONTRACTS
DEPARTMENT
C h a n g e
M a n a g e m e n t -
C h a n g e O r d e r
G u i d e
SBBC- Facilities and Construction
Management Division- Contracts
Dept
1700 SW 14
th Court, Fort
Lauderdale, Fl 33312
Phone 754-321-1641, 754-321-
1682
Ta b l e o f
C o n t e n t s
Introdu c t i o n i
CHAPTER 1
Goals for Change Orders 1
Definitions 1
Change Order Guidelines 2
Change Order Do’s 2
Change Order Don’ts 3
Change Order Authority 3
Change Order Process 3
How To Save Time in the Future 4
Resubmittals 4
More Template Tips 4
CHAPTER 2
For Project Managers 1
Change Order Process 1
Required Documents 2
When to Refuse 2
Review by Inhouse Cost Estimators 3
Outside Cost Estimators 3
Board Approval 3
How To Save Time in the Future 4
Resubmittals 4
More Tips 4
CHAPTER 3
For Consultants 1
Consultant’s Responsibility 1
How to handle qualifications 2
Error and Omission Changes 2
Resubmittals 3
More Tips 3
CHAPTER 4
For Contractors 1
Contractor’s Responsibility 1
Required Documents 2
Submittal Timeframe 2
Tips for Contractors 3
How to handle subcontractors 3
Subcontractors Responsibility 3
Markups for subs and Gc’s 4
Resubmittals 4
More Tips 4
Index 5
CHANGE ORDER GUIDELINES
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C h a n g e O r d e r s , C C D ’ s a n d
C U D ’ s - a C h a n g e M a n a g e m e n t
t o o l .
A guide to processing Changes to the Contract for
Project Managers, Contractors and Consultants..
his guide has been created to help all stakeholders in the
C on s t ru c ti o n P r oc es s , n o m a tt e r w ha t k i n d of Co ns t ru c t io n d el i v er y
s y s te m y o u u s e , h o w t o h a n dl e C ha n g es in t he co n tr a ct . Ch a n ge is
inevitable. There will always be changes to the contract, no matter how
perfect a set of documents there is. The Owner may change his mind and
w a nt s o me t hi n g di f fer en t . Th e co n t ra ct o r m ay f i nd s o me t hi n g th a t wa s
h i d d en t h a t c o u ld n o t h a v e b ee n re a so n a bl y pl an n ed fo r. T h e c o n su l t an t
ma y make an er ro r in the plans or specifications that has to be overcome.
In any event, there is always a need to change something. So this manual
was created with the idea that if everyone speaks a common language with
how Changes are to be addressed, the easier and less time consuming it
w il l b e f o r e a ch pa r ty to th e c o nt r ac t t o d e a l w it h t ho s e c h an g e s.
G o a l s
Overall it should be the goal of the Facilit i e s an d C o n st r u ct i o n M a n agem en t
Division, i n clu d i n g C o n t r ac t s, D e sign an d al l t h e P r o ject M an a ger s t o r ed u c e t h e
number of Change orders, an d t h e q u a n t i t y o f c h a n g e o r d e r s , a n d t h e d o l lar am o u n t
fo r C h an ge O r d er s as a percentage of the Construction cost.
C h a p t e r
1
T
CHANGE ORDER GUIDELINES
2
D e f i n i t i o n s - C h a n g e O r d e r T e r m s
HERE, TO BE BRIEF, ALL CH A N GE MANAGEMENT ITEMS- INCLUSIVE OF CHANGE ORDERS, CONTINGENCY USE
DIRECTIVE’S (CUD’S) , CONSTRUCTION CH A N GE DIRECTIVES ( CCD’S), ETC WILL BE REFERRED TO AS CHANGE
ORD ERS .
D e f i n i t i o n s - C h a n g e O r d e r T e r m s
All The terms and definitions for Change Orders, Construction Change Directives (CCD’s) and
Contingency Use Directives (CUD’s) is defined in the Contract, under General Conditions
Section 00700, The agreement form (Document 00520).
Architect’s Supplemental Instructions (ASI): Architects Supplemental Instructions
and Project Consultants Supplemental Instructions are the same. These instructions are
written by the Project Consultant to make minor changes in the work, without a change
in the contract sum or contract time. These may arise out of an interpretation of the
Contract Documents.
Change Order: Change Orders are Changes to the Construction contract that occur
after award of the Contract, while being within the General scope of the contract. The
Changes may include Changes to project schedule duration, changes to the scope of
the contract, and changes may be additive or negative. The Changes may be
precipitated by the Project Consultants Supplemental Instructions, usually referred to
as ASI’s, Construction Change Directives and Change Orders Requests.
Change Order Summary: Change order summary is an Owners form that documents
the Change Orders that have occurred in the project from its start to completion. The
Change Order Summary is often used 1) for verification of Errors and Omissions (E and
O’s) Change Orders, (for the portion of E and O’s that exceed the norm for the area.),
for closing out the project with the contractor at Final Acceptance, and a tool to see
that Change Orders being processed are not duplicated.
Once School Board Approval has been obtained for any change to the contract
schedule or cost, a standardized form letter(specify the number of days from
Board approval date that it should be expected that this letter will be issued)
will be sent to the contractor and copied to the design consultant recognizing the
change and authorizing a change to either the Schedule of Values or the project
schedule or both.
CHANGE ORDER GUIDELINES
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Construction Change Directive ( CCD): A Construction Change Directive is
issued when the work is critical to the project schedule or would cause a hazard
for occupancy if not corrected. In the event of an immediate need ( safety,
building damage) or if the Consultant and Project Manager are unable to reach
agreement with the Contractor on the cost or the amount of time required, then
a Construction Change Directive (CCD) is issued so as to not delay the project.
The CCD is issued, sent to the Board for approval, and the Change Order for
these changes should be ready for approval at the next available Board meeting.
In the event that the Contractor is still unwilling to agree or sign the CCD, the
item is issued without his approval.
Contingency Use Directive (CUD): Utilized to adjust the schedule of values
in the GMP after Bidding and Award to reflect the awarded contract amounts or
an unforeseen condition change order when using Construction Management at
Risk Contracts. CUD’ s are not to be used for owner requests or consultant
errors. A credit change order to the owner savings line is required before such
funds can be used for owner requests or consultant error Change Orders. See
Article 6 of the CM/ TPM agreements.
A CUD is utilized after the above steps are taken and entitlement, cost and
project schedule changes are agreed upon.
The CUD should be returned to the Construction Manager when executed
by the Deputy Superintendent of Schools and Board Approval is obtained.
The CUD is particularly used for Unforeseen items and for financial adjustments
to the Contingency Line item in a CM at Risk or TPM contract. This CUD may not
be used for Owner requests, unless the Owner is requesting an adjustment to
the Owner savings line.
Once School Board Approval has been obtained for any change to the contract
schedule or cost, a standardized form letter (within ten (10) business days from
Board approval date that it should be expected that this letter will be issued)
will be sent to the contractor and copied to the design consultant recognizing the
change and authorizing a change to either the Schedule of Values or the Project
schedule or both.
CHANGE ORDER GUIDELINES
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Change Order Proposal Request: This is one of the first documents in the
preparation of a change order. The owner, the consultant or the contractor may
under certain conditions request a change in the contract. A proposal request is
issued to document that request and to identify the cost and time necessary to
accomplish that request.
Entitlement: Entitlement is the determination that a Change Order is
appropriate for the project and the contractor is entitled to being paid to make
the change. Entitlement to the Change Order is essential prior to beginning the
evaluation of the costs attributed to the change order.
Example 1: a contractor may submit a change order request for an item
that was on the plans and specifications, but the subcontractor didn’t provide
him a bid on that item. The Contractor fixes the scope of work of all the
subcontractors, so in that case it is up to the General Contractor to resolve who
performs the work, but from the Owners perspective, the work is included in the
project and it is then clear that the Contractor should provide the work at no
additional cost to the Owner.
Example 2: The Owner asks the architect to include in the project a monument
sign for the campus. The drawings did not include the monument sign. However
the owner feels that it will be a good move to provide this kind of signage and
information to the parents and also serve as an architectural feature. Because it
is in addition to the scope, the Contractor is entitled to being paid for the
change.
CHANGE ORDER GUIDELINES
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D o ’ s
Be simple in writing Description of Change and Reason for Change. Project
Managers will write both and give them to the Consultant to put into the
Change order form, SF 720. Always use the latest approved form.
Include a transmittal with the Change Order item as it goes thru the
process of getting approved. Contractors/Consultant’s should use the
transmittal form included in their contract. Project Managers should use
the “Project Managers Change Order Review Approval form.” Change
Orders submitted without the appropriate transmittal form will get
rejected.
Check spelling and grammar before submitting.
Check math before submitting the Change Order.
Roundup or round down to the nearest whole dollar. No cents will be
approved on Change Orders.
Submit enough backup to have the Change Order proposal evaluated and
approved hopefully on the first submission. When in doubt about whether
a piece of documentation should be added or not, add it. It can always be
taken away later.
Include % amounts by each item when they add Profit, overhead, and
bond amounts. Bonds are always 1%, no matter what a contractor pays
for bonds. Some subcontractors have been showing 2% or more for bonds
when it is not allowed.
Include enough time when processing a change order for approval to allow
enough time for Contracts Dept cost estimators and/or outside cost
estimators to review and approve Change Orders before they can be
processed for approval on the School Board agenda. Allow 3 days for
Contracts Dept Cost estimators. Allow one week or more for outside cost
estimators, and the three days for in-house Contracts Dept cost estimators
to approve Change orders that are over $100,000 or whenever conditions
are necessary to get the outside cost estimators involved in looking at
each change order.
Do allow markup in the Change Order that is consistent with the values
included in the contract. Contractor markup- on a Design-Bid- Build (DBB)
or any other construction type other than TPM or CM at Risk, The General
Contractor is entitled to 10% overhead, 5% profit and 1% bond.
Subcontractors are allowed 5% overhead, 10% profit, and 1% bond.
However, look at your contract, the contract will be the final word.
Use the forms supplied with the contract to submit Change Orders for
School Board approval. Only those forms must be used. General
CHANGE ORDER GUIDELINES
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Contractor, if so equipped, may propose to the Owner for approval, their
form which presents the same information on the Owners form, and is
compatible with the Owner’s information system and computer software.
The General Contractor must propose the form(s) in advance and receive
approval of the owner prior to the first submission of the required item.
Allow two weeks from submission to approval/denial.
Include backup anytime additional days is requested in the Change Order.
Backup should include last schedule approved at the regular monthly
requisition meeting and a revised schedule showing the critical path and
the impact of the days being requested. If this is not done, Project
Manager’s should reject the Change Order. Without that backup, additional
days won’t be approved.
CHANGE ORDER GUIDELINES
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D o n ’ t s
D on ’ t U se Ac r o ny m s. C h a ng e O r de r s w it h A c ro n ym s w i ll no t b e ac c e pt e d.
D o n’ t w ri t e t h e D e s cr i pt i o n o f C h a n ge a nd t h e R ea son for Change to be
i d en t i c al o n Ch a n ge Or d er f o rm , S F 7 20 , i n cl ud i ng th e Ch an g e O rd e r r eq u es t
form.
D o n’ t i n cl u de B ui l d er’ s Ri sk a n d G en er al l i a bi l it y In s u ra nc e on e ac h C h an g e
Order as a markup. These are adjusted at the end of the project by a final
C ha n ge Or de r.
Don’t submit proposals with only subcontractors only proposal form ( that’s
includes their qualifications etc,)
Don’t submit Change Order Proposals with qualifications by the General
C o nt r ac to r or su b co n tr a ct o r . T he y w i ll n o t b e a c c e p te d.
Don’t justify the reason for a change order with “ The Principal requested the
Change.” The Principal of the school is a customer. However they have no
authority to request or demand changes that are implemented on their say
so. P ro je ct M an a ger s sh o u ld di sc u s s P rin c i pa l ’s re qu e st s w i th t h ei r S e ni o r P M
and PM III prior to processing a change order for a Principal requested
c ha n ge . I f P M d o e sn ’ t r ev i e w w it h S e ni o r P M a nd /o r P M I I I p r io r t o su bm i tt i n g
t o C o nt r ac t s D ep t f o r r ev i ew an d a p pr o va l , i t w il l be re tu rn ed u n ap pr ov ed.
D o n’ t i n c l ud e C en t s on a Ch a n ge Or de r f i n al c os t.
Don’t hold on to a Change Order to group them for processing to the School
Board. Once it has been determined that a Change Order is needed, The
Contractor is entitled to be paid for the Change order in a reasonable period
of time. By holding a change order, you are holding up his money. By doing
that you set up an adversarial relationship, instead of a cooperative
relationship to get the school project completed timely.
CHANGE ORDER GUIDELINES
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Don’t submit Change Orders for approval where the backup is insufficient or
backup doesn’t support the prices that are in the Change Order. It has to be
c le a r t o a n yo n e l oo k in g a t, ev e n i f f or th e fi r st t i me .
Don’t let Contractors fool you. You may ask f o r b a ckup like i nvoices, job
tickets etc. Contractors ar e reluctant to give them up. They may say that they
d o n’ t h a v e an y , t he y d i d n’t cr ea t e a ny o r so m e ex c us e . You have a right to
see them. ‘The Public Company Accounting Reform and Investor Protection
Act of 2002,( also known as Sarbanes-Oxley Act of 2002,) was a US Federal
act created to protect public interest.” The Right to Audit clause which is in all
our contracts, al lo ws us to ac ce ss “a ll ” t he co nt ra ct or s fi le s at a n y t i me du r in g
t h e co n st ru c t i on p ro ject and for a certain duration after the project is closed
o ut , u s ua l ly fi v e y ea r s . Y ou r c o n tr a ct h a s t he fi n al wo r d.
Additionally, Contractors are required to take certain financial courses in order
to keep their Contractors license. If they don’t provid e yo u th e i n fo rm a ti on
they are required to, they have breached the contract and their ethical
responsibility as being a State of Florida Certified Contractor or subcontractor.
You can file a complaint with the Department of Professional Regulation, and
their license could get revoked.
CHANGE ORDER GUIDELINES
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C h a n g e O r d e r A u t h o r i t y
Authority for Changes
•The Manager’s Responsible- No matter what- Everyone looks to the Manager as
being responsible (perceived authority)
•School Board has all the Authority, which is why items are prepared for the
School Board’s approval. (School Board policy 7006)
There are in fact different levels of authority for the approval of Change Orders
that are in place to expedite a project. Currently the Board policy and our
contracts read that the Deputy Superintendent can approve up to 5% of the
total original construction contract amount. That means he could approve up 5%
as accumulative total, to expedite the work, while the CO’s would still have to go
to the Board for post approval.
Those that are in place are being revised to read:
Project Manager up to $10,000. and/or 10 consecutive calendar days
With co-approval of superintendents designee as listed for each of the
Following:
Senior Project Manager $50, 000 and/or 30 consecutive calendar days
Executive Director, Project management, $100, 000 or 60 consecutive
calendar days each.
Deputy Superintendent, FACMD, $200,000. and/or 90 consecutive
calendar days each.
The Change Order would still require School Board post approval on the first
available Board meeting date after the approval.
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C h a n g e O r d e r P r o c e s s
.
R o l e o f t h e C o n t r a c t s D e p a r t m e n t
The Contracts Department serves as a check and balance function or Oversight
and Accountability function in house before the Change Order is officially
approved by the School Board. Contracts Department :
1) Reviews the Change Order for entitlement. Entitlement must be
established first before looking at any of the rest of the Change order.
2) Reviews for conformance to the contract- using the proper forms,
providing the proper backup and information, seeing that the Consultant
has done proper due diligence in preparing the change order,
3) Checks the math to see that the amounts are proper. Checking the
amounts allowed for percentages in relation to what is allowed in the
contract- ie % for bonds allowance by General Contractor and
subcontractor.
4) Makes sure that the contractor has not added any qualifications or
stipulations in his proposal or on the change order form that directly
contradict the language in the CO form.
5) Checks to see that the Change order is reasonable, not excessive, and
when possible can be compared against a standard such as RS Means
Costworks to verify that the Dollar amounts quoted by the contractor are
proper and not usurious.
Process for Review by the Contracts Department:
1) Project Manager receives Change Order item from the Consultant and
Contractor.
2) Project Manager reviews the Change Order to determine entitlement and
that he/she is satisfied that the Change Order as presented is
appropriate cost, for the work involved. ( up to this point the Project
Manager should have been involved in knowing about the Change Order
item, what brought it about, monitoring the Contractor as to when he
was given the item to price out and following up to see that he priced out
in time.)
3) If Project Manager is not satisfied with the Change Order, he/she must
reject the Change order item, send it back to the contractor/consultant
identifying the reason(s) the change order is being rejected. The Project
Manager has a responsibility to review the Change as mentioned in
number 2 above and to reject for cause when appropriate. Project
Manager shall not arbitrarily process the Change order without review to
11
satisfy the consultant and/or contractor that he agrees with the item and
is processing it.
4) Project Manager will fill out “Project Managers Change Order Approval
form” to send to the Contracts Department.
1) The form acts as a transmittal for the Project Manager.
1) The PM acknowledges that he has reviewed the Change Order etc
and approves it.
2) Pm in short form explains why contractor or CM is entitled to the
Change order entitlement.
3) Certain other information is elicited to make sure that we have
some information that we need so that we don’t go back and forth
to collect it to process your item.
Project Manager should review the contract terms before sending a Change
Order to Contracts Department for approval. This means checking the markups
allowed by the contract for the General Contractor, TPM, or CM and the
subcontractor’s markup.
1. Contractor markup- On a Design-Bid- Build, or any other Construction project
type other than TPM or CM at Risk, At this writing, the Contractor is entitled to
10% overhead, 5% profit and 1% bond. Subs are entitled to 5% overhead, 10%
profit and may only allow for bond amount of no more than 1%.
Subcontractor’s who want to be paid more than the 1% allowed on bonds, only
remedy is to include the cost above the 1% limit in their proposal, but
specifically excluded from the bonds section. For example, a sub has a 2% bond.
The sub can only be paid the 1%. The other 1% has to be included in the
proposal included in other line items or just not included at all.
However, look at your contract, your contract will always be the final word.
The Project Manager or his assigned Secretary or Clerk Specialist III or IV, is to
place the Change Order item in the bin in Building 8 to be reviewed by
Contracts. ( If the item is sent by pony or sent in person, it may be delayed)
From the time it is entered into the Contracts Database, it takes three (3) days
to get reviewed and logged out. It may be impossible at times to get Change
Orders reviewed and out in 3 days. This is when a number of project managers
deliver quite a number of change orders to be processed when they are trying to
get on a specific Board agenda.
The Change order gets a brief look over when it is first looked at, after its been
logged in. The look over is to see if there are items that are so incomplete that it
warrants rejection and no further action. If the Change Order is to be rejected,
that’s when the Project Manager will receive from Contracts a form “ Return of
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CO, CDD, CUD to Project Manager.” That form will have checked off the items
that are inadequate or prompted the return.
R e s u b m i t t a l s
It is n o w Standard p ro ce du r e o f F ac i l it ies an d C on s t ru c ti o n M a n ag e me n t D iv is io n
(FACMD) of the School Board of Broward County Florida to allow the Contractor a
submittal of his Change order item and one resubmittal of the same item for
approval. Only one resubmittal is allowed for the contractor to make the revisions
ne cess ar y a s requ es te d by t he Fa ci li ti es a nd C o nstr uc ti on M an ag eme nt D iv is io n st aff
or their independent cost estimators reviewing the Change order item.
However, when a Project Manager gets into having two or more resubmittals of the
s a m e c h an g e o rd er i t em , t he F ac il it i e s an d C on s tr u ct i on Ma na g em en t D i vi s i on m ay
c h a rg e t h e co n su l t an t a n d t he co n tr a c to r f o r t he c os t o f r e v ie wi n g a nd a p p ro v in g the
resubmittal beginning with the second resubmittal and every one thereafter until
t h e C h an g e Order is approved. The charge will specifically be for the review and
approval of the Change Order item. It is not a penalty fee. If the Project requires
an outside cost estimator review the change orders or if the project is over
$100,000, then those change orders will be reviewed and approved by the outside
cost estimator to SBBC. Once approved by the outside cost estimator, it goes to the
School Board i n h ou se Cost estimator for approval.
In the case of the outside cost estimator, the cost for reviewing and approving the
Change order item is the cost charged to the School Board for review and approval
i n f ul l f o r e a ch re s ub mi t ta l .
In the case of review and approval by the School Board’s cost estimator in order to
get approval, it is simply a $100 processing fee. This cost does not reimburse the
School Board of Broward County for the full impact of the cost of the review by
S ch o ol B oa r d s ta f f p ri o r t o a p pr ov al .
T o p rov id e a n e xa m pl e: U Save Em C on s tr u ct i on ’ s c h a ng e or d er o n t h ei r pr oj e c t
was for $1,000,000. The change order was to provide items that seemed to be
omitted from the project construction drawings but were necessary to complete the
work. Contractor made obligatory first resubmittal. There was still missing
information- backup from subcontractor for labor hours performed. (T hi s is a pr oj ect
where excavation was done and job tickets ordinarily are kept for each load, etc. )
Howe ver, Subcontractor didn’t want to supply labor hours or said they didn’t have
any records of it. They were lost. (This is usually a tactic by the Contractor when
e co n o mi c t im e s a r e un c e rt a in t o g e t m o re mo n e y th a n h e i s legally entitled to.)
13
General contractor adds in to his proposal costs that are for his staff’s time on the
change order that arguably is a part of his overhead etc. He adds other costs that
l oo k l i ke he is pa d di n g h i s c os t s.
T h e Additional r e v ie w by th e o uts id e co st estimator costs up to $1,0 00. That cost for
t h e a d di t io n al re vi e w a mo u nt sh o ul d b e a s si g n ab l e t o th e Co n tr a ct o r.
The additional review by the School Board cost estimator is required to get school
b oa rd a p pro va l . Th at c h arg e i s $10 0.
R e c o ve r y f ro m Co nt r ac t o r i s de t e rm i ne d a s :
Outside Cost Estimator Review- Ac tu al C os t- $1,000.00
In House School Board Cost Estimator- $ 100.00
T o t a l: $ 1 ,1 0 0. 0 0
If the reason why the Change Order was resubmitted a second time, had to do
with consultant error, then the cost for the recovery would be charged against the
c o nt r ac t or an d t he co ns u l t an t eq u al ly . In t h is ex a m pl e , e ac h t h e C on t ra ct o r a nd t h e
c on s ul t an t w ou l d p a y th e t o ta l c o st a b o ve d iv id e d b y t wo o r $ 55 0 .
The cost for the resubmittals are to be deducted from the Contractors pay
application. The Contract allows for the PM to do this. General Conditions Section
00700, Article 10. Withholding Payment to the Contractor. It sa ys that the Project
M an a ge r m a y w it h ho l d p ay m e nt s t o t h e C o nt r ac to r f o r a ny o f th e f o ll o wi n g r e as o ns ,
but not limited to these:
10.01.05 Subject to Owners written notice to contractor in acc or da nc e
with the contract documents back charge items for work performed by owner or
a n ot h er c on t ra c t or a t t h e re qu es t o f ow n er , wh i ch w o rk is within the scope of the
w or k u n d er t h i s c on s truction contract.
1 0 .0 1 .0 9 D am a ge to th e o w ne r o r an o th er co n tr a c to r
10.01.12 Failure of the contractor to submit the information or documents required
by this contract or reasonably required by Owner, including but not limited to
s ch ed u le s an d d ail y lo gs.
Th e r es u bm i t t al s of t h e C h an g e O rd er s w h en t he y e x te n d i n t o th e se co n d
resubmittal and beyond are a damage to the owner. They are a damage to the
outside cost estimator who has to look at them again until he is paid for that
serv ic e. It i s a b ac kc harge item as in 10.01.05. It also encompasses 10.01.12
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because it is information that the contractor is required to submit to be able to get a
c h an ge o rd e r approved. By not doing so, it is a failure of Contractor to submit
information r e qu i red b y t he c on tr ac t.
W h en ev e r th e $Dollar a m o un t of t h e e x t ra re su b m it t a l s i s k n o wn , th e n a C ha n g e
Order is prepared to officially deduct that amount from the Contractor’s p a y
application.
Approval by the School Board:
The Change Order Approval Form- (Owners form to process on the School Board
agenda is filled out by the Project Manager, after the Contracts Department has
approved the item.) This form and the Change Order with all backup is sent to
Executive Director of Project Management or designee to approve to go on Board
agenda. This is sent to Building 1(Debbie Connelly and Susan Teich) to be
collated and processed on the next available agenda. The Project Manager may
check to see that a Change Order has been approved by using the links on the
in-house computer system, Capweb,.
Once School Board Approval has been obtained for any change to the contract
schedule or cost, a standardized form letter (will be prepared within ten working
days from Board approval date by the Senior Project Manager, Construction. )
will be sent to the contractor and copied to the Design Consultant recognizing
the change and authorizing a change to either the Schedule of Values or the
Project schedule or both.
.
15
M o r e T ip s
Change Management-Using Change Orders, CCD’s and CUD’s
Contracts Department- Facilities and Construction Management Division- SBBC
Introduction
Overview
Construction Change Order Section 01250 Contract Modification Procedures
•Read this section. Check to see it is in your contract. Know what to do
”
•It should be easier
•Must know how to do the process in order to better understand how to make it
easier.
•Oversight and Accountability Reviews have driven changes in
the way we do business and why it is the way it is! Best way
to stop having to do this is to do better at documenting the project and getting
what we paid for. In other words, do it right the first time.
Change Management
•Project Managers unwittingly take on the responsibility of the Contractor or
Consultant when they want to see an item resolved and do the
consultants/contractors work for them. Don’t do that. They let you do their job
16
for them because you let them dump on you. Hold your architects and
Contractors accountable. If they don’t do it right, don’t pay them as much.
•
•Best way to stop having to do this (Process Change Orders) is to do better at
documenting the project and getting what we paid for.
We have changed policy related to submittal of CO’s:
The Project Manager is always the one who should know the most about his
project .
Contracts dept only processes or reviews Change orders for Entitlement,
conformance to the contract etc. before they go to the Board for approval.
Entitlement is pretty much straight forward- actually the dollar costs should be
straight forward as well. But it isn’t always that way. Because the PM’s know
their projects, you are in a better position to know all the quirks surrounding the
approval of change orders in your job.
Why do change orders fail to get processed? The Unlucky 7 reasons are:
1. The item has been pushed through without looking
at it to check for mistakes etc. .
2. There is no entitlement or entitlement can’t be
established from the amount of Information provided.
3. Math is wrong.
4. The language that is used in writing the Change order doesn’t make it
easy to read or understand, defies proper Grammar. Spelling is wrong
too.
5. Wrong forms are being used.
6. Backup doesn’t match the Change Order in $$
7. All the parties haven’t signed the Change Order, or haven’t signed all of
them, one party has changed the language on the actual CO form that
is not appropriate to do.
We have added a new form: The form is to help speed the processing of Change
orders.
1) PM acknowledges that he has reviewed the Change Order, etc, and
approves it
2) PM in short form explains why contractor or CM is entitled to the change
order- entitlement.
3) Certain other information is elicited to make sure that we have some
information that we need so that we don’t go back and forth trying to
collect it to process your item.
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Contracts Department wants to speed up the processing of Change Orders, Our
goal is that by providing the tools to the Project Manager to facilitate approval of
or rejection of change orders on a timely basis, and by insisting that
Consultants and Contractors do their part, that the processing of Change Orders
will be expedited and not cumbersome. Once everyone is using the common
language and doing the forms and submittals the right way, we can simplify the
process even further. But it takes work on everyone’s part to do that.
Example: Items that have been submitted back in December 2006, and
resubmitted multiple times before it is finally was right to process; This took at
least 3 resubmittals or more.
All items will bear the 3 day rule: It will be processed within 3 days of coming
into our department: Processed means:
1) It will be returned to you immediately due to insufficient information.
There is not enough information to connect the dots.
2) A request has gone out to you for information to expedite, we waited two
days-
No info was received, so it is rejected for insufficient information.
3) Entitlement cannot be proven based upon what was submitted.
4) Contractor have added Qualifiers that they are not permitted to do.(this
can easily be remedied by the PM removing the sheets containing the
Contractor qualifications when PM processed the CO.
5) There are math errors or problems in the Change Orders that are being
returned corrected. It is up to Debbie Connelly and Jack Cooper to
determine if the item has to be sent back to the Architect and Contractor
( CM) to be fixed, and resubmitted.
There may be some times when the 3 day rule is impossible to meet- That is
when the number of change orders being submitted at any one time
prevents our doing so.
We can move a large number of Change Orders through providing we have
the resources, computer programs etc. Some change orders can take
several days to review based on the fact that information has to be verified,
phone calls made to architect, PM, CM. Or whoever to piece together the info
that would permit approval. One project manager submitted a proposal in
which the response took several days of work- so when it was scheduled
along with the others being processed through the office, it would look like it
took over a week.
Often times, an email is sent out saying that the deadline is a certain date
and the last date to submit Change Order is Junely (this is a fictitious
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month- but represents a contraction of June and July) X to get on the Board
agenda. What Front Office may not always take into account is the number
of Change Orders and the dollar amount for each one. Most of the time, The
Project Manager should assume that if you are in a hurry, you can be
assured that even if you to try to get it in for review, it is going to be the
next Board meeting after the one that you wanted it to go on, Unless you
have the specific Direction from Mr. Garretson or Rick Ragland.
The processing of the Change Order involves the following activities, after it
has been logged in by Andrea for tracking:
1) Review of Entitlement-
2) Check the Change Order form for math, signatures, consistency,
backup- This is the connecting of the dots. This is where the Contracts
Department checks to see that everything is put together to tell the
story concisely that is needed to get the item approved by the School
Board.
3) logging in to other Change Order databases that allows us to track the
time it takes to process, the reasons for return of CO item, etc.
4)
Resubmittals: We get resubmittals of the same item- multiple times. For
example recently- The Consultant was told to redo the Reason for Change. The
reason for change was redone on one page only. There are 4 copies of the same
submittal being sent for approval. Consultant should submit and revise all
copies.
Resubmittals come without a transmittal or acknowledgement of what is
transpiring. PM.s, contractors and consultants think it is sufficient to resubmit
without a cover memo that says what they have done. It is not appropriate.
These will be sent back. It doesn’t take much to write a quick memo as to what
was revised or done. If the resubmittal of the Change Order does not come with
a transmittal that explains what has taken place and been revised to suit the
rejection memo, This is what will happen:
1) The item will be returned.
2) If Contracts Dept elects to review it, it may be treated as a new review
or seem to be reviewed that way. That may mean if there are other
errors in the resubmittal that were not picked up the first time, they
may be the second time and returned for correction. ( This is not being
done to penalize the Contractor, or the PM. This is being done to
facilitate correction of the item and getting it to you as quickly as
possible.
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No t e
A
Approval 1 , 1
Approval form 1 , 1
Index 1, 1
Index 2, 2
Index 3, 3
Index 1, 1
Index 1, 1
B
Index 1, 1
Index 1, 1
Index 1, 1
Index 2, 2
C
Index 1, 1
Index 1, 1
Cost Estimator 1 , 1
Index 2, 2
Index 1, 1
Index 1, 1
Index 1, 1
D
Index 1, 1
Index 1, 1
Index 1, 1
Index 1, 1
E
Estimates 1, 1
Index 1, 1
Index 1, 1
Index 2, 2
Index 1, 1
Index 1, 1
Index 1, 1
G
Index 1, 1
Index 1 , 1
Index 1, 1
Index 1, 1
Index 1, 1
Index 1, 1
H
Index 1, 1
Index 1, 1
Index 1, 1
Index 1, 1
Index 2, 2
Index 1, 1
Index 1, 1
Index 1, 1
Index 1, 1
Index 1, 1
Index 1, 1
K
Index 1, 1
L
Index 1, 1
Index 2, 2
Index 1, 1
Index 1, 1
Index 2, 2
Index 1, 1
Ind e x 1, 1
Index 1, 1
Index 1, 1
Index 1, 1
M
Index 1, 1
Index 1, 1
Index 1, 1
Index 2, 2
N
Index 1, 1
Index 1, 1
Index 1, 1
Index 2, 2
Index 1, 1
Index 1, 1
Index 1, 1
R
Resubmittals of
Change
Orders 1 , 1
Index 1, 1
S
Index 1, 1
Index 1, 1
Index 1, 1
Index 2 , 2
Index 1, 1
Index 1, 1
Index 1, 1
T
Index 1, 1
Index 1, 1
Index 1, 1
Index 1, 1
Index 2, 2
W
Index 1, 1
Index 1, 1
Index 1, 1
Index 2, 2
Index 1, 1
Index 1, 1
Index 1, 1
20
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Suppl e ment 1
T hi s i s sup pl em en ta l inf or mati on p ro vi de d in disc us si on s an d m ee tings wit h Ja ck
Co op er . T he t ext as s ho wn i s wha t Ja ck C oo pe r wr ot e up i nclu di ng h is
co mm en ts o n wh at wa s n ee de d fo r th e ite ms t hat we re n’t r eso lved o r writ te n
ab ou t. I t i s i nc lu de d h ere to act as a gui de to ide ntif y in fo rm at io n th at is n ot i n t h e
ma te ri al h er e, a nd wh at n eed s t o be ad de d h ere to m ake it wo rk .
CHANGE ORDERS:
C h an g e Ord e r s a r e c h an g es t o t h e or ig i n al ( C on t ra c t do cu me n ts a f te r
a wa rd of p ro je ct )(deleted-scope of work )1o r p ro j ec t s c h ed ul e du r at i on
a n d bo th m ay be e ith er a dd i t iv e o r n eg a ti v e. C h an g es to t h e st a nd a rd
construction contract are defined by Article 33 of the contract General
Conditions, Section 00700. The purpose of this procedure is to
provide an overview of the sequence of the review and approval or
denial proc es s an d ob t ai ni n g s c ho ol b oar d ap p rov al . Ch an ge Or de rs
(CO) to the contract should be evaluated timely (within X days) Based
on adding up all the durations of time that the item is in each parties
hands- and if entitlement is determined then the item sho ul d be on th e
ne xt a vai la bl e Bo ar d ag enda .
The first level of evaluation is entitlement of the change. This
e v al u a ti o n s h ou l d be a j oi n t ef f ort w i th t h e d es i g n c o ns u l ta nt a n d
SBBC project manager to be confident that the requested change is
b ey on d t h e original scope of work within the contract
(Documents)2. Entitlement is based upon review of the contract
d o cu m en t s w i t h t h e co n di t i on s p r op os e d i n th e c h a ng e . I f t he i te m
is clearly absent from the documents or conditions have changed
s i n ce t he bi d , t he n the contractor is entitled to additional contract
s u m s a nd / o r t im e .
In the event a change order becomes necessary please direct the
consultant to obtain a cost proposal from the contractor (Document
01250b).The Contractor should process a Change Order item to the
c o ns u l ta n t in no m or e t ha n 10 C al e nd a r da y s. T hi s p rop o sa l sh o ul d
1
By Rick Ragland made Changes, done by Drew Lippman, 2/4/08
2
By Rick Ragland made changes, done by Drew Lippman 2/4/08
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then be reviewed/evaluated by the consultant for completeness and
cost efficiency within X days.(within 5 calendar days or 3 business
days) If the CO is recommended,(PM writes des cr i pt i on of C ha n g e
a n d R ea so n f o r C ha n g e) 3 t h e d es i gn co n su l t an t sh ou l d p re pa r e th e
District’s Change Order Item form (SF720), sign, obtain the
contractor’s signature and submit the form to the SBBC project
manager for processing. (I do not agree to signat u r es u n t il a ll ha v e
a p p ro ve d , i nc l u di n g t h e c o s t es t i ma tor ) T h e P ro je c t M an a ge r
should, in order to keep the processing time down to a minimum,
sign the Change Order, before they process to cost estimator. If
they don’t agree with the Change Order and don’t want to sign,
t h ey s ho ul dn ’t be s end in g th e Ch an g e Ord er t o be p roc e ss ed .
If t he De s i gn c on su l t a nt re co m me n ds t h e Ch a ng e Order b y
s u b mi t ti n g t h e SF 7 2 0 fo rm si g n ed i t sh o ul d be co st / s ch ed u le
evaluated by the project manager within X days,(project mana q er
should have 5 calendar days or 3 business days to review and
approve) then SBBC Contracts staff (SBBC Contracts staff should
have 5 calendar or 3 business days) and/or an independent cost
consultants within X days as determined by the cost of the chan ge.
( O u ts i d e c on s u lt an t s d e pe n di n g u po n the level of Change orders
t h a t t h ey a r e re v ie w i n g s h ou l d h av e n o m or e t h a n 5 ca l en d a r d ay s
f o r a ny Ch a ng e O r d e r under $100,000, those above $100,000 will
take more time.) (Consider thresholds, ie, PM can sign up to
$XXXX, PM III $X XXX, Senior PM $XXXX, etc….as per the proposed
Policy 7006 changes) ( PM can process up to $2500, PM III-$7500
Senior PM- $15,000 Deputy Superintendent up to 5% or $50,000
on every project under $1million, and 3.5% on anything above $1
million to 10,000,000.
Upon receipt of the executed CO form, place the item on the next
available agenda. The agenda request f orm will require additional
p r oj ec t i n f or ma t i on i n c lu d in g t h e c h a ng e o rd e r c o di n g i n f orm a t i on .
C ha n ge ord e rs a re co de d by “ Owner request, Unforeseen Condition
a n d Co ns u l ta nt E rr or / O mi s si o n” . ( W h o m a k es t hi s de t er mi na t i on ?)
PM should make the initial determination- as they are closest to the
project. If there are errors in the coding, those people above the
project manager in rank are able to change the coding as they
de e m nec e ssar y b as ed u po n the c ir cu ms ta nc es . ( C on s ul t a nt sh o ul d
3
By Rick Ragland made changes, done by Drew Lippman 2/4/08
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m a k e t he i n i t i al d e t erm i n at i o n, an d i ncl u de t h e S R P M a nd t he P M
I II to ma k e t he de t e rm i na t io n i f i t i s n o t c le a r .) 4
This coding is extremely important for later use in possible recovery
o f p a rt of t he ch a ng e c o st an d i n ev a l ua t i ng th e d es i gn c on su l t a nt
p e rf or m an c e i n e x e cu t i on o f t he p ro j ec t . T h e c on t ra c t or s h ou l d
perform no work on this item until Board approval of it has been
o bt a in ed .
If the work is critical to the project schedule or would cause a
h a za rd f o r o c c up a n cy (and has just been discovered, not talked
a b ou t fo r we e ks o r m o nt h s ) 5t h en a C on s t ru c t io n C h an g e Di r ec t iv e
(CCD) should be issued. In the event of an immediate need (safety,
building damage, unable to reach agreement with the contractor on
cost or contractor delay claim) of a change to the project a
C on s t ru c ti o n C h a ng e D ir ec t i ve ( CC D ) m a y b e i s su ed t o t h e
con tr ac to r wh ic h f ol lo w s t he st ep s li st ed ab ov e except
i s B o a r d
a p pro ve d s u bs eq u en t l y. A l l C CD m u st h av e t h e (SR PM’s Const)
(deleted-Executive Director’s???)6 an d D e pu t y S u p er in t en d en t ’ s
approval before issuance. You must submit the CCD for Board
a p pro va l f or t he next available Board meeting. ( Th e C ha n g e Or de r
and CCD should be pre pa re d a nd pr oc es s ed s i mu lt a ne ou sl y so t h at
the Change Order is sent to the board for approval on the Board
ag enda imm edia tel y f ollo wing th e C CD appr oval. I t m ay n ot alw ays
be possible to get the CO on the next board meeting for approval if
t he co s t o r s o me o the r b acku p is mis si ng .
A Change Order Summary will be compiled for you from the change
o rd er do cu me nt s ap pr ov ed by t he Bo ar d; (u s ing P ro lo g) th is wi ll be
utilized at project Final Acceptance. All CO are coded as
“ C on su l t a nt E rr or” , “ Ow ne r Re q ue st ” o r “ U n fo re se e n C o n di t i on ” , t h e
P M s h ou l d m a k e t h is ev a l ua t i on a ft e r d i sc u s si n g t he c ha n ge w i t h
the design consultant. (If you have already stated further up who
4
By Rick Ragland made changes, Done by Drew Lippman, 2/4/08
5
By Rick Ragland made Changes, done by Drew Lippman, 2/4/08
6
By Rick Ragland made changes, done by Drew Lippman, 2/4/08
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is supposed to make the first evaluation of CE, OR and UC, then it
doesn’t need to be stated here.
Need to include the following issues:
1. No qualifying commentary by the contractor should be
accepted, ie, reserving future rights, exclusions, etc.
2. Time extensions, time impact analyses, review criteria,
etc.
3. Project close-out – settling liquidated damages, E&Os,
etc.
4. Dispute Resolution – What to do when the parties
disagree
5. Documents required in the CO, ie, a checklist
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THE SCHOOL BOARD OF BROWARD COUNTY,
FLORIDA
Contracts and Compliance Department
F A C I L I T Y :
P R O J E C T : P r o j e c t N o _ _ _ _ _ _ _ _ _ _ _ _ _
C O N S U LTA N T: D a t e : _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
R E T U R N O F C H A N G E O R D E R , C C D , C U D t o P R O J E C T M A N A G E R
D e f i c i e n c i e s a r e a s f o l l o w s o r c h e c k e d b e l o w :
The Contracts Department has reviewed the Change Order or Changes submitted
And found that there were deficiencies in the submittal for approval. The Change
Order has been reviewed and the problems found are checked below. These should
be corrected and resubmitted.
Description of Change and Reason for Change are insufficient
Contractor or sub including qualifications not acceptable to SBBC.
Consultant or Contractor modified the form or language in the form.
There is no entitlement proven.- no reason to pay for this Change.
Changes may not be requested by the Principal or other staff.
Backup information is insufficient
Transmittal from Project Manager is missing
All Change Orders must be signed by all three parties.7
(___________________________________)other (___________________________________)Other
(___________________________________)
Other (___________________________________)
Other (___________________________________)
7 If the Project Manager does not sign the Change Order, the Project Manager must have
reason for not signing the Change Order when submitting to the Contracts Department. In
any event, the Project Manager must sign the Change Order before it is approved by the
Senior Project Manager, Construction, and placed on the School Board agenda. In either case,
if the project manager doesn’t sign, the item will be returned rejected. The Purpose is to
move the Project along, and reduce the possibilities for creating errors.
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Form needed
Document 01250a,
Proposal Request,
___________
01250b- Change
Order request,
Document 01250C,
Worksheet Detail,
Document 01250D.
Proposal worksheet
Summary 01250d-
for subcontractors
and contractors,
____________
Change Order sent to Contracts Dept for review
( This acts as transmittal) (PM fills out)
Project Managers
Change Order
Review Approval
Form
Contracts department reviewed/approved the Change Order, and
shows in the bottom left hand corner the $ amount approved.
1
Project Managers
Change Order
Review Approval
Form
Return of Change
Order, CCD, CUD to
Project Manager
form
Change Order
approval memo

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