If you perceive that changes are a problem in construction, then you are likely framing them as a point of blaming others. This framing will impact your ability to effectively manage changes.
Construction is a cash-intensive business and change orders are often one of the root causes of poor cash flow. A 30-day improvement to change management workflow can generate over $400K in additional cash flow for a $50M contractor.
A 10% improvement in change order pricing for a $50M per year contractor will add $500K to their bottom line. This is not about simply marking up the change more, but rather, including the many costs that are typically missed or undervalued.
Changes are a part of the construction process with many underlying causes. While we have all heard the average of 10% changes on construction projects, it is interesting to look at an industry study for validation.
The first step for contractors improving their management of changes on a project is simply earlier identification. This starts with a better definition of what a change really is, and then setting standards within your company around that definition.
Fighting back effectively against labor productivity impacts will significantly improve project outcomes including customer satisfaction if handled properly. There are four interrelated aspects to effectively fighting back.
Each craftsperson needs about 200 usable square feet for a productive installation. This assumption is included in production units used to estimate and budget projects. Having less than that can impact productivity up to 50%.
The biggest risk for a specialty contractor is the performance of on-site labor. One of the biggest impacts to labor productivity is having a schedule that requires large variations in labor.
Dilution of management will compound an already impacted construction project. It is important for teams to realize the full costs of impacts as they start to occur.