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"2 I ’ .Mh LIBRARY ; Michigan State University This is to certify that the thesis entitled A FRAMEWORK FOR REDUCING CHANGE ORDER PROCESSING TIME IN UNIVERSITY CONSTRUCTION PROJECTS presented by POOJA MECHAN DA has been accepted towards fulfillment of the requirements for the MS. degree in Construction Management i VIII/Wow ‘Major P ofessor’s Signature Q § /4w§ I I Date MSU is an Affirmative Action/Equal Opportunity Institution PLACE IN RETURN Box to remove this checkout from your record. To AVOID FINES return on or before date due. MAY BE RECALLED with earlier due date if requested. DATE DUE DATE DUE DATE ours um i 5 3““ a b 1 '0 T . A FRAMEWORK FOR REDUCING CHANGE ORDER PROCESSING TIME IN UNIVERSITY CONSTRUCTION PROJECTS By Pooja Mechanda A THESIS Submitted to Michigan State University In partial fulfillment of the requirements For the degree of MASTER OF SCIENCE CONSTRUCTION MAN AGEIWENT PROGRAM SCHOOL OF PLANNING, DESIGN AND CONSTRUCTION 2005 ABSTRACT A FRAMEWORK FOR REDUCING CHANGE ORDER PROCESSING TIME IN UNIVERSITY CONSTRUCTION PROJECTS By Pooja Mechanda The process of administering change orders is an integral part of construction project management. This process is time consuming and, if not organized or streamlined, may result in delays. This thesis offers a framework that could be used by universities to reduce change order processing time; it briefly describes types of change orders, presents change order management practices and process mapping techniques. The researcher mapped and analyzed the change order process of a case study university, identified areas of improvement, and suggested strategies for reducing change order processing time. Information on 159 change orders with approximately 1675 change order items from 19 past construction contracts were organized in a database and statistically analyzed. In addition, interviews were conducted with construction professionals: architects, engineers, contractors, subcontractors and university administrators. Some of the areas for improvement the researcher identified were: reducing levels of approvals for simple change orders, reducing approval time, and reducing the number of items packaged into a single change order. After describing a generic framework, which universities could use to reduce processing time for change orders, a broad set of recommendations are presented. Dedicated to my mother, who stood by me and had faith in me, who made the long journey to the United States possible, who made every dream achievable, to my father for being an inspiration, and to my brother for being my strong support and confidante. To HIM who gives life and enough courage to live it, and all the colors in it so we may enjoy it in all its brilliance. iii ACKNOWLEDGMENTS The author would like to thank her graduate advisor, Professor Timothy Mrozowski for his valuable guidance through the research and the program. The author would also like to thank Dr. Matt Syal and Mr. J ack Mumma for their time and input as committee members. The author would particularly like to thank Dr. Abdelhamid and Dr. Von Bernuth for their valuable guidance, and advice on several aspects of this research. The author also acknowledges all the guidance and knowledge imparted by the faculty members and the support provided by the staff of the Construction Management Program. The author also thanks all her fiiends and colleagues at Michigan State University for all the support and wonderful time spent together that made life away from home so comfortable. Finally the author thanks her parents and brother for all their love and support, always showered so generously. iv LIST OF FIGURES ....................................................................... xi LIST OF TABLES ........................................................................ xiii ABBREVIATIONS ...................................................................... xiv CHAPTER 1 INTRODUCTION 1.1 Introduction ..................................................................... 02 1.2 Need for this research ......................................................... 04 1.3 Research goal and objectives ................................................. 06 1.4 Comparable studies ............................................................ 07 1.5 Case study: Change order process at Michigan State University .......... 10 1.6 Methodology .................................................................... 11 1.7 Deliverables .................................................................... 13 1.8 Research scope ................................................................. l4 . 1.9 Limitations of the research ................................................... 14 1.10 Chapter summary and thesis organization .................................. 16 CHAPTER 2 LITERATURE REVIEW 2.1 Introduction ..................................................................... 18 2.2 Existing literature on change orders ........................................ 18 2.2.1 Understanding bilateral and unilateral change orders 19 2.2.2 Types of changes ...................................................... 19 2.2.3 Project delivery methods and change orders ....................... 21 2.2.4 Impact of change on productivity ................................... 22 2.2.5 Cost impact determination of change orders ...................... 25 2.2.6 Markup, and cost estimating of change orders ..................... 25 2.3 Literature on change order management ..................................... 27 2.3.1 Nine keys for effective management of change orders .......... 27 2.3.2 Timeliness of change orders ......................................... 28 2.3.3 Standardizing procedures ............................................ 28 2.3.4 Documenting oral discussions .................................... 29 2.3.5 Pricing of change orders .............................................. 30 2.3.6 Three-cost pricing of change orders ................................ 30 2.4 Process improvement techniques ............................................. 31 2.4.1 Analysis of process ................................................... 31 2.4.2 Process mapping ...................................................... 32 2.4.3 Types of flowcharts ................................................... 33 2.4.4 Graham flowcharting technique .................................... 34 2.5 TABLE OF CONTENTS Chapter summary .............................................................. 36 CHAPTER 3 METHODOLOGY 3.1 Introduction ..................................................................... 38 3.2 Methodology ......... 38 3.3 Literature review ............................................................... 41 3.4 Case study organization: Michigan State University ..................... 41 3.5 Database ........................................................................ 42 3.6 Statistical analysis of database ............................................... 45 3.7 Interview and feedback ....................................................... 48 3.8 Current process map ................................. 49 3.9 Restructuring the current Engineering and Architectural. Services process map to develop an alternate process map .......................... 53 3.10 Development of an alternate process map .................................. 54 3.11 Validation of the alternate process map ......................... . ............ 54 3.12 Development of generic framework .......................................... 54 3.12 Chapter summary ............................................................... 54 CHAPTER 4 DATA HANDLING AND RESULTS 4.1 Introduction ..................................................................... 56 4.2 Description of database ........................................................ 56 4.2.1 Sub—processes ........................................................ 59 4.3 Explanation of calculations through an example .......................... 60 4.4 Data handling and reporting ................................................. 64 4.5 Overview of statistical analysis ............................................. 64 4.5.1 Overall average time taken to process change orders ........... 64 ’ 4.5.2 Summary of projects and time taken to process their change orders .................................................................. 66 4.5.3 Summary of nineteen projects ....................... . .............. 72 4.6 Statistical analysis ............................................................. 73 4.6.1 Relationship between initiation period and total time taken to process change orders ............................................... 73 4.6.2 Relationship between time taken by Michigan State University and total time taken to process change orders (D1) ............. 74 4.6.3 Relationship between number of items in a change order and total time taken to process change orders (D1) .................. 75 4.6.4 Analysis of change order cost ..................................... 79 4.7 Conclusion of statistical analyses ........................................... 80 4.8 Chapter summary .............................................................. 82 CHAPTER 5 PROCESS MAPS 5.1 Introduction ..................................................................... 84 5.2 Interview data handling ........................................................ 84 5.2.1 Overview of interview data .......................................... 86 5.3 Summary of interviews ......................................................... 90 5.4 Process map ..................................................................... 91 5.4.1 Housing and Food Services ....................................... ,. 93 5.4.2 Campus Park and Planning .......................................... 94 5.4.3 Engineering and Architectural Services current process map... 97 5.5 Summary of Engineering and Architectural Services process map analysis. ............................................................................................... 105 5.6 Alternative process map ............................................... - ........ 107 5.7 Summary of process map analyses and observations. . . . . .- ................ 115 5.8 Recommendations to reduce change order processing time for Michigan State University .................................................... 115 5.8 Verification interviews ......................................................... 117 5.10 Chapter summary ............................................................... 120 CHAPTER 6 SUMMARY AND CONCLUSION 6.1 Introduction ..................................................................... 122 6.2 Research objectives ............................................................. 122 6.3 Framework for streamlining change order processes ...................... 123 6.4 Recommendations for reducing change order processing time for Michigan State University and other similar universities... . . . . . .. 129 6.5 Contributions of this research .................................................. 132 6.6 Limitations of this research ..................................................... 133 6.7 Areas of future research ........................................................ 134 6.8 Benefits of streamlining change order processes ............................ 134 6.9 Cautions to consider in process improvement studies ..................... 135 6.10 Research conclusion ............................................................ 136 6.11 Chapter summary .................................................................. 137 BIBLIOGRAPHY ........................................................................ 138 APPENDD( A ............................................................................. 141 Details of sample APPENDIX B ............................................................................. 144 Interview responses fi'om contractors APPENDD( C ............................................................................. 155 Interview responses from subcontractors APPENDDK D ............................................................................. 163 Interview responses from architects APPENDD( E .............................................................................. 174 Interview responses from university administrators APPENDD( F .............................................................................. 188 Types of changes APPENDIX G ............................................................................... 193 Sub process charts ' LIST OF FIGURES CHAPTER 1 INTRODUCTION 1.1 Domain and focus area of research ............................................... 14 CHAPTER 2 LITERATURE REVIEW 2.1 Symbols used in the Graham flowcharting technique ......................... 35 CHAPTER 3 METHODOLOGY 3.1 Methodology of this research .................................................... 40 3.2 Hierarchy of forms ................................................................. 43 3.3 Fields available in the three forms in the database ............................. 43 3.4 Formal process of change order mapped using Graham technique .......... 5 3 CHAPTER 4 DATABASE ANALYSIS ' 4.1 Excerpt of information from database project 3981 (Michigan State University Cyclotron project .................. 57 4.2 Sub-processes and sequence of significant dates ............................... 5 8 4.3 Calculations from datum point (item initiation date) ........................... 63 4.4 Bar-chart showing total time taken to process change orders in project 3981 (D1) ................................................................... 69 4.5 Stacked bar-chart showing contribution of sub-process time to overall processing time of change orders (D1):project 3981 ........................... 70 4.6 Percentage contributions of sub-processes to total processing time of change orders........., .............................................................. 72 4.7 Scatter plot of D1 versus time taken to initiate change orders ............... 74 4.8 Box plots of D1 and number of items in a change order ...................... 76 4.9 Scatter plot of D1 and number of items in a change order .................... 77 4.10 Average number of change items per project ................................... 78 4.11 Change items and their dollar values ............................................. 79 4.12 Pie-chart of 1372 change items in dollar amount ranges ...................... 80 CHAPTER 5 PROCESS MAPS 5.1 Excerpt of interview data of contractors ......................................... 85 5.2 Current change order process in Housing and Food Services ................. 93 5.3 Current change order process in Campus Park and Planning ................. 96 * 5.4 Current change order process in Engineering and Architectural Services... 100 5.5 Analysis of Engineering and Architectural Services process using Graham mapping technique ....................................................... 104 5.6 Alternate change order process map: Engineering and Architectural Services ............................................................. 111 CHAPTER 6 SUMMARY AND CONCLUSION 6.1 Framework to reduce change order processing time in university construction projects ............................................................... 125 ix LIST OF TABLES CHAPTER 1 INTRODUCTION 1.1 Approximate annual construction spending of universities ................... 03 CHAPTER 2 LITERATURE REVIEW 2.1 Bilateral and unilateral changes. ., ................................................. 19 CHAPTER 3 METHODOLOGY 3.1 Box plot calculations for 20-80 percentiles ...................................... 46 32 Upper and lower fence of data set ................................................ 47 3.3 BOLO list by Smith .................... ' ............................................ 52 CHAPTER 4 DATA HANDLING 4.1 Average time and time taken by each sub-process to process change orders ........................................................................ 65 4.2 Total time and time taken by each sub-process to process . change orders ........................................................................ 65 4.3 Summary of change order information for project 3981 : Michigan State University Cyclotron Project ................................... 67 4.4 Table summarizing 19 projects ................................................... 71 ABBREVIATIONS A/E AIA AN OVA ANSI ASCII ASME CGA CII CIID COAA COID CPP CSI EAS EJ CDC HF 8 K-12 MSU RFI US Architect/ Engineer American Institute of Architects Analysis of Variance American National Standards Institute American Standard Code for Information Interchange American Society of Mechanical Engineers Contract and Grant Administration (www.cga.msu.edu) Construction Industry Institute Change Item Identification Number Construction Owners Association of America Change Order Identification Number Campus Park and Planning (www.cpp.msu.edu) Construction Specifications Institute Engineering and Architectural Services (www.cas.msu.edu) Engineers Joint Contract Documents Committee Housing and Food Services (www.hfs.msu.edu) Grades Kindergarten Through Twelfth Michigan State University (www.msu.edu) Request for Information Request for Proposal United States (of America) xi Chapter 1 Introduction 1.1 Introduction The process of administering change orders is an integral part of construction project management. This process is time consuming and, if not organized or streamlined, may result in delays. This thesis offers a framework that could be used by universities to reduce change order processing time; it describes types of change orders, presents change I order management practices and process mapping techniques. Universities are typically experienced and knowledgeable owners and have a host of construction representatives, project managers, and designers as well as established systems for budget approval and administration. Typically university processing times for change orders are lengthy because of diverse project types, complex utilities and administrative requirements. Universities fall under the category of institutional construction, which includes K-12 schools, universities, and prisons. This institutional sector makes a significant contribution to total construction value in the United States (US). “The institutional sector is the most stable nonresidential sub-sector in the construction industry, with its share of total construction spending ranging. from 52% to 58% during every year since 1994.” (Delano, 2003). Table 1.1 shows approximate annual construction expenditure at certain universities. Universities in the table are members of the Big Ten conference. Annual construction expenditure (physrcal Division One Universities Year plant) approximate (millions) - 140 Pennsylvania State University 2003-2004 125 University of Iowa 2003 -2004 l 17 Indiana University 2003-2004 100 University of Minnesota 2003-2004 80 Northwestern University 2003 -2004 88 Michigan State University 2003—2004 Table 1.1 Approximate annual construction spending of universities Source: Budget information on university websitesl Change orders can have significant administrative and financial impact on projects. At MSU, (Michigan State University) preconstruction project contingencies are typically assigned at five to ten percent of project budget and may be largely consumed by change orders on a given project. These change orders result from unanticipated project conditions, document or process deficiencies, or by scope changes. Change orders at MSU may equate to three to ten million dollars of change orders annually. It is the author’s opinion that streamlining a change order management process can reduce impacts and administrative costs for all project participants. I htq:://www.budget.psu.edu/factbook/Finance2004/Expense200405.asp? (Accessed 2"" June 2005). http://www.uiowa.edu/%7Eour/fact.book/ (Accessed 2"d lime 2005). http://www.indiana.edu/~vpcofo/ (Accessed 2" June 2005). http://www.budget.umn.edu/budget/archive.htm (Accessed 2'“ June 2005). http://www.northwestern.edu/accounting-scrvices/Annual%2ORepothtm (Accessed 2"d June 2005). http://opbweb.msu.edu/ (Accessed 2'“l June 2005). 1.2 Change orders impact all participants in construction in some way. At a presentation for the Associated General Contractors, Michigan Chapter, Prof. Timothy Mrozowski AIA, professor in MSU’s Construction Management Program, discussed some of the ' impacts on construction project participants‘. The following list is an excerpt from his Need for this research presentation. Impacts an contractors Disruption of project flow. Reduction in productivity. Increased project management time. Uncompensated management time. Breakdown in project relationships. Insufficient compensation for indirect costs. Personnel, equipment and bond capacity tied up on project. Disruption of cash flow. Coordination difficulties. Impacts on design professionals Increased contract administrative time. Concern for liabilities due to errors and omissions. Uncompensated processing time. Breakdown in project relationships. ' A summary of this discussion is reported in the article “Personal Integrity, a Prime Quality of Proven Leader” available at htmzl/mi.agc.org/PDD_2004.asp. (Accessed 2nd June 2005). Associated General Contractors Michigan Chapter. 0 Disruption in project flow. Impacts on owners 0 Increased project costs. 0 Project delays. 0 Breakdown in project relationships. 0 Disruption of project flow. 0 Increased administrative costs. Through this research, the researcher has attempted to develop a fiamework and recommendations for change order processing suitable for institutional owners, specifically universities, which can help to reduce the impacts and administrative cost to all project participants identified above. 1.3 Research goal and objectives The broad goal of this thesis was to develop a fiamework that would help reduce processing time of change orders in universities. The specific objectives of the research were: 1. To develop a framework for reducing change order processing time in a case study organization. 2. To statistically analyze past construction projects within a case study organization in order to determine processing times and identify areas for improvement. 3. To conduct interviews with contractors, architects, subcontractors, and university personnel to gather different perspectives on change order processes, and to identify effective change order management strategies. 4. To develop an alternative process map and provide recommendations, which address change order management strategies for the case study organization. 5. To develop a generic framework for reducing change order processing time that universities can use in construction projects. In order to help achieve the objectives, the researcher identified previous similar research and their methodology. These studies, described below, were conducted by organizations with bureaucratic levels and approval processes similar to those at universities. 1.4 Comparable studies Three studies related to processing of change orders and relevant to this research were: the Federal Highway Administration (FHW A) report 2001, Missouri Department of Transportation (MoDOT) audit report 2002, and Performance Evaluation and Expenditure Review-Mississippi Legislature 2002 (PEER). . The. FHWA (2001) study analyzed 159 change orders and showed the average processing time of change orders ranged from five to ten days. Processing times for change orders were broken into several groups to isolate trends. These groups consisted of: change order date to contractor’s signature date, contractor’s signature date to project engineer’s signature date, project engineer’s signature date to district engineer’s signature date, district engineer’s signature date to director of operation’s signature date, and director's signature date to FHWA's signature date. The simple averages for each respectively were 4.41, 2.25, 4.25, 4.33, and 10.75 days. The total time weighted average was 9.14 days. Although the author did not consider these days comparable to university processes, the methodology used for the FHWA study was adaptable to this research thesis. The FHW A (2001) study showed 65% of the change orders were processed in five days. Close to 70% of their change orders were adequately documented. In addition to data collection and analysis, the review team put together a short questionnaire designed to get some idea of how the districts felt the change order process was currently working. Although the processes were not mapped and analyzed for causes of delay, the assessment of processing time was very useful to this thesis. The MoDOT (2002) report did not assess processing time; however the report described an approval process in that organization. In that process, management personnel at lower levels in the organization were authorized to approve change orders of limited complexity and dollar value. As dollar value and complexity increased, higher levels of management were involved. The author recognized this as a possible means for I reducing processing time for change orders in a university. MoDOT (2002) utilized four levels of change orders as indicated below: 0 Level 1 required a Resident Engineer’s approval and involved a change in a contract item of less than $50,000 or in a new contingent item under $20,000. 0 Level 2 required the approval Of a District Engineer and may require approval from the Federal Highway Administration. It pertained to a change in a contract item between $50,000 and $100,000, a new contingent item between $20,000 and $50,000, or a final change order not meeting the criteria of Levels 3 or 4. 0 Level 3, a major change order, required the approval of the State Project Operations Engineer, and also an approval from FHW A. It entailed a change in a contract or contingent item over $100,000, a new contingent item over $50,000, a specification change, a revision in contract price, a change in a contract item amount or change in a major item over 25%, a change in design concept, a differing site condition, or any value engineering change orders. ‘ - Level 4, a major change order, required the approval of both the Chief Engineer and the Chief Operating Officer, in addition to all the previously mentioned approval levels. It entailed additions greater than 50 % if the original contract amount was $500,000 or less, additions greater than 25 % if the original contract amount was greater than $500,000, or contract additions greater than $1,000,000. In Missouri, the Department of Finance and Administration's Bureau of Building, Grounds, and Real Property Management was responsible for the construction, repair, and renovation of most state buildings. PEER (2002) reviewed the bureau's selection of the architectural and engineering contract professionals who assisted in construction project management. PEER (2002) also reviewed the bureau's management of project change orders. The PEER (2002) report mentioned that they have weak cost analyses of change orders. There was no assessment for processing time of change orders. However, the report identified possibilities for improvement in the change order documentation. Neither of the studies mentioned above addressed specific complexities of university construction processes. The method used for research however is applicable. Primarily, these were audits of processes that concluded either that their processes needed to be improved, or that they were functioning well. There was no attempt made to map a process, analyze it, and redefine it using the conclusions of their audit reports. Since no complete fiamework was laid out in the existing literature for this research, it was necessary to establish a research methodology. In order to develop a framework, the researcher chose to focus on a case study of one university. This allowed the researcher to develop the framework/ methodology specific to the needs of the case study university, conduct the research along the lines of the framework, and identify opportunities for reducing processing time of change orders; The framework was then subsequently broadened based on literature and interview of outside architects, contractors and administrators from four other universities. Recommendations were made which are applicable to other similar universities. 1.5 Case study: Change order process at Michigan State University The case study used for this research was a part of a larger research study for MSU. In 2003- 2004, a research project was conducted for the purpose of improving the change order management process at MSU. The overall research objective was to develop strategies for reducing the impact and cost of change orders on MSU projects. The strategies encompassed both preconstruction change order prevention activities and construction phase change order management. Data collected for this larger research study form the basis for the time analysis of this research. This research project led to three masters theses, which included: 0 Statistical analyses of MSU change orders (Gottschalk, 2005- unpublished at the time of this writing). 0 Development of pre-construction change order prevention strategies for reducing design errors and omissions in university construction projects. (Y elakanti, 2005). o A fi'amework for reducing change order processing time in university construction projects. (Mechanda, 2005). Each researcher conducted a review of existing literature, studied project histories of 16 MSU construction projects to derive results important for their individual research goals and objectives. Project histories were put into a database, which was used by the researchers for statistical analyses. Additionally, researchers conducted interviews with project managers, subcontractors, and designers in the construction industry, as well as 10 university construction administrators. This helped the research team gain a broader perspective on change orders. l 1.6 Methodology This thesis research work was accomplished through the following three primary steps: . 1. Literature review I Literature was reviewed on process models and change order management strategies, as well as comparable studies on change order process improvement. 2. Development of framework for reducing processing time for change orders at a case study organization MSU was identified as a case study organization. The processes in this organization were studied in detail. An alternate process map and a set of recommendations were developed to reduce change order processing time at MSU. Based on the fi'amework used for this university, a generic fiamework was developed that can be used by other universities to reduce their processing times. I a. Statistical analysis of database of construction projects to identify trends in the process in this organization Information from the umbrella project database was analyzed using Microsofi® Excel and Minitabm. Analysis was done to: 0 Identify overall process time of change orders at MSU. 0 Identify process time between each major milestone (sub-processes) to show which Sub-process significantly contributed to overall processing time. 0 Removal of outliers fi'om the dataset, using box plots and standard deviation to identify typical projects, change orders and change items. 11 0 Establish correlations between factors using regression analysis. (ANOVA). 0 Identify areas for improvement in the process, leading to reduction in processing . time. Analysis tools such as histograms, bar charts, scatter plots, line diagrams, pie charts, MinitabTM firnctions and MS® Excel functions were used for this purpose. . Interviews Separate questionnaires were developed for university administrators, architects, contractors, and subcontractors for the purpose of gaining an industry perspective of the management of change orders. (Refer to Appendices B, C, D, & E). The responses and opinions aided in identifying change order process improvement opportunities. . Mapping of current management process of change orders in a case study organization The change order process at MSU was mapped using the Graham technique (Graham, 2003). This technique identified each activity in the map by assigning characteristics to each step (value added, waiting, editing, approval etc.). After mapping the process was evaluated for opportunities for improvement using a checklist developed by Smith (2002), which is presented in chapter three. . Development of an alternative change order process map Evaluations of the current process map and the results fi'om the statistical analysis and interviews were used to deVelop an alternative process map. The Graham technique (Graham, 2003) and MSU interviews identified opportunities for improvement. Statistical regression results established relationships between factors that justified 12 the need to modify a step in the current process map. The alternative model was developed using these results. e. Interviews for verification of results Verification was necessary to confirm the applicability of the alternate process map. Three MSU personnel were interviewed to verify the feasibility of an alternative process map and recommendations. 3. Development of generic framework for reducing processing time for change orders in university construction Based on the research framework developed for the case study organization, and literature review the researcher developed a generic framework that can be used by other universities for reducing processing time for change orders. Additionally a set of recommendations was also developed. 1.7 Deliverables Through this thesis, the researcher developed an alternate change order process map, which aims at reducing processing time of change orders in MSU. This map was accompanied by recommendations for process improvement. In addition to the primary deliverable, current processes of three departments in MSU were mapped: Engineering and Architectural Services (EAS), Housing and Food Service (HF S), and Campus Park and Planning (CPP). The generic map and a set of recommendations, which was developed, based on the framework used for the case study organization, were the primary deliverables of this research. 13 1.8 Research scope Within the larger domain of university construction processes, this research focused on change order process improvement. Within this smaller domain of change order processes, this research concentrated on reduction of processing time for change orders. Large university construction projects = Change order process improvement Reduction of processing time for change orders Focus area ' "[1. l i ‘ ‘ . é Smaller domain- . . r‘ ' I ,. . t.. - C ar. . , ( rv..7.. ._ Y . -,.v. . , -. . . ,‘ .-'-»" .- r I J , ~-v; I . ._ .... . x _ v ,, . . ‘ ;_ - _’,. . - . . - . , g . . _ _ _ , . g - .. . . 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I -‘ 7. ~ .\ V 4‘ . . . .. - , . h: 'w ‘ . v v Figure 1.1: Domain and focus area of research 1.9 Limitations of the research Taking into account the scope and time restriction of conducting such a study, this thesis has some limitations, which should be taken into account in the application of the results. Sample A sample of 16 projects was identified for this thesis. Although the projects are believed by the researcher and the oversight committee to be a representative set of 14 projects, purposive sampling was chosen versus random sampling, due to a possibility of replication of project types. A random sample could bring out a sample with higher percentages of either renovation or new construction, or more projects procured by one of the departments, or of one type. This would not have been representative of MSU projects. The oversight committee developed a list of possible projects that were free of litigation and fairly representative. From this list the researchers selected 16 projects for inclusion in the database. Refer to Appendix A for details of the sample. The specific statistical results may not be generalized in their totality to other universities. Each university would have its unique processes and project types and a host of different parameters. However the recommendations can be applicable and the methodology can be generalized for process improvement initiatives in other universities. Project delivery method The sample did not address all project delivery methods. The sample projects largely used general contract and construction management forms of project delivery. Further research could be done by adding projects that cover other methods of project delivery in the sample, such as design build. Cost savings I Although reducing processing time alludes to savings in administrative costs, no assessment of cost savings was made in this thesis. lS 1.10 Chapter summary and thesis organization This chapter lays out a context for the thesis and introduces terminology that will be used further. It provides an introduction, indicates a need for this research, identifies goals and objectives, deliverables, and the scope and limitations of the thesis. The thesis is organized in seven chapters and appendices. The first chapter presented an overview of the study. The second chapter presents the literature review, and identifies existing research and studies of change orders and process improvement. The third chapter discusses the methodology of the thesis. The fourth chapter describes the case study, and how data was handled and reported. Additionally the fourth chapter presents the results of the database analysis. The fifth chapter describes the framework developed for the case study organization. The sixth chapter presents the generic fi'amework that could be used by. universities in process improvement endeavors to reduce processing time for change orders in their organization. The last chapter also presents a summary, areas for future research and conclusions of the thesis. 16 Chapter 2 Literature Review 17 2.1 Introduction Overall, the literature suggests that construction change orders are inevitable. The author concurs with Civitello’s (2002) opinion that owners, designers and contractors will be in an advantageous position if they accept the fact that changes are a normal part of every project. Then time and energy can be diverted away from improper arguments and paper shuffling and be devoted to the prompt settlement of the three critical change order components: scope, cost and time. . This chapter presents work by other researchers on the general subject of change orders, as well as studies specifically devoted to the subject of change order management. This chapter also describes process maps and techniques for mapping, as well as related literature. The chapter is divided into three major sections, which include: 2.2 Existing literature on change orders. 2.3 Literature on change order management. 2.4 Process improvement techniques. 2.2 Existing literature on change orders Change orders can be broadly characterized depending on the way they are addressed in a contract as: unilateral and bilateral. Moreover there are several types of change orders based on the kinds of changes made in contracts. These are described below. The impact of change orders on various phases of construction and on project participants as well as a brief discussion of markup and cost estimation of change orders are also presented. 18 2.2.1 Understanding bilateral and unilateral change orders A bilateral change order is an agreement between the owner and the contractor to effect a change. The term used in federal contracts is contract amendment. “If the term change order is used in federal projects it generally implies a unilateral agreement, which is usually directed by the owner. This is issued for emergency work and to expedite a process. It has to be supported by a bilateral contract modification. The other terms used for unilateral contract amendment are: Construction Change Directive, CCD, (in AIA documents) and Work Change Directive (in EJCDC contract documents)” (Fisk, 2004). This research uses the term change order as in bilateral contract modification for non- federal projects. Public (non federal) (TZhange Co | and private Federal contracts only we contracts Contract Amendment Contract Bilateral Change order or supplemental cement modifications . agr Unilateral CO ctron Change Change order Directive Table 2.1 Bilateral and unilateral changes (Fisk, 2004) 2.2.2 Types of changes Directed and Constructive Change “Directed changes are changes ordered by the owner to perform work that differs from that specified in the contract. This can be either additive or deductive (add to or reduce scope). In this type of change there will be no debates on whether a change occurred. The only issues would be financial compensation or the impact on schedule and I9 that is mentioned in the contract by any of the construction participants. These have to be claimed by the contractor in a specified amount of time. This type of change leads to disputes. Types of constructive changes may include: defective plans and specifications; engineer’s interpretation; higher standard or performance than specified; improper inspection and rejection; change in method or performance; change in construction sequence; owner nondisclosure; impossibility/ impracticability of performance.” (Fisk, 2004). The other types of change orders are]: - Differing site conditions. 0 Acceleration of work. 0 Weather conditions. 0 Non design-related change order. 0 Design-related change order. 0 Emergency field condition change orders. 0 Scope changes. 0 Donation/contribution change orders. 0 Value engineering and betterment change orders. (Refer to Appendix F for explanation of the above terminology). 2.2.3 Project delivery methods and change orders McCally (1997) studied the relationships between project delivery methods and change orders. The following sections summarize the observations of this research. ' From website of Department of Neighborhood development. Housing Policy, City of Boston. http:/l www.ci.boston.ma.us/dnd/D_2-2_change_order_and_contingency.asp. Also refer to appendix F. (Accessed 2ml June 2005). 20 Hard-bid contracts and change orders “Hard-bid contracts are very competitive and are won by narrow margins; therefore they require highly defined scopes. Change-order management on hard-bid contracts can actually start during the bid process. In this type of contract, the issue may ofien be that the bid documents did not express the owner’s intent clearly. If people who review bid documents are trained in the design disciplines, they may better be able to detect technical flaws. A constructability review, if done by the estimator and constructor, provides an opportunity to point out areas where alternative construction methods of equal soundness could result in lower bid prices. The same principle can apply to specifications for equipment, materials, and even milestone schedules. When specifications are well defined and the owner accepts the bid after thorough review, potential change orders may drop in number.” (McCally, 1997) Guaranteed-maximum contracts and change orders “Guaranteed-maxirnum contracts are usually negotiated and often are based on conceptual documents. When the scope is not well defined changes during the construction phase are likely to occur. Too much drawing information is left to shop drawings to complete. Often the fact that scope revisions are not accounted for in the maximum price fixed is overlooked, and this leads to unsettled issues and disputes.” (McCally, 1997) Cost-plus contracts and change orders “Cost-plus contracts are used because the scope of work cannot be defined in some instances. The contractor has to establish a preliminary budget on information made 21 available at the time and, as work progresses, scope as well as design becomes clearer. This leads to budget revisions.” (McCally, 1997) 2.2.4 Impact of change on productivity I Change, whether during the. design phase or during construction, may affect productivity, general conditions, and mobilization costs. It can also cause rework. Changes occurring later in the project have a greater impact; a key variable affecting efficiency is the point in time at which change occurs (Ibbs, 1997). Ibbs used a questionnaire developed with the help of the Construction Industry Institute (CII) Change Management Task Force. A pilot version was tested and then data was collected on cost, labor-hour, schedule, and milestones, at 25, 50, 75, 80, 85, 90, and 95 % completion. 79 statistical analyses were conducted. Responses from 35 different organizations, with 104 projects involving more than eight billion dollars in total installed cost were obtained. Compared to change rates projected by Diekmann and Nelson, (1985), and Hester et al. (1991), the change ratios in the study by Ibbs (1997) were low. This was as a result of private sector projects studied. (Flexibility of negotiations prevented change orders from occurring; hence the ratios were low.) Most projects had less than four percent growth in the design phase. In the combined design and construction phase growth equaled five percent. 20 % of projects showed 11 % or more growth. Ibbs (1997) concluded that every additional 10% of change affected productivity by 2.48% and that construction productivity was equal to planned value at a six percent change level. Additionally, he concluded that lower labor performance was strongly related to presence of change (Ibbs, 1997). 22 Assem (2000) developed ten neural network models, which estimated productivity losses due to change orders. The models accounted for: type of impact, intensity of change orders, timing of change orders, and type of work executed in the changes. This was used for development of a software application. Data sets that could be used for further research or development of new models were a valuable contribution of this research work. Research on productivity by Assem (2000) and Abdo (1999) used neural networks. Abdo (1999) developed a series of neural network models that account for change order intensity, work type, and type of impact. Hanna (2002) developed a non- linear regression equation that estimates the ratio of labor productivity to total man hours for both electrical and mechanical work. In mechanical work the equations accounted for change order intensity, timing of occurrence of change orders, and work phase (Hanna et a1, 1999 a). In electrical work (Hanna et al., 1999b) the equations accounted for project manager’s years of experience, and change order intensity. Another study that used the support of the C11 Change Management Task Force committee was (Hanna et al., 2002). This work specifically studied electrical and mechanical contractor’s projects, since their work is labor intensive. The goal was to quantify the impacts and identify projects impacted by change orders. Thirty six electrical contractors provided data on 59 projects and 33 mechanical contractors gave data on 57 projects. Project size was greater than 2000 work hours. Statistical analyses using software and hypothesis testing and regression analysis were conducted. A model was developed to determine if projects were impacted. Validation of the model was done using new data. Findings relevant to the above study are summarized as follows: 23 Characteristics of projects impacted by change are: (Hanna et al., 2002) o Impacted projects experience a longer change order processing time. (average more than 28 days). ' 0 Other factors interact with amount of change (such as timing of change, type of change, and project size),,or are caused by change (disruptions such as over-manning, overtime and absenteeism) that determines if a project will be or has been impacted. o Impacted projects show a higher percent of change (mean percentage change was 44.6 %). Hanna et al., (2002) developed a logistic model to determine probability that a project ~ has been impacted by a change order. Eight different factors identified by Hanna, that might affect a project are summarized below: 0 Planning phase , Large projects, identified by actual hours, were more likely to be impacted by change orders. 0 Design Phase On projects where adequate support was given during construction by the AIR, the design issues were usually coordinated prior to construction. Research conducted (Hanna et al., 2002) also indicated that an average of 50% of change orders in impacted projects were from design problems, while un-impacted projects averaged 38% (Design problems include design changes, coordination, errors by contractor or designer). 24 0 Construction Phase If overtime and over-manning is used to accelerate because of a change order, the project is likely to be impacted. The amount of change itself showed up as a significant factor in determining if a project was impacted by change orders. The more change that occurred on a project, the more likely the project was to be impacted and to have significant productivity losses. Changes lead to absenteeism, which decreased productivity. Processing times of change orders were significantly higher for impacted projects compared to un-impacted projects. 2.2.5 Cost impact determination of change orders Moselhi et a1. (1991) studied productivity losses due to change orders using 90 cases from 57 different construction projects. The model that resulted from this research can be a useful tool for afler-the-fact situations and also for front-end cost impact determination. Results indicated a significant direct correlation between labor hours spent carrying out change work and loss of productivity. Productivity losses were shown to be greater in mechanical and electrical work than in civil and architectural work. Another significant finding was that productivity losses were affected by the type of work (fine versus gross motor skills), but not by type of construction (buildings versus industrial facilities). 2.2.6 Markup and cost estimating of change orders The issue of markup and cost estimating of change orders is a major concern with contractors and owners. Sarvi (1987) concluded that the true cost of a change order could be significantly greater than the cost of labor, materials, equipment and markups. Moselhi 25 et a1. (1999) conducted research on neural networks for estimating costs and Semple (1996) conducted research on markups and other practices through surveys. Both these studies led to results similar to Sarvi (1987). Semple’s (1996) thesis was based on construction practices in Alberta, Canada, and discusses markup values, impacts of change orders and the process of change orders. The thesis sought to answer these (questions: Did the then-current markup cover costs and time associated with change orders? Was ten percent markup acceptable in Alberta’s construction industry? What were reasonable methods for determining change order markup values? Her research focused on studying change order costs and the time involved in processing the change orders. Semple (1996) concluded that a reasonable markup percentage was seven to eight percent. There was little agreement on an average markup value, indicating that markup and profits should not be standardized. Civitello (2002) suggested that it is advantageous for a contractor to submit a large number of small costs instead of a small number of large costs for approval. This seems like a logical strategy not only from the contractor’s perspective, but also fi'om the owner’s perSpective. It is easier for owners to approve ,a proposal when it is broken down I into smaller components and negotiating time is thereby reduced. Some components can be eliminated, instead of the entire proposal. Civitello (2002) also suggested presenting change order proposals in the three-cost approach: Direct, Indirect, and Consequential costs. In every proposal; each category may not be applicable, however, it gave the owner confidence and made the cost procedure standard. Moselhi (1999) presented a cost model for pricing change orders, which identified cost components and cost categories. One conclusion similar to Civitello’s (2002) 26 recommendation was that impact costs should be included in change order costs. In contrast to Civitello (2002) both Semple (1996) and Moselhi (1999) do not suggest standardization of change orders. semple (1996) and Moselhi (1999) recognized that there were too many parameters affecting pricing and it was difficult to quantify costs. Moselhi’s (1999) model assessed impact cost through neural networks. His model can also be used during claims to quantify damages. The following section describes the prevalent, change order management practices. It also summarizes relevant research work done in this area. 2.3 I Literature on change order management Responding to the drive for improvement in process and quality, several technical and management journals have published a wide variety of articles on change management and claims prevention. The key to successfirl management of change orders, as the literature suggests, seems to be good document management and process improvement. The findings fiom some of the literature on change order management are summarized below. 27 2.3.1 Nine keys for effective management of change orders McCally (1997) suggested nine keys for effective change order management: 1. Clearly defined processing procedure. 2. Supervision of processing procedure. 3. Clear instruction regarding scope of changes. 4. Timely issuance of request for proposal (RFP). 5. Timely response by contractor to RFP. 6. Timely review of contractor’s proposal. 7. Timely issuance of work authorization. 8. Timely performance of changed work. 9. Prompt payment for change order work. 2.3.2 Timeliness of change orders Many of the inefficiencies that may result from change orders are related to the timeliness of a change; “How much notice is given-between the date the change is identified and the date it is scheduled to start. When the notice period is too small, it affects planned sequencing. If processing time is too long, the contractor has to begin work and move on at his/her expense.” (Kasen and Oblas, 1996). 2.3.3 Standardizing procedures Many organizations in the construction industry view standardization as making a system rigid, resulting in additional paper work. (Supported by interview feedback as shown in appendices B, C, D, and E) Standardization is viewed with skepticism by some. Civitello (2002) suggested that contractors should not underestimate the power of standardized forms. People are hypnotized by forms (Civitello, 2002). Civitello (2002) 28 urged that standardizing procedures and forms made a system more legitimate and logical, and maple rarely challenge such a system. He also specified that the effect is more pronounced when a large bureaucratic organization used such forms or standardized procedures. He advised contractors to understand processes and question authority, if required, rather than be intimidated by them. Civitello (2002) suggested that standardization is vital to build confidence of project participants. Additionally it ensured that a process was executed in a consistent manner. Bekerman (2003) also suggested that consistency and standardization were vital to avoid errors. “Consistency is one of the significant elements for continuous improvement. One should aim at doing every operation (in the process) the same way every time. A certain degree of standardization is necessary, but without inhibiting innovation. Consistency should not dampen innovation. You need both in order to grow and prosper. Make sure that you have written procedures for all your operations. These procedures should reflect what is really happening; having procedures that are ignored is worse than not having them at all. When a new procedure is developed that is more productive or less prone to error, the whole process of documentation and training should start all over again.” (Bekerman, 2003) 2.3.4 Documenting oral discussions Oral discussions may facilitate quick decision making and the dissemination of information on issues, but such discussions must be confirmed with documents. It is important to understand the seriousness of the written confirmation of quotes (Civitello, 2002). In Wisch & Vaughan Construction Co. v. Melrose Properties Corp., 21 SW. 3d 36 (Mo.App. 2000), an owner wished to avoid paying for certain extras on the basis that 29 the contractor had not followed the contract requirement to obtain approval in writing. The court found that the owner had to pay, because by paying for other extras that were only agreed to orally, the owner had waived the right to insist on written approval. “It is not easy for some contractors to say no when directed to do work in the field. As a result, they are taking a big risk as to which side a court will come down on later if the owner or general contractor decides not to pay. The only way to avoid this is to have a strict company policy, which no one but the owner can waive, that directives have to be in writing before any work will be done that is over and above, or different from, than what is called for in the contract.” (McGreevy, 2001) 2.3.5 Pricing of change orders Forward pricing is another technique suggested to reduce claims and delays. It is an impact resolution technique that uses formulas to carry out up-fi‘ont impact estimating of change orders, taking into account various factors. The parties agree upon impact costs for each change as it arises. Kasen and Oblas (1996) put forth a forward pricing formula, that takes into account the sum of direct costs, timeliness (time between notice to proceed and actual-schedule-activity start date), complexity of the disciplines or trades, cumulative impact and future impact on float. 2.3.6 Three-cost pricing of change orders Civitello (2002) suggests prioritizing items and submissions required in the early stages of construction for early review and approval. He urges that establishing a fixed time for approvals is beneficial to all parties. Civitello’s (2002) suggestions for contractors include using detailed proposals that break down large costs into smaller costs. “Three-cost” pricing is suggested for faster approval and for gaining the trust of 30 owners. The three costs include: direct, indirect and consequential costs. Not all owners may agree to indirect and consequential costs, however. Detailed checklists are offered by Civitello to contractors for good docmnent management, proposal preparation, and tracking of change orders. 2.4 Process improvement techniques What is a process? A process is a series of activities undertaken to accomplish something. “It has a start point, and an end point between which various items (materials, forms, and records) are worked on usually by a different number of people located in different places using various equipment.” (Graham, 1996) A process map can be used as a tool for process improvement. “Process mapping is a technique for making work visible. A process map shows: who is doing what, with whom, when and for how long. It also shows decisions that are made, the sequence of events and any wait times or delays inherent in the process. They also can help in the effort to reduce cycle time, avoid rework, eliminate some inspections or quality control steps, and prevent errors.” (Smith, 2000) 2.4.1 Analysis of process Smith’s (2000) analysis of a process requires considering the process activities and flow by undertaking the following: Looking at each process step for: . Bottlenecks. 0 Sources of delay. 31 . Errors being fixed instead of prevented (rework). . Role ambiguity (we didn't know who...) . Duplications. 0 . Unnecessary steps. 9 Cycle time. Looking at each decision for: . Authority ambiguity (two or more people get to decide...). . Are the decisions needed at this point? Looking at each rework loop for: . Possibly eliminating the step(s). . Using the customer's point of view . Value-added vs. non-value-added steps. 2.4.2 Process mapping Because process mapping was used during this research to study current change order practices, the researcher reviewed literature on process mapping. There may be several ways of mapping a process, based on what the goal of mapping is. Snowdon (2000) suggested that one could begin by macro mapping and then move to more detailed ’ mapping. 32 Flow charting is a popular method of process mapping. Snowdon defined different levels of flow charting as: Macro, Mini and Micro (Snowdon, 2000) which are described below: 2.4.3 Macro level. The top leadership may not need the amount of detail required by the workers in a process. A "big picture," or macro-level, view of the process may be enough for their purposes. Generally, a macro-level flowchart has fewer than six steps. Mini level. The term "mini" or "midi" is used for a flowchart that falls between the big picture of the macro level and the fine detail of the micro level. Typically, it focuses on only a part of the macro-level flowchart. Micro level. People trying to improve the way a job is done need a detailed depiction of process steps. The micro-level, or ground-level, view provides a very detailed picture of a specific portion of the process by documenting every action and decision. It is commonly used to chart how a particular task is performed. Types of flowcharts Besides the three levels of detail used to categorize flowcharts, Snowdon (2000) described three (main types of flowcharts—Linear, Deployment, and Opportunity, which have been paraphrased below. The level of detail can be depicted as macro, mini, or micro for each of these types. Linear flowchart. A linear flowchart is a diagram that displays the sequence of work steps that make up a process. This tool can help identify rework, as well as redundant or unnecessary steps within a process. 33 0 Deployment flowchart. A deployment flowchart shows the actual process flow and identifies the people or groups involved at each step. Horizontal lines define customer-supplier relationships. This type of chart shows where the people or groups fit into the process sequence, and how they relate to one another throughout the process. 0 Opportunity flowchart. An opportunity flowchart, a variation of the basic linear type, differentiates process activities that add value fi'om those that add cost only. 2.4.4 Graham Flowcharting technique There are sophisticated versions of flowcharting that are variations of the fundamental types. Graham (1996, 2001, and 2003), for example developed flowcharting techniques for process improvement. These flow charts incorporate some qualities of all the flow chart types described above. Graham process charts provide a picture of a process with enough detail to allow (and stimulate) common sense improvement ideas by the people who do the work. Process charting software developed by Graham is a 32-bit Windows application. Graham techniques use symbols in the flow charts. Different symbols indicate functions of each step in the process. For example, as shown in Figure 2.1, a value added document edited for some reason, and awaiting approval is indicated by a specific symbol. 34 nose 0 V T Do The do operation represents a value added step in the production process. It adds value to the product by physically changing it in the direction of beingcompleted. Origlnate The origination symbol is used the first time information is entered in a document Add! Alter After'the item is entered this symbol will show Up every time information or document is added to! altered. This is essentially a value added activity. Handle This indimted physical paper shuffling, keying information in electronically, loading, unloading. Transport This symbol represents movement from one work area to another. which are physically separate. These may be time consuminlactivities. Inspect This symbol represents the activity of checking the item to see if it is right. Storage! delay Time when nothing is happening to the physical document/ product It may indicate “waiting for some other information" and delay caused due to it. Destroy This indicates that the activity/ iteml ceases to exist. It identifies items that are in the system to purge and clean the system. © Copyright 1996, The Ben Graham Corporation. All rights reserved Figure 2.1 Symbols used in Graham flowcharting technique that are: accounting etc.) Graham’s symbols serve as verbs describing the actions. “They are a set of categories Mutually exclusive: Each symbol represents a distinct type of action. Therefore the categories do not overlap, and this makes it difficult to determine which symbol to apply. An item is either moving (an arrow) or stationary (all other symbols): it is either doing nothing (a triangle) or doing something (all other symbols), etc. Universally applicable: They occur in all work areas. Therefore it is not necessary to use different terminology in different work areas. (For example sales, engineering, 35 0 Comprehensive: They cover work processes completely. Each step in a work process is identified by one of eight of the American Society of Mechanical Engineers (ASME) and American National Standards Institute (ANSI) approved symbols.” Graham (2003) Because of its clarity, this process mapping tool was used to map the prevalent process in the case study organization as well as to construct the alternate process map. The Graham technique of flowcharting was used in this research. The “destroy” symbol . was not used and new symbols were added for review and “approval”. These symbols are described in more detail in chapter four. 2.5 Chapter summary This chapter summarized literature on the subject of change orders related to pricing, documentation, processing time and timelines of change orders. Additionally, prevalent process improvement techniques and tools used to analyze processes were also described. 36 Chapter 3 Methodology 37 3.1 Introduction This chapter describes the methodology adopted to complete this research and how data was obtained, managed and used to draw conclusions related to the research topic. The researcher used a database developed by Gottschalk (2005- unpublished at the time of this writing) for MSU to statistically analyze the processing time of change orders, and to observe trends in the sub-processes. Interviews were conducted with architects, subcontractors, contractors, and owners to gain perspectives on the change order process. Both the statistical analysis and the interviews are described in this chapter. This chapter also describes how the current MSU change order processes were mapped and how they were analyzed. Results are described in chapter four. The mapped processes and the alternate process map are presented and described in chapter four. 3.2 Methodology As 'shown in figure 3.1, the research began by first defining the research project, its goals and objectives. This was then followed by literature review of existing studies and articles on change orders and process improvement. MSU was identified as a case study organization for the research. MSU’s background information and processes were reperted. Interviews were conducted with local architects, contractors, subcontractors, and university administrators at MSU and administrators fiom other universities. Meanwhile a historical database of sample projects was set up and data was analyzed. In order to understand MSU change order processing activities the prevalent change order processes at MSU were mapped. Based on the results of the process mapping analysis, interviews, database analyses, and process improvement tools identified during the literature review, an alternate process map and recommendations for streamlining the 38 change order process were developed. The alternate process map and recommendations were evaluated through interviews of MSU administrators. . Based on the framework used for process improvement at MSU and literature review, a generic framework was developed for reducing change order processing time, which can be applicable to other similar universities. Sections 3.3 through 3.14 describe methodology in detail. 39' :28»: a... s assess: 3 25m 3.3 Literature review The literature review covered research projects supported by the Construction Industry Institute (C11) Change Order Management Task Force, masters theses, industry audit reports on change order processing, relevant technical papers and feature articles in jom'nals. Chapter two discusses some of the literature, which the author regarded as more relevant to the change order process. 3.4 Case study organization: Michigan State University In Section 1.5 the researcher provides a background on the change order research project conducted for MSU. This research is a subset of that project. MSU has several departments that can procure construction services. Five of these departments took an active initiative in sponsoring the research as well as serving on the oversight committee for the research. They are: MSU Office of the Vice-President for Finance and Operations, MSU Physical Plant, EAS, CPP, and HFS. CPP adminiSters site planning, site construction, roads, landscape furniture, and storm sewer lines between manholes. HFS oversees interior design, maintenance of residence halls, and housing projects. The Physical Plant at MSU oversees Engineering and Architectural Services (EAS), custodial services, maintenance, utilities, recycling, and waste management, as well as other functions. EAS oversees major campus construction projects. EAS and CGA both review change orders for budget conformance and final approval. While CPP and HF S have fairly simple change order process, EAS has a more complex process and is the primary focus of this research. There are four categories of the EAS change orders, which are as follows: 41 Major process The external architect usually drafts the change orders in the Maj or category. Formal process In the Formal process, either the external or the internal architect drafts the change order. Construction management process The construction manager drafts the change order in the construction management process. Purchase order process The internal architect drafts the change order in purchase orders. These are classified on the basis of project complexity, dollar amount and other factors. This research emphasizes the Formal process. 3.5 Database Records of 16 projects, 19 contracts and 159 change orders were included in the database. The database was developed for the overall MSU change order project, and has approximately seventy thousand data entries. The data was obtained from paper files of EAS and incorporated into the database, which was developed in MS® Access. Change order data entry forms, developed by the researchers were used to input all data from the paper records. The. information was placed in tables and exported into MS® Excel and analyzed using Minitabm. 42 There were three forms for data input, including a project form, a change order form, and a change item form, the hierarchy of which is shown in Figure 3.2 below. Project form Change order form Change items form Figure 3.2 Hierarchy of forms Every project form had several change order forms depending on the number of change orders in a project. Every change order form in turn had several change item forms, depending on number of change items in each change order. There were input fields in each form as listed in figure 3.3 Project form input Change order form input Change item form fields: fields: input fields: Project name Change order number COID Change item number Project number Change order initiation date CIID MSU project Project contract sum Reason code manager New contract sum Bulletin/CCD/ other Architect name Changed contract sum Item initiation date Contractor name Days affected CSI categories Contract date Architect’s authorization date Overhead and profit MSU authorization date Item description Contractor’s authorization date Project progress Figure 3.3 Fields available in the three forms in the database 43 In order to differentiate between change orders and change items, it is necessary to define them before discussing them further in the thesis. Change Order: A change order is a written agreement to modify, add to, or change work that is defined by contract documents. See Appendix A for detailed description of change orders. A change order may consist of a single “change item” or it may have several “change items” incorporated. Change Item: “Change items” are individual changes ‘ generated for various reasons, and may be grouped with other unrelated items for review. Typically, change orders contain multiple unrelated change items. Each item was identified by the CSI division as applicable. A description of the item, the date when it was recognized, and every date on which the change order was authorized by a person in the change order process, were all noted. In. addition to this information, each change item has a reason code assigned to it. These codes are formal classifications of the cause of changes items developed by CGA, in order to help in tracking reasons for change. See AppendixA for reason codes. In order to calculate durations, a macro level process map was established which defined the sequence of major steps in the change order process. For database analysis as well as process mapping, the researcher adopted the date system from the FHW A report ' discussed in chapter two. The sequence of significant dates was as follows: 1. Item initiation date (date when the earliest item in a change order was initiated) 2. Change order initiation date (date when the change order document was initiated) 3. Architect authorization date (date when architect authorized the document) 4. Contractor authorization date (date when contractor authorized the document) 5. MSU authorization date (date when MSU authorized the document) The durations of sub-processes (time frames between two consecutive significant dates) were calculated with respect to the above dates. Change order processes varied within departments in MSU; hence, there were instances when the sequence described above was not applicable. 3.6 Statistical analysis of database Analysis of 1,675 change order items to draw out useful information involved several steps. First a broad scope analysis was carried out to identify overall average change order processing time at MSU for the project set. Each project was then analyzed separately and finally each change item was analyzed individually. Every change order and change item was analyzed for the length of time taken to process it. Finally each change order was analyzed by sub-processes. The sub-processes were: 0 Time when the earliest item was initiated. 0 Change order initiation time (when it was first documented). 0 Time taken before the architect authorized the change order. 0 Time taken by EAS and the CGA to authorize the change order. 0 Time taken by the contractor to authorize the change order. Durations for each sub-process were calculated and averages were computed. Data from the set of 1,675 items were statistically filtered using box plots. A box plot is a tool for summarizing a set of observations and variations of a data set. To identify outliers, a percentile range is used for the data set. For the purpose of this research, a percentile range of 20-80 was used. This range was used due to the number of data points 45 in the data set and the large variations. Table 3.1 below, shows the 20 -80 percentile box plot for the data set. Table 3.2 shows upper and lower limit of values beyond which the data was identified as outliers. The tables show calculations that were done using box plots for filtering data of the set of 1,675 items. Minimum and maximum values and medians were identified for each of the sub-processes and for the total duration. The first quartile and third quartile were calculated for each and y = 1.5 (IQR) was calculated, where IQR = Q3 —Q1. Lower fence = Ql-y and upper fence = Q3+y. Statistic Time Length of Length of Length of Length of taken to time taken time taken time taken time-taken process to initiate before before before change change architect contractor MSU orders orders authorizes authorizes authorizes (days) change change change orders orders orders Min 8 O 0 0 2 Median 146 97 0 4 28 Max 1983 1101 383 106 1553 - Q1 98 57 0 2 15 Q3 232 177 4 7 40 IQR 134 120 4 5 25 201 180 6 7.5 37.5 Lower fence -103 -123 -6 -5.5 -22.5 Upper fence 433 357 10 14.5 77.5 Table 3.1 Box plot calculations for 20-80 percentiles 46 Time Length Length of Length of Length of Statistic taken of time time time time to taken taken taken taken process to before before before change initiate architect contractor MSU orders CO authorizes authorizes authorizes (days) CO CO CO Lower fence 0 O 0 0 0 Upper fence 433 357 10 14.5 77.5 ‘ Table 3.2 Upper and lower fence of data set The analysis was aimed at determining: how long change orders took to be processed, what caused lengthy processing time, and what might help to reduce process time. The results were displayed using pie charts, bar charts, histograms, line diagrams, and scatter plots. All statistical analysis was done using formulas in Microsoft® Excel and Minitab'“ ftmctions. The results were summarized and conclusions were developed for each sub- process and the overall change order process. Concurrent with the statistical analysis, the change order processes at MSU were mapped so that both these activities could beneficially influence each other. ‘47 3.7 Interviews and feedback Interviews were conducted in order to learn how other universities, contractors, design professionals, and subcontractors conducted their construction project management processes in general; and in particular, how change orders were managed. The project Oversight Committee developed a list of local and regional contractors, subcontractors, and architects, who worked with MSU in order to solicit information specific to MSU processes. The researchers selected companies from the list and did not disclOse the names to the Oversight Committee in order to maintain confidentiality. Additionally, the Oversight Committee suggested other major universities with characteristics similar to MSU, which were appropriate to include in this research. Questions focused on finding strategies for prevention, management, and process improvement for change orders. Questionsincluded both open ended and single response questions. Interviewees were given an option of telephone interviews, but all respondents chose to have a face-to-face interview. In order to maintain confidentiality of interviewees, every interview had a code number assigned. In all over 40 individuals were interviewed. In some instances the researcher’s conducted interviews with groups of individuals from the same organization. Personnel from four major universities, in addition to project administrators from MSU, provided information on university processes. Seven contracting, three architectural, and three sub contracting companies were interviewed for this research. Responses are discussed in chapter four. Appendices B through E include questions and responses fiom all categories of interviews. 48 All responses were paraphrased during interviews by the researcher. The interviews generally took 45-90 minutes. Interview responses were paraphrased and organized in tables included in appendices B through E. Questions covered demographic data, title, change order rates, information on change orders specific to the interviewee’s organization and area of work. Information on methods used within the organization to prevent change orders and to manage them was also gathered. Questions sought perceptions of interviewees in their work with MSU and with other owners, as well as suggestions for possible areas of improvement. Interviews of local and regional contractors, subcontractors and architects included questions about MSU processes. The questions were used to identify patterns in MSU processes and to corroborate the statistical analysis of the database. The interviewees commended some of the management practices at MSU but also identified areas of improvement. The researcher used this information to identify themes from the responses. Interview feedback along with the results of analysis of the database and mapped process were used to restructure the current change order process map, and to develop an alternate process map and recommendations. 3.8 Current Process map The current processes of CPP, HFS and EAS were mapped using simple flowcharts. The processes were documented through interviews of MSU project administrators. The purpose of mapping was to determine and develop an understanding of the current change order processes at MSU. MSU document formats were reviewed and MSU personnel were interviewed in order to gain an understanding of the process. The process was mapped in Microsofi® Excel. Upon completion, the process maps were sent to 49 personnel involved in the change order process, to confirm sequence, clarity, accuracy, responsibilities and the amount of time taken at each step. After editing and further discussion, the process map was finalized and submitted for review to the interviewees to determine if the map accurately represented the process. The evaluation of change order processing time was broken down into groups to identify trends. These groups (sub-processes) are as follows: - Change item initiation date to change order date. - Change order date to architect authorization date. - Architect authorization date to contractor authorization date. - Contractor authorization date to MSU authorization date. For EAS, each of these sub-processes was further broken down while mapping and analyzed using the Graham flowcharting technique described in chapter two. The alternative process map for EAS was then developed using the Graham technique (Graham, 2003) and the BOLO list (Smith, 2002). Table 3.3 shows this checklist of items to “Be On the Look Out for” (BOLO),l developed by Smith (2002) which can be used, when mapping and analyzing any process. Items in the table relevant to this thesis were considered while mapping and analyzing the processes. Chapter four includes explanation of how this BOLO list was used in this research. Each activity in the EAS current / “as-is” process map was analyzed using this list to ascertain if there was an activity that was value adding, or just required, but not necessarily value adding work or just redundant. These activities were then identified ‘ BOLO (Be On LookOut) List for Analyzing Process Mapping By Michael Lee Smith Copyright © 2000-2004 iSixSigma LLC — All Rights Reserved. Reproduction Without Permission Is Strictly Prohibited. Permission to reproduce it in this research has been obtained. Michael Lee Smith, the author of this article, is a director of process improvement at E IS in New Jersey. 50 with symbols and the entire process map was represented using the Graham (2002) flow charting technique, which enabled the researcher to visually locate areas for improvement. The BOLO list was used by the researcher because: 1. It enables the researcher to analyze each step individually. 2. It enables the researcher to view the process without bias. 3. It does not suggest elimination, but allows the researcher to observe characteristics of each step in a process and then make a judgment after the entire process is analyzed. 4. It is a standard tool for process improvement. 51 Challenge all assumptions: It's easy to forget that a process step was based on one or ‘ l Assumptions more assumptions and not fact. 2 Changes Idiosyncratic change (or). changes made to be creative or for some other reason that 13 NOT hnked to the busmess plan or a busmess need. 3 Duplication Duplicate data entry. ‘4 Duplication Duplicate work steps in another group. Flexibility Can the process respond to changes in customer/technology requirements? Is it flexrble? Forgot how, or Mistakes because of a complex-clerical procedure or mistakes because people forgot 6 too complex what to do: Consider job aids: list, check sheet, flowchart, picture, etc. . . When you hear words like ”coordinate," "pass it by me first," "expedite” and 7 Intermediaries "liaison," question whether the intermediary step is value added. Lack of 7 . . 8 Standards not followed and there 13 no consequence or negative feedback. ‘ consequences - Tools/software available that ls not used because people have not taken time to get 9 Old ways ‘ trained or do not want to. Old ways with . . . . 10 new tools Lots of steps in software that are just rephcatlng the old by-hand process. ‘ 11 Paper records Is the process adding, maintaining or eliminating paper records? it ' n o - 12 Q l'ty control 3;?! of work when the suppher could have checked and sent 100 /o ok mputs to 13 Quality control QC is when someone else checks work, not when somne checks their own work. . When talking about QC consider Poka Yoke — Can the work be mistake proofed to 14 Quahty control make it impossflale for the defect to be passed on? 15 Quality control Is the QC really needed? Prevention instead of detection is the desired process. . 16 Repetition Can repetitive work be automated? l7 Resi Do professionals want to make changes rather than "stick with the standard" or do what they want, saying there is no standard since they did not agree to it. 18 Resis Someone continually saying “this won't work, can't make any changes.” Focus on objective and say that “changes to improve the process, is why we are here.” 19 Scalability Is the process limited to the current workload? Is it scalable to handle a larger volume of work? Specifications/ D l . 'fi . h . thin . d . . 20 every time like eve oplng spec1 canons eac time some g is one instead of the first time as a standard or template. first 21 Supplier input Input supplier sends inaccurate/incorrect input. Ask if they know what to do. Table 3.3 BOLO list by Smith (2002) Copyright © 2000-2005 iSixSigma LLC — All Rights Reserved Reproduced with Permission of iSixSigma.com 52 3.9 Restructuring the current EAS process map to develop an alternate process map. An alternate process map was developed using the Graham flowcharting technique. The mapping technique used in this research is a variation of the Graham flowcharting technique (Graham 2003) that was presented in the literature review chapter. The diagram below shows an example of the technique and how it was used to identify delays or areas for improvement. This process map is defined in detail in chapter four. Change order Change Item , order Contractor Eamon drafted authorization te o 2:32;}: “Elm?“ . Date Design Administrator, University an orlzatlon . . Quotteisa ti order date date . engineer reVlews. nego on, . l needfor v—.—. fi @ change, Items collected End Of —. O z change ' , ° - . Cl 'cal staff 02335 Associate Input in Coordmatlon, CGA audits, ' disejiilttches p VP FAMIS lack 0f verifies projects to h sic al lant MSU auth information set budget P Y P Payment date process begins % 3 US mail, contractor Campus mail, A/E Key: . Authorization date 0 Work being done Q Add/ alter/ review V Delay/ waiting for information @ Review and initial » delay due to movement from one work area to another Inspect Figure 3.4 Formal process of change order mapped using Graham technique. 53 The flowchart identified value adding steps, steps or personnel involvement redundancy, delay causing steps, and steps that could be added to improve the process. This was done by taking into account the results of the analysis, the interviews, and overall goals and objectives of the study. 3.10 Development of the alternate process map An alternate process map and recommendations were developed from the analysis described above, which if implemented could reduce processing time. i 3.11 Validation of the alternate process map In order to obtain practical evaluation the recommendations, the alternate process map, and the current processes were presented to EAS and CGA personnel .for review. Suggestions made by the interviewees are reported in chapter seven. 3.12 Development of generic framework Based on the framework used for reducing change order process time at MSU, the interviews of four other universities and the literature, a generic fiamework was developed, which can be used by other universities to study and analyze their change order processes. A set of broad recommendations was also developed. These are reputed in chapter four. 8 3.13 Chapter summary This chapter describes the methodology used in this research thesis. It briefly describes the change order processes at MSU, introduces the different departments, and also describes the database in interview process and process mapping techniques. Details on analysis and results are described in chapters four and five. 54 Chapter 4 ' Database Analysis 55 4.1 IntroductiOn This chapter presents the database and its statistical analyses. The chapter begins by . describing the database and how data was sorted. This is followed by a description of how data was analyzed and the tools that were used for analyses. Relationships between various factors were established by these analyses. Chapter five describes the interview results, process maps, and how the process maps Were developed. 4.2 Description of database The database consisted of sample projects chosen from a list developed by an Oversight Committee fi'om MSU. The sample was purposive, in order to provide diversity of projects in the database. The other criteria used by the Oversight Committee were: complexity, dollar value, and individual handling of projects by the departments sponsoring the research. Projects that had claims or litigation associated with them were excluded. Refer to Appendix A for more information on projects that were included in the database. Student researchers on the change order project team at MSU developed the database in Microsofi® Access. The author and fellow researchers of the change order research input data into the database from papers records. Relevant information was exported to MicroSofl® Excel for sorting and analysis by the author. Refer to Figure 4.1, for an excerpt from the database. 56 penitence 3...:— N 5 gene 55.: $3.35 5.53th 3.9.03.5 83m naming 83 «3.3.:— soonfi 3898:). a. nets—Eek... me 2:33.— 3. 9.53...— 3 0% x. ..n 3 m2 m3 3' 3 n ..m 8 3.. 3 3m «3 n3 ow \. 5 33 v3 3 3 3m 3.. 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NA— ‘ r :— 58 As the aim was to identify what contributes to the overall processing time, the change order process was broken into steps, and the time taken by these steps or sub-processes was calculated. 4.2.1 Sub-processes The durations of sub-processes were calculated in the following manner: Initiation sub-process = Change order initiation date - item initiation date. Architect sub-process = Architect authorization date - change order initiation date. Contractor sub-process = Contractor authorization date - architect authorization date. MSU sub-process = MSU authorization date — contractor authOrization date. D1 = Total time taken to process change order (initiation date to MSU authorization date). D2 = Time taken to process change order (change order date to MSU authorization date, excluding initiation period). Activities in each sub-process The activities in each sub-process are described below: Time taken to initiate change order: Change items are evaluated for need for the change, quotes are requested, bulletin estimates are prepared, quotes received from the contractor, negotiation (item initiation to change order date). Architect sub-process: After a change order is drafted, the architect reviews and authorizes the change (change order date to architect authorization date). Contractor sub-process: Contractor authorizes change order (architect authorization date to contractor authorization date). 59 MSU sub-process: Reviews at EAS, reviews at CGA (contractor authorization date to MSU authorization date). 4.3 Explanation of calculations through an example In this section a representative change item is used to demonstrate how durations of the total time taken to process change orders (D1), as well as the duration of each sub- process, was calculated. For the change item 1153, which is one of the change items in change order number seven in project 3981 (MSU Cyclotron project), calculations are explained. As seen in figure 4.1, the reason code is D3, which is a document error (a constructability issue). The item description of item 1153 is “change in brick selection” (not shown in diagram). The date when this problem was first identified is given by the item initiation date: 2002, 11, O4 (yyyy, mm, dd). The date on which a number of such items were collected and put into a change order is the change order date (2003, 03, 10), which included this item as well as all the other items in change order number seven. Item initiation dates for items 1144, 1145, 1150, and 1153 are the same as shown in figure 4.1. The item initiation dates may be unique for every item in a change order because frequently unrelated change order items are grouped into a single change order for processing purposes. 60 Calculations of sub-process durations were conducted using the formulas in section 4.2.1. For item 1153 sub-process durations are as folloWs: Initiation sub-process = (2003,03,10 — 2002,11,04) = 126. Architect sub-process = (2003,04,10 — 2003,03,10) = 31. Contractor sub-process (2003,04,l7 — 2003,04,10) = 7. . MSU sub.process = (2003,05,27 —- 2003,04,l7) = 40. Total time taken to process this change order item was 204 days (D1), and 78 days (D2) which is (2003,05,27 — 2002,11,04), and (2003,05,27 - 2003,03,]0) respectively. Item 1145 in change order eight showed the contractor sub-process was a negative value (-2 days). In this case the contractor signed two days before the architect signed the change order. This happened either because there was a deviation fi'om the typical process, or because there was an error in recording the date on the change order (paper document). For example, the architect may have a signed the change order before the contractor, but the document was date stamped two days after the date on which the contractor had signed the change order. Such negative values affect averages and could be eliminated, but since there were 73 instances where the architect sub-process had negative values and 162 instances where the contractor signed before the architect, many _ items would have to be eliminated. To avoid loss of data, another set of calculations was performed with all durations calculated from the item initiation date as the starting datum point. 61 Figure 4.3 graphically explains how these values were calculated. See figure 4.1 for A1, A2, A3, A4, and A4-A1 values for any item. The values were obtained by the following formulas: A1 = A2 = A3 = A4 = Change order initiation date -— Item initiation date. Architect authorization date — Item initiation date. Contractor authorization date — Item initiation date. MSU authorization date — Item initiation date. A4 — A1 = D2 = Total time taken to process a change item excluding the initiation sub- process. The calculations were performed on all items in the database, and duration calculations for all change items were executed and recorded. These were subsequently organized in tables to obtain an overview of durations for each project, and for each change order and change order item. 62 A33 SEE as: is. 55% 5.5 8338.6 3. 25E sate—.3 acute—=3 acute—=3 Dm—Z 389.33 3839.8 98qu 9.82— 9.82— catch 2.5 he 5»qu eat me 5»qu 2:: we Succu— 5.33::— n o m m o o e .— 9 - a a m actuate—:32. , :etaute:~u< accenteflse. .8523:— 859 , Pm: c. . 369.280 C 882.9% $36 emu-EU m .. 553:5 Eu: . - r E. H - 2 u i ~< l t r ~< t a: l :— 63 4.4 Data handling and reporting All calculations were done in Microsofi® Excel and reported using tables, and graphs in Microsofl® Excel®. Pie-charts, line diagrams, scatter plots, bar charts, and histograms were used to report analysis results. Analysis was done using Minitab'l'M Release 14 for Windows statistical software. ANOVA (analysis of variance) and linear regression fimctions were run on the database and reported using histograms, scatter plots, individual value plots, box plots and residual plots. 4.5 Overview of statistical analysis Interviews, process mapping and statistical analysis were conducted concurrently so that they could beneficially influence each other. Questions raised or suggestions made through the literature review, process mapping and interviews suggested areas that could be considered for statistical. analysis. 4.5.1 Overall average time taken to process change orders The overall time taken to process change orders was calculated twice: once considering 927 items with complete information (all dates available, no negative values) and another considering 1135 items with some missing durations. In the latter, A1, A2 A3, A4 and A4-A1 were used to give durations of processes, so that useful items need not be deleted. Although process time calculations were done using 1135 items, 1675 items were still used for other statistical analysis, such as cost range of change orders, and number of change items in a change order. (Discussed in section 4.14 in support of the . recommendations.) 64. Table 4.1 shows average time taken to process change orders for all projects and average time taken by each sub-process, considering 1135 items only. All 1675 items could not be used here because of outliers, and items with two or more dates missing, were excluded. Time taken Time taken Time taken Time taken Average Time taken to initiate before by by MSU to time taken without change architect contractor authorize to process initiation orders authorizes to authorize change change period (days) change change order (days) orders (days) order (days) order (days) (days) D1 D2 134 8 6 49 196 63 Table 4.1: Average time and time taken by each sub-process to process change orders (1135 items) These 1135 items from nineteen projects took an overall average of, 196 days (D1) and 63 days (D2), to be processed. Sub-processes had average times as follows: initiation period 134 days, architect sub—process eight days, contractor sub-process six days and MSU sub-process 49 days. Table 4.2 shows the time taken to process change orders and the time taken by each sub-process considering 927 items only. This analysis included thirteen projects and 107 change orders only. Time taken Time taken Time taken Time taken Average Time taken to initiate before by by MSU to time taken without change architect contractor authorize to process initiation orders authorizes to authorize change change period (days) change change order (days) orders (days) order (days) order (days) (days) D1 D2 140 4 5 56 205 65 Table 4.2: Total time and time taken by each sub-process to process change orders (927 items) 65 The researcher was aware that the sample size was relatively small and it might not necessarily be generalized to all MSU projects, hence it was not as important to find exact values. However, the researcher identified a range of days. Here time taken by MSU to process change orders is about 60-65 days, which is comparable to the way other universities operate. The contractor may be more concerned however about the D1 definition, because the contractor knows the date when the problem was identified and the time taken to process that change item and receive payment. This D1 time may be of special concern when the contractor has already performed the work as required by a construction change directive. Typical payments may add more than 30 days beyond the MSU authorization date, leaving a substantial period of time from when a contractor performs work to when he/she actually receives payment for it. One should be aware at this point that the initiation period is influenced by the contractor, architect and MSU personnel and therefore cannot be completely controlled by MSU; however there may be room for improvement in the activities performed by MSU personnel during this period. 4.5.2 Summary of projects and time taken to process their change orders After the average time taken to process change orders was determined, the researcher determined the average time taken to process change orders for each individual project. An example of how projects were summarized is shown in Table 4.3. Table 4.3 shows an excerpt of the complete table. The table shows the project identification number (Project ID 3981), the number of change orders in this project (14), time taken to process each change order in this project (D1), average time taken to process change orders in 66 this project (151 days); initiation period for each change order, average initiation time taken (83 days); time taken by the architect sub-process for each change order, average time taken by architect sub-process (23 days); time taken by contractor sub-process for each change order, average time taken by contractor sub-process (3 days); time taken by MSU sub-process, and average time taken by MSU sub-process, (42 days). Project 3981 Change Initiation Architect Contractor MSU sub- Total time Total time order sub- sub- sub- process taken to without number process process process (days) process initiation (days) (days) (days) change period D2 order D1 (days) (day-S) 1 0 0 - - - - 2 86 12 57 -9 < 146 60 . 3 34 53 -l 81 167 133 4 155 24 -1 95 273 118 5 168 27 23 7 225 57 6 l l 10 -9 55 67 56 7 194 31 ' 7 40 272 78 8 67 52 -2 33 150 83 9 71 13 -1 40 123 52 10 100 17 2 33 152 52 1 1 29 13 -1 4O 81 52 12 80 13 -12 34 1 15 35 13 81 13 ~12 34 l 16 35 14 0 16 -6 61 71 71 Average time taken for each sub-process: Average total time taken to process change orders (D1) = 151 days Average total time taken to process change orders (D2) = 68 days Average initiation sub-process = 83 days Average architeCt sub-process = 23 days Average contractor sub-process = 3 days ‘D1 is time fiame between initiation date of the earliest item in a change order to date when the change order was authorized by MSU. When projects are compared the averages of D1 for all change orders will be considered. Table 4.3 Summary of change order information for Project 3981: Michigan State University Cyclotron Project. ' 67 The row containing change order number one was deleted because MSU and contractor dates were not recorded on the change order. The last column shows the duration calculated between the architect authorization date and the .MSU authorization date, without considering the contractor sub-process. This was done to eliminate the negative values seen in the contractor sub-process column. Results for project 3981 are as follows: 13 change orders were considered, on average: 151 days D1, 68 days D2, 83 days initiation period, 23 days for architect sub-process and 45 days was the time taken fiom when architect authorized to the date when MSU authorized change orders. Figure 4.4 shows a bar chart of total processing time (D1) of each change order in project 3981 and a line indicating average processing time of 151 days. 13 change orders were considered. Similarly bar charts for all the sub-processes for this project were made. A stacked bar chart was prepared to provide a view of how each sub-process contributed to the D1 time period in project 3981.The time for the initiation period is the greatest contributor to overall processing time of change orders, followed by MSU sub-process, as shown in figure 4.5 68 mxpx 275 ~— 250 «- 225 ~— 175 ~- 150 «— 125 «~ 100 —~ 75 «1- 50 4 25 a» o _ duration (days) j 1446‘ ' T 150’ ' '1— if i I 115116 81.,.,,. ,-7_.]_ | 2 3 4 5 6 7 s 9 12 13 Time taken to process Change Orders Project ID 3981 273 272 225 167 10 ll 14 Change order numbers - Time taken to process Change Order —average lime taken to process Change Order Figure 4.4: Bar chart showing total time taken to process change orders in project 3981 (D1) All 19 projects were arranged and analyzed similarly. Bar charts and tables were then prepared. See Appendix G for bar charts of sub-processes on all projects. Finally all calculations were put together to give an overall picture of 19 projects. See Table 4.4 and Figure 4.6 69 5am tenet—“Ge 2098 own-Eu «e 2.5 ”583.:— =Eo>e 3 2:: 3025A: me net—.3989 mike—1 r35 .3.— 335 u m... 2.5mm Ra... E mound-an: none Aq pamqmo: emu p comma; pun Map 11' 0mm 5 7O .8985 52m 08 E mucus owqfio com mowfigm 8a NQ can RH... 33.33 a Minn—Esp. 035. "v4. ~35. Va 83 mm 38 EN 2.3 3 58 ow 9%" o o mono vm F <35... om — a." mu — 83 R o 33 on a 333 E o <23 3 S St 9. 2 a; mm m mica. mm N 33 mm a «an mu N «33 nm e 53 $2. 2 962a a menx OE: GOV—D,— ®E_ . ., 089:3: hop—O oooao>< omoao>< ex 3:: E taco—.0, mm: +02an 71 4.5.3 Summary of nineteen projects Table 4.4 shows a summary of 19 projects. For project 0365, contractor authorization dates were not recorded; therefore average times could not be calculated. The table shows the number of change orders considered in each project, durations of total time (D1 and D2) and sub-processes. Figure 4.6 shows the time taken by MSU and the initiation period are high contributors to the overall processing time of change orders; therefore these processes were mapped simultaneously and their steps were broken into details to understand the reasons for the differences in duration. I 4% I 25% I 68% I time taken from when an Item was recognized to the drafting of change order Ei Time taken before architect authorizes it I ‘lime taken by contractor I Time taken by MSU Figure 4.6 Percentage contributions of sub-processes to total processing time of change orders. 72 4.6 Statistical analysis After conducting interviews and process mapping discussed below, the researcher sought to find out if there were relationships between the sub-processes, other factors, and the total time taken to process change orders. Therefore statistical analyses were run to identify outliers, correlate factors with each other and to see how one factor affects the other. Software used for this purpose was Minitabm. Linear regression and ANOVA (analysis of variance) were run and results were displayed using box plots, scatter plots, individual plots and residual plots. 4.6.1 Relationship between initiation period and total time taken to process change orders As seen from Microsofi® Excel graphs and interview results (to be discussed in chapter five), there is a relationship between the initiation period and total time taken to process change orders (Di). The researcher was interested in determining if variation in duration of the initiation period led to variation in D1. AN OVA analysis was conducted for this purpose. 73 Total time taken to process change orders D1 ‘7 500250 a (1.250500) 750 ° 1000 ’ iz'éd Time taken to initiate change orders Figure 4.7: Scatter plot of D1 versus time taken to initiate change orders The scatter plot in Fig 4.7 was generated by Minitab and shows a linear relationship between the two variables. The tightness of the data points around the line indicates the strength of the correlation. The scatter plot shows outliers highlighted by circles; these indicate that for these items D1 varied fiom the line of regression because there were other factors that influenced D1 in addition to the time taken to initiate change orders. 4.6.2 Relationship between time taken by Michigan State University and Total time taken to process change orders (D1) If a sub-process is lengthy in a linear process, overall time will increase. The existence of a linear relationship between the two variables was ascertained by AN OVA. The results are as follows: P value 0.000, (a value 0.05). S = 101.0 R—Sq = 81.94% R- Sq (adj) = 80.91%. The ANOVA analysis indicates that there is a strong relationship 74 between time taken by MSU to process a change order and overall time taken to process a change order. When MSU sub-process time increased, overall time to process change orders also had increased: 81.94 % (strength of correlation). This does not mean however that in 81% ofthe cases where overall processing time was long, it was due to MSU sub- process time. The analysis showed that there is a linear relationship between the two variables and that if MSU sub-process time is reduced it could reduce overall processing time; however there will be other influencing factors that will still afl'ect overall processing time. In order to find the possible reasons for this time period the researcher correlated the results with interviews. The interviews suggested that there may be too many layers of approval authority and that too many non related items are packaged into each change order which adds to processing time. 4.6.3 Relationship between number of items in a change 'order and total time taken to process change orders (D1) ANOVA analysis was run on the database. As Figure 4.8 depicts, there was a relationship between the number of items in a change order and D1. The results were as follows: P value 0.000 (a value) 0.05. The analysis shows that the number of unassociated items packaged in a change order affected the overall processing time of change orders. For the strength of the correlation, see figure 4.9. 75 ‘I ', I ~ Tgwi j I‘ I l T’ T_~_ l 1234 s ‘6 7 s 9 to 11 12 13 14 is as 18119 as 22 23 31 Number of change items in a change order Total time takentoprocesschange orders D1 Figure 4.8 Box plots of D1 and number of items in a change order In the box plot there was an outlier indicated which represented change order six fiom project 2474A- MSU Biophysical Sciences Building. Change order six had three items but took 564 days for processing (date when first item was initiated to date when MSU authorized the change order) which was an unusually long time. As seen in figure 4.8 there were several items which took more than 564 days to process, however this chart has grouped change orders with a fixed number of items in it and created individual bar charts of those change orders. The average of such groups is indicated by the line joining points indicated by circles. Numbers nine and 16 on the X axis indicate two groups having change orders with nine items and sixteen items respectively. Their processing time in days has a wider range and therefore appears as long boxes; however there are no outliers in that group. Whereas the change order group with three items (indicated by 76 threeonaxis)hasasmallrangeandanychangeorderinthatgroupfallingoutofthe range stood out as an outlier. Total time taken to process change orders D1 0 Number of change items in a change order Figure 4.9 Scatter plot of DI and number of items in a change order The scatter plot in figme 4.9 shows a linear relationship between the two variables. S = 178.7 R-Sq = 48.57% R-Sq (adj) = 31.64.Additionally, Figure 4.10 shows that the number of change items in a change order varies from two change items per change order to 40 change items per change order. While project 3158 has one change order with an average of two items per change order, project 2474D has 45 change orders with an average of ten items per change order. There was a lack of consistency seen, which also indicated that contractors and sub contractors could have a tough time anticipating processing times of change orders. 77 45 aaaaa __, *7. 4o , WI“ «— ~— 35 a” ,,_a,fi___¥ma____- I_ _.,,_ .- y- 30 In... ._____.-......,_,*.#.m-_.__n_. _.__,--a_a_-..~...,_~,az __ _____ ________s F. 25 7“” -—— w ~— 2" ’ 17, "“ __<_ 14 . i4 15 12 12 11 113 10 10 10 “IO .-E§5%.rranflflddfli _ a awyg 29,1» a; a gasses» seq,» 1o« 1 El Number of change orders it the project * all items considered I Average number of items per change order 'rouuded off to closest value‘ Figure 4.10 Average number of change items per project The conclusion from these analyses is that there is a re1ation between the number of items in a change order and the time required to process a change order. 48.57 % of the variability in time taken to process change orders is explained by the number of items in a change order. The interviewees suggested that if there were fewer unrelated items in a change order, that a particular change order would be quicker to review, which appears to ba corroborated by statistical analyses. 78 4.6.4 Analysis of change order cost In order to identify trends in cost of the change orders, an analysis was conducted. There were 1372 change items that had cost in the database. The distribution of costs of 1372 change items in the database is shown in the scatter plot below. 850000 ~—~———~e___.-.___ Masflmm _ VINE w 800000 __ 750000 1—~——————__ ~____. -____ 700000 -— . ,_ _ 650000 ___.. -. a. ,_,__________u____,_“H 600000 1% 550000 .. . fi_ 500000 a_, 450000 . , .. -____ 400000 _ ______ I. 350000 «--~-———~ . - 300000 .----......-._a..._-...-.....,-__.___. , 250000 . . _ ,, mm 2.... 200000 ..__.....M_ . _ 150000 . 100000 —: s, . 50000 5 o. :0 . . a, . i Dollar value of change items O '1 O O 0! o 7 WT , . f . ‘ -50000 wWM—dfieL—LGOGWBWOOGWW , $100M: ~1600 Change order items Figure 4.11 Change items and their dollar values The scatter plot shows the cost of change items. Items below the zero line show deductive change items. The X axis shows every item in the database; (item 600 on the X axis does not indicate CIID 600 in the database).The majority of the items cost under $50,000. A pie chart of the items shows that 90% of change items are under $10,000. 10% of the items fall within the $10,000 -$100,000 range, which suggests an opportunity for management personnel at lower levels in the organization to approve change orders of 79 limited complexity and dollar value. As dollar value and complexity increases, higher levels of management could be involved (incremental authorization of change orders). Percentage of items under each dollar range category of change items [3 10,000-100,000 143 296 139 10% 22% Inorlese 1:15000-10,000 ' I O or less I <5000 E] 5000-10,000 [310,000-100,000 Figure 4.12: Pie-chart of 1372 change items in dollar amount ranges 4.7 Conclusions of statistical analyses Based on the analyses of the database, the following conclusions were developed: 1. There is room for improvement in the change order initiation and MSU authorization sub-process. 2. The initiation period is the highest contributor to the overall processing time D1; the second highest contributor is the MSU authorization period (includes EAS and MSU time). 80 9. MSU on an average takes 196 days (D1) and 63 days (D2) to process its change orders. This calculation was based on 1135 items from nineteen projects. D2 time appeared consistent with that of other universities interviewed. The initiation period took 134 days, architect sub—process took eight days, contractor sub—process took six days and MSU sub-process took 49 days. This calculation was based on 1135 items from nineteen projects; Typical payments may add in excess of 30 days after the MSU authorization date, leaving a substantial period of time fi'om when contractors performed work to when they actually receive payment for it There is a relationship between time taken by MSU to authorize change orders and overall time taken to process change orders (D1). There is a relationship between the initiation period of change orders and overall time taken to process change orders (D1). There is a linear relationship between the number of items in a change order and time taken to process change orders (D1). On an average 11 items per change order are packaged into a single change order. 10. 90% of change items are under $10,000. Ten percent of the items fall under $10,000- $lO0,000 range, which suggests an opportunity for incremental authorization of change orders by MSU personnel. 81 4.8 Chapter summary This chapter reports the various analyses run on the database. It began by describing the database and how data was organized. Results of the analyses were reported and relationships between various factors as well as the total time taken to process change orders were reported. The chapter ends by presenting conclusions of the statistical analyses. Chapter five describes interviews, results of interviews and process maps of change order management processes at MSU. Process map analysis and development of an alternate process map are described in chapter five. 82 Chapter 5 Process maps 83 5.1 Introduction This chapter presents the change order process maps for various departments at MSU. The chapter begins by describing the interview process and how it was used to develop current as well as an alternate process map for EAS. 5.2 Interview data handling As explained in chapter three, interviews were conducted with architects, contractors, subcontractors, MSU construction personnel and construction personnel from four other universities. Paraphrased responses were entered into a spreadsheet format. Figure 5.1 shows an excerpt of the spreadsheet of interview data from contractors. Six contracting, three subcontracting, two architectural and ten MSU project administrators were interviewed to solicit opinions and identify room for improvement in the change order process. Administrators from four other universities were also interviewed to learn about processes at other universities. In all, 40 construction professionals were interviewed. The five sets of interviews were set up in separate spreadsheets. The responses were coded to maintain anonymity. 84 Question Code Question 1 Response Response code Q12 radditional costs such as What are the typical 60 days typically fi‘om date bulletin is approved to MSU durations for processing authorization date. Yes they contribute, earlier we could accept change orders? Do these with 8% 0&P, now it is 4% we cannot accept it. Prices durations contribute to increase when executed later. Cl Pvt Cos are quick in negotiations due to less hierarchy in approval (1 wed: processing + 30 days payment). They can contribute to extended general conditions. The lst CO may not have a major effect but the 5th will have a cumulative effect. Impacts include, financial burden on SC, relationships breakdown, detrimental to administration. Owners have to understand that SC payment is important. If delay in payment is anticipated they include it in their cost. If they trust the process time they will quote realisticallL for extended general conditions, ripple effects or impact change orders? 90—120 days, without the payment period. Yes. 4-6 weeks for change order drafting. fipm time initiated to MSU authorization 3 months. Yes they do. Most other places takes 10-15 days. C4 195 days in MSU (payment process is included). Subs are problems. Once a month request for potential CO to Proj Rep to generate a bulletin. In other places it is 30-40 days, State of Michigan 60 days. Identification of change to MSU authorization date not including payment is 2 months on an average. Yes absolutely. Higher % of overhead. Negotiation takes a while and as more time is taken, subs tend to charge more for change ordas. Very few will inflate change orders though, but business is business. sometimes there is no choice but to do it in order to survive. C6 Figure 5.1 Excerpt of interview data of contractors 85 5.2.1 Overview of interview data Administrators (at both MSU and outside universities), architects, subcontractors and contractors were interviewed. The questions were tailored as appropriate for each group. Some questions overlapped and were common to all interviews. The number of questions ranged from 30 to 45 for the five sets of interviews. Questions one and two were demographic in nature; the rest of the questions were open ended and single-response type questions. Responses were paraphrased. (Included in Appendices B - F) Reported below is a general overview of the responses expressed by the respondents for various questions. ‘ Generally the architect, contractor and subcontractor interviewees have been actively involved in MSU construction projects and are involved in the process of change orders. The interviewees identified the following types of projects their organizations are involved with: historic preservation, new construction, laboratories, power plants, classrooms, sports facilities, hospitals, retail, industrial, and resorts. The number of projects built annually ranged from 40 projects to 400 projects, worth $ 20 million to $1 billion. Most have worked with other large owners and are aware of the processes they work with. When asked if they conduct any formal post construction analysis of projects with respect to budget, schedule, change orders, or performance of the parties involved, the general response was “informal analysis”. There were some instances of interviewees responding that they'conducted formal post-construction analysis. 86 The general response for change order rates (final cost increase due to change orders) 2 was, 5-10% increasing to 25% in one response reporting on heavy infrastructure renovation. When asked about the typical durations for processing change orders, the general response was 60 days to three months, followed by 30 days for payments to be issued. Some interviewees responded that other universities or large owners had similar procedures while others differed in their response. The overall theme was that private owners take less time to process change orders, compared to public owners. The interviewees attribute this to bureaucracy. Regarding the question: “Based on your work with other large owners, what organizational traits or processes contribute to reduced impacts of change orders?” the general response was: “ more defined process with fewer layers of approval and a defined decision maker.” Some responses also suggested that more or less all public owners manage their projects along the same lines and face common issues. Most respondents agreed that change orders have impacts in the form of productivity losses, extended general conditions and mobilization costs; however many respondents said claims rarely arise for these, and some responded that owners don’t understand these impacts. Most contractors, architects and subcontractors agreed that change is not welcome to any of them and that most people they work with are fair and trustworthy and that people rarely take advantage of change orders. However there were some responses where the interviewees said that they do consider an ‘MSU factor’ in their bids, taking into account the processing time of change orders. 87 When asked to comment on the effectiveness of MSU’s change order process and what should be changed in it, the responses were as follows: 1. 2. It took too long to process change orders and was ineffective in that aspect. There was a unanimous response that change orders pass through too many hands in spite of being negotiated very well by the MSU’s staff. . Ahnost all contractors stated that it was their responsibility to push the paperwork and track change orders. Subcontractors were not aware of what takes so long and whether it was the contractor who delayed payment or the owner. There was a general comment that MSU is understaffed. The interviewees also stated that they considered MSU a fair owner with a good understanding of construction, but the university needs to change some procedures; streamline its processes, and trust decision makers at lower levels. Another comment was that, “MSU is extremely picky, to the extent that it is counterproductive. Time taken to process change orders is so long, that it shows that such an important process is not getting the attention that it requires.” There was another comment suggesting that change orders should be issued in a time and material method. Another view was that the owners should change the antiquated system of operating and should internally track their change orders using software. Administrators of four other major universities were also interviewed. Overall their description of the change order process was similar. Their average change order processing time was closely comparable to MSU’s time (D2). University of Notre Dame, 88 however, extensively tracked its change orders and indicated that most of its change orders were processed in less than two weeks. They did cite instances when the change orders were processed in two months. Purdue issued change orders monthly. All administrators were of the opinion that the processing time is generally accepted by contractors and subcontractors, but that time could be reduced. The contractors, subcontractors and architects were resigned to the long time it takes owners to process and pay change orders; however, they think that there definitely is room for improvement. Change orders that had scope issues, large dollar amounts, schedule impacts, or were generally complex were scrutinized more closely by owners. Therefore these had longer change order processing times. Some universities had a different way of processing change orders. For example, Purdue University generally uses change orders containing single items. Purdue also uses reason codes assigned to change orders, from which MSU reason codes were developed. Purdue had a system of approval in place that allowed change orders with certain criteria to be approved at lower management levels. The University of Minnesota had a similar system in place. All administrators generally concluded that there is always room for improvement and that they are interested in effectively managing the construction processes. 89 5.3 Summary of interviews Based on the interview responses the following conclusions can be drawn: 1. Administrators in universities agreed that there was room for improvement and a framework to improve the process should be developed by each university that will cater to its own needs. The general consensus of most interviewees was that universities can and should reduce processing time of change orders. Small items sometimes get packaged with critical items and end up taking longer to review and authorize payment. The general view was that unrelated items are packaged together which increases review periods. Interviewees suggested that change order prices are agreed to afier negotiations with the owner; therefore it should not take as long for change orders to be reviewed and approved. Some universities have approval systems which allow change orders to be approved at lower management levels. Interviewees suggested that other large owners (other than universities) have more defined processes and fewer layers of approval. Interviewees also suggested that owners should take efforts to internally track - change orders. 90 Section 4.1 to 4.8 explained the manner in which data was organized, handled, analyzed, and reported. Interview responses are provided in appendices B C, D, E, and F. Interview data was used along with the statistical analyses and process mapping, discussed below, to identify areas for improvement, to develop an alternate process map for EAS and to develop recommendations, which are applicable to large universities in general. 5.4 Process map As discussed in chapter three, the change order processes of CPP, HFS and EAS were mapped using flow diagrams. These initial process maps were developed fi'om information obtained through interviews of MSU construction personnel and administrators. The respective maps were presented to personnel of the appropriate departments and were restructured as required to make them accurate representations of the typical change order process used by each department. CPP had a simple process with a single person designated to monitor, review and authorize change orders. The current process map for CPP was drawn in Microsoft® ’ Excel and was confirmed for accuracy by the interviewees. Housing and. Food Services, like Campus Park and Planning had a fairly simple process and one person designated to monitor, review and authorize change orders. The process was mapped after an interview and discussions with the designated authority and the current process map for HFS was drawn in Microsofl® Excel. This sequence and accuracy was reviewed and confirmed by HFS staff. Through interviews, database analysis results, and study of the map, it was easy to conclude that this too was a simple process and required very little processing time compared to EAS. 91 In EAS more people handle change orders when compared to CPP and HFS. The EAS process was mapped in detail using the Graham flchhart method presented in 2.4.4 and 5.4.3 and analyzed. The formal process of change orders, from the date when the earliest item was identified in a change order to the date. when the change order was finally authorized by MSU for implementation, was considered. The payment process was not included. The EAS process activities are described in detail in section 5 .43. Maps for HFS and CPP are presented first, followed by the EAS process. 92 5.4.1 Housing and Food Services The change order process used by HFS is shown in Figure 5.2. IHFS can procure construction directly and contracts are usually based on unit costs. I Orgin of process I ’ 1 Change identified through RFI, CCD is issued to MM, telephone call, Field _. direct work if observation by required. SubC/Contractor/HF S Item intiation date Bulletin is prepared which also firnctions as a request for quotes. (Word document) _ i s ., Contractor |Bulletin is quoted and signed by l Negotiations are ] authorization contractor made face to face/ date - phone , t MSU Change order is issued by HFS authorization date l 2 copies are made, one is sent to the I contractor. s, IEnd of change order process. Payment process begins. Figure 5.2 Current change order process in Housing and Food Services (process map) As seen in Figure 5 .2 potential changes are identified through meeting minutes and Requests for Information (RF Is) or by field observations by a subcontractor, contractor or HF S. If necessary a CCD is issued, otherwise a bulletin is prepared. A bulletin also 93 functions as a request for quote. Bulletins are received, quoted and signed by a contractor and returned to HF S. All negotiations prior to signature are either done face to face or by telephone. Finally a change order is issued by HFS and two copies are maintained, one retained by HFS for records and the other returned to the contractor. There are only three significant dates in this process: item initiation, contractor authorization and MSU authorization date. Through interviews of HF S staff, the researcher ascertained that change orders are processed within a week. The process is streamlined and simple and allows for rapid decision-making. The change order process described above is similar to the EAS purchase order process, except that HFS has a single designated authority who handles changes. 1 As the process was simple, there were no suggestions for process improvement made by the researcher. However, it was suggested that HFS maintain a process map in writing to ensure standardization of its process. 5.4.2 Campus Park and Planning CPP can procure construction either through EAS or by itself. The mapped process in this thesis is for projects that are procured directly through CPP rather than through EAS. CPP generally uses unit cost contracts. Projects and costs are typically smaller and less complicated than those of EAS projects. As seen in figure 5.3, the change order process begins when a problem or a potential change is identified. A change may be identified either by CPP or by a consultant who has recommended a change. Notification is either made informally or on paper. After ”a potential change is identified, CPP or the design consultant develops a CCD and initials it. The construction site superintendent at CPP reviews a change order and authorizes it. 94 The Director is kept informed of approval and authorization of a CCD. Two copies of a CCD are made, one retained by CPP for records and the other issued to the contractor. Occasionally, at intervals, several CCDs are collected and a change order is drafted. More typically all CCDs are collected and drafied into a single change order at the end of the project. This is included as the change order date in the database. The director and construction site superintendent review a change order for content and wording, and send it to the contractor for signature. When CGA receives a change order, it is reviewed for content and accounting purposes. The MSU authorization date is the date when the Associate Vice-President signs the change order. The change order process used by CPP has a streamlined approval hierarchy; therefore few delays occur during decision making or processing. Processing time is related to project duration, which is five to six weeks. Change order processing occurs during the post construction phase. The database shows the Parking Lot 89 Expansion Project took 120 and 389 days for processing its two change orders when considering (D1), and 33 and 16 days for processing its tWo change orders when considering (D2). The process was simple. The only suggestion made therefore was to maintain a process map in writing to standardize procedures. 95 r Origin of process 1 Potential change is identified or Problem is identified and investigated. Change identified 1. CPP 2. Consultant recommends change Notification is by informal! formal paperwork. l [CPP/ consultants write CCD and intials it. | s l Director is kept CPP (site construction superintendent) 3 informed regularly reviews and signs it. s l [:0pies made. One is kept for records, the other copy of CCD is issued to contractor to roceed with work. L Occassionally at intervals or at the end of project CCDs are collected and one single change order is drafted by CPP. Change order is drafted/written by consultant and intialed. 0005 are attached. 1 File construction superintendent at CPP l and Director intial it. (review for content, verbage of change order) 3 l [Contractor initials change order ] - l , , Contracts and Grants receives change orde Change order is approves or returns it for further refinement. authorized by MSU (Vice president) Change order issued. End of change order 7 process. Payment process begins. Figure 5.3 Current change orders process in Campus Park and Planning 96 5.4.3 Engineering and Architectural Services current process map EAS projects are typically larger and more complex than those of HFS and CPP, and consequently the change order process is more complex. On average, change orders take 190- 200 days D1, 60 -65 days D2 to be processed. Interviews, both internal and external, suggest that the process takes too long. EAS has four categories of change orders: Major, Formal, Construction Manager and Purchase Order. This thesis addresses the formal process in detail. Figure 5.4 shows that EAS process formal route has all of the five significant dates discussed earlier. Initiation period: The change order process begins with a potential change being identified thorough RFIs, and meeting minutes. The items may or may not have costs associated with them. As each item is identified by the construction representative (CR), the CR seeks inputs fiom in—house and outside consultants on details. The need for a change is evaluated by the architect/ engineer (A/E) and CR. If they conclude that there is not need for a change; the rejected items, with or without quotes, are recorded and the contractor is informed. The CR groups a number of such items to prepare a potential change order. The length of this assembly time and the number of items in a potential change order are net standardized and are left to the discretion of the CR. Although, informal quotes may have been requested by this point, a formal request for a quote is made to the contractor, and two weeks are allotted for the contractor to prepare required quotes (although interviews suggest that sometimes it takes longer for contractors to submit these quotes.) When a change is requested by the A/E or owner, a bulletin and estimate are prepared that describe and estimate cost of change orders. At this time, a “Fred note” is prepared, either by the EAS architect or at the CCD stage. (Fred note is a 97 local phrase: this refers to a note that outlines the reason for change and is used by upper level administrators who must authorize a change order under the current protocol.) Reason codes are also assigned at this point. Meanwhile the contractor obtains ’sub contractor quotes as required and submits his/her quote to the CR. Some negotiation may occur, which typically takes up to a week. If there is disagreement over price, then a CCD or time and material method may be used. After final negotiation and agreement, a change order is drafted by theEAS architect and this date is recorded as the change order date. Architect sub-process: After a change order is drafted the consultant architect or in-house architect reviews and signs it, the date when this occurs is the architect authorization date in the database. After the architect authorizes a change order three ' copies are made, which are sent to the contractor for signatures. Contractor sub-process: The contractor signs three copies afier reviewing them and returns two copies to MSU. The date the contractor authorizes a (change order is the contractor authorization date in the database. On occasion a change order was generated by an in-house architect on projects designed in-house. On those occasions the contractor was not required to sign a change order, which led to some missing contractor dates in the database. MSU sub-process: The design administrator reviews a change order for content; reviews the “Fred note” and initials the change order. Next, the University Engineer also reviews and initials the change order. It is then sent by the university’s internal mail dispatch system, to CGA. CGA receives and audits the change order for content, budget conformance, reason codes, and item description. CGA correlates the change order with 98 relevant CCDs and checks the contingency ledger, bulletins, and other documents. If there is a need for clarification or if some information is lacking, CGA may consult with EAS or return a change order. This step may be lengthy. The staff at CGA enters information into the university information system (FAMIS). The Associate Vice- President authorizes a change order, which is indicated by the MSU authorization date in the database. The database does not include payment dates but they are generally believed to be about 30 days after the MSU authorization date. 99 32: 8009.5 330m 3500.502 can wat3afiafi 5 8000.:— 830 09:30 «38:0 :8.— vfi PSME MO 05 a 858% as: as \ 88 m: 5 see 05 x03 388 35 28 8.888883% 82m 8083 8% 339.00.. 888.280 888 «888.580 53 08.580 8 3888 0.8 38830 awed: 38:8 £003 N 33200.. on? .8 3380.5 .3888 mm MO .3 038 08830 58:3 8 28 3.898 mm 58:3 08.8 8m 80.82 88.8%: \038 m_ 08.8 8 .8850 8 m}. .3 380.80.. owed—8 8 m .8.“ 8282 88.8% 8 :88 m3 3:85. 8:00 a: 30:0.“ 3088580 3330.8 20 .8 808083. 8:82 8 389 0:5 338088 .8 Eng .8088 088:0 3833 8 0088 8 380:8 0.8 «80: .3E8m5 mm 8808.80 98 8800.. 35 MO ow 808.8 8053, 8 :83 5.80: 3808M 28 m2 .3 383—«>0 0883 8m 302— m3: 8 800588 28 $08308 0238 E8 088:5 89a MO .3 EwaB 0.8 089: mean zoPSeZ 2m: as 5555 mesa: :8 8:85 8882 as: E: _ 80008 .8 auto— 100 308 800005 000_>..0m 8.5800392 .28 ”5.80595 5 00000.:— ._030 098:0 2.0.850 N tam Wm PSME 0 200 030a , 28 80:80 8.: 0008 098:0 030300 .3882 a x 005.: but. 803:0 0E. 8850,8833 $80G .0: 0888.: b000, 803:0 _ 05 030:5 3:08 0: 00:8 0w8:0 .m— - 80:80 8.: 00:8 0w8:0 030:6.— 88508883 @809 mama ZOF23 So 23a Emu»: aoaowfiunoo 5m? :85 ”839.3% 88m .830 882 .oogfiuomnoo «0335 no.“ 520 «mango 88.35 98 £98 <00 _ <00 2 :83me Ema— fiomwfim nwsoafi EEO omaaso 3:8 bfim €2.85 ‘ m mnwmm BREE van .2838 How .820 owqano 9,632 beammqm 565,33 102 The EAS change order process map was scrutinized by construction representatives, and other EAS personnel to ensure that the map was accurate. Figure 5.5 shows the map afier it was reviewed and accepted as representative of the process at MSU. The MSU change order management process was analyzed in order to develop an understanding of each activity and its importance as well as to identify milestone activities and possible improvements. The researcher modified the Graham technique (Graham, 2003, 2000) by introducing new symbols that would identify improvements. The following are symbols used by the researcher for analysis. @ Origin of process: Indicates the beginning of the change order process in the map 0 Work being done: Indicates that work which was required was being done. . Authorization dates: Indicates the date a change order is authorized/ signed Value added activities: Indicates that a useful activity occurred, something that 1’] added value to the process/ document. V Room for improvement: Indicates that there were certain activities in the step that have possibilities for improvement. Review and approval: Indicates that a person in the process reviewed the document and signed it to indicate approval. Formatting and review: Indicates that the document was formatted and reviewed, but no one signed the document. Delay, room for improvement: Indicates delay in the manner in which the document moved between departments. 103 V .— J- .2 Ann it... . I._'ll.w 803 .88 £2,200 0:35—08 mains:— Eafinw mama: $000.3 moumtom 30308534 000 wfiuoofiwufi .8 £m>_a=000 ”00003000 0 U - 503 0323005 Wm ..... mfl 00:00:00: a0:000fluz0dw00 0050 :0 000000000— 0003 , 30:2 ........... .r 080.2232 aessaoaasofl 00:30.80 ‘ 0000000 05 05058000 00 8000005880000 .......... 00000000000000 0000000050 “0 “on a “a g g 0850“? 30-03 ccccc 0%. egg 5m; ”gumtsa .8. 5a.... 02.033401 . 0000000 05 00 00000 00000 0:05 0300000 0:0—A m. .0300 _ 0 .0080 b08085: 0000000 0300000 000800;. 00000 0:00:00 0.000—00000 0.000 00800 50000 00000000000000. 00.0 , , , 00000 5:00— A000? 000000.00 _[ 300000 008000031— 33500 .00 0.0.0005 0000000080 .00 0000000 .00 5000050000000 000000005 .00—0900000 00:. 0.000000 0:00:00 00003.04- . 03223:. 0:0.0:0 $080003 000200 T ........ 2000000 30000000000005 000000 0&0300 0 :0 0.00000 0000—0000 .00 000:5: 0000 00000 03000000 0:0: 03026 080000 , ............ .000 .250 .58 9022. 80 «53. 0.080380 305 8280 02. 35+ 0000an0 00000000 003800 30000000: — - .00 000000000 , . 00000 0000.00 0:000 000.051.— 8000 000.05 000000000 0:00:00 5:00— , I 000: a A 125 The next vital step in this framework is to analyze each step in the process for its usefulness and necessity. The BOLO list (Smith, 2002) described in section 3.8 was a useful tool to identify the value of each step. This list was used by the researcher because: 1. It enables the researcher to analyze each step individually. 2. It provides answers to the five essential process improvement questions: what, when, why, where, who. 3. It enables the researcher to view the process without bias. 4. It does not suggest elimination, but allows the researcher to observe characteristics of each step in a process and then make a judgment after the entire process is analyzed. 5. It is a standard tool for process improvement. This tool was used by the researcher, but any other tool that will give similar results may be used for process analysis. After each activity is analyzed, the process map may be graphically represented using the Graham technique (Graham, 2002). This tool was used by the researcher because the technique uses symbols that are: 1. Mutually exclusive: Each symbol represents a distinct type of action. Therefore the categories do not overlap and make it difficult to determine which symbol to apply. An item is either moving (an arroW) or stationary (all other symbols): it is doing nothing (a triangle) or doing something (all other symbols), etc. 2. Universally applicable: They occur in all work areas. Therefore it is not necessary to use different terminology in different work areas. (For example, sales engineering, accounting, etc.) 3. Comprehensive: They cover work processes completely. 126 4. Each step in a work process is identified by one of eight ASME and ANSI approved symbols. This tool was used by the researcher, but any other tool that will give similar results may be used for the same purpose. After areas for improvement are identified and visually represented, the results from statistical analyses of a historical database can be compared to the process analysis observations and, at the research team’s discretion, the activities may then be changed/ deleted/added to the process to improve it. For example, as in the case study, figure 4.14, using the Graham symbol of “triangle” indicates a delay towards the end of the process. This came as a result of notes taken during process mapping interviews in the case study organization, where personnel mentioned that considerable time is spent when there is lack of informationon a document, or there are unclear descriptions of change items, or disagreement over choice of reason codes. It takes time to coordinate, get the right information, revise the document, and then send it for approval. In addition, if there are too many unrelated items, coordination and review time increases. A lot of time is spent waiting for responses between departments. The BOLO list helped the researcher analyze this step. BOLO items 6, 7, 13, 14, and 15 are applicable here. The researcher analyzed this step as follows: a. Someone forgot to input valuable information required by another department on the document. b. This step is intermediary and required to coordinate something that could have been done earlier in the process. This step is non value adding and also causes delay. c. This is a Quality Control (QC) step. 127 d. This step could have been avoided if the process was “mistake proofed” in the previous department. A possible tool which could be used to remedy this is a simple checklist. The Graham symbol of non value adding and delay causing activity was used to identify this activity. This visually identifies it as area for improvement. The results of statistical analysis of the database showed that time taken by MSU (CGA and EAS combined) impacts overall processing time of change orders. The results also showed that there can be as many as 40 unrelated items in a change order. Another relevant result is that number of unrelated change items in a change order affects overall processing time of change orders. The researcher concluded that this step should be improved/ deleted. A change was made to the process map, and recommendations were made to avoid this step and streamline the process. Similarly, areas for improvement can be identified and. analyzed and changes can be made to processes in other universities. The results of analysis can be presented by interviews or in brainstorming sessions that are part of a process to obtain the views and suggestions of the research team and organization personnel. Conclusions can be drawn on which activities are to be deleted/ modified/ added or moved. In this manner the alternate process map can be developed. To ensure that this improved map is feasible and applicable, a feasibility review should be done. Any changes that come as a result of the review can be incorporated and the process can be changed. This changed process should then be documented for reference in the future, and also to ascertain that the process is followed as a standard procedure. 128 6.4 Recommendations for reducing change order processing time for MSU and other similar universities 1. Set time goals The author believes that, if a university wishes to reduce processing time of change orders, it has to set time goals for each step and monitor process activities. This may be easier said than done, as personnel approving change orders have more responsibilities than mere approvals. However, it may be better to set time targets and attempt to achieve them, rather than working without time goals. The intent would be to enforce accountability and responsibility. 2. Reduce layers of approvals. If the presentation of a change order including its cost components were to be clearly defined, the approval or rejection may be accelerated. If the policies of a university require these layers of approval, the university could classify change orders and identify those that should pass through every layer of authority for approval. Once the change order price is agreed upon and the need for this change is fiilly justified, the system of multiple approvals becomes a repetitive activity. 3. Delegate tracking responsibility. It is important to see that tracking of a change order is followed through the life of the change order process up to its conclusion. Eventhough responsibilities are assigned and approval time goals are set, implementing them may require systematic tracking of change orders. Delegated personnel who handle project controls could track change orders, as an additional responsibility. When time limits are exceeded, a ‘late notice’ could be issued. Weekly meetings could use a change order status log in order to bring 129 everyone on the same platform. Contractors who track change orders do so through meeting minutes or by displaying them electronically. Project management software could be used to monitor and track individual change orders. 4. Reduction of time in initiation period could reduce overall processing time of change orders. Analysis results have indicated that the relation between the number of change items and length of processing time is linear. Interviews suggested that it makes it easier for approval if the number of unrelated items in a change order is reduced. Less information has to be reviewed and approval is quicker. The author suggested ten change items maximum per change order. The verification interviews suggested that the number could work, but that this change would have to be tested to ascertain if it .would indeed reduce processing time. The author concurs with this opinion. A monthly schedule of change orders could also reduce waiting time before formal paper work begins. Change orders and any accumulated items that have been agreed upon can be processed perhaps concurrent with the payment application. Universities could analyze their change order process in a manner, similar to that - explained in this research, and identify sub-processes that could be improved. At MSU there was an opportunity in the initiation sub-process by preparing a potential change order that includes fewer unrelated items. 130 5. Using a checklist before a change order leaves one department to another for approval. A change order may not be processed immediately if it lacks required information. Personnel fi'om various departments have different responsibilities and when responsibilities begin to overlap a delay may occur in processing. Approval time could be reduced if change orders were checked for all the required fields before being sent from one department to another for final approval, using tools such as checklists. 6. If an organization tends to package several items in one change order consider the following: a. Limiting number of unrelated items in a change order. b. Issue change orders periodically. When several unrelated items are packaged together, chances are that because one item is not approved several other simple change items are held up. Delay in approval and payment of simple items or if work is already executed, brings discomfort to project participants. If change orders are issued regularly, the contractors and subcontractors can be sure about the approval period and anticipate the date when they could be paid for changes. 7. Entering data in software and information systems. Using software and information systems could also (eliminate misplacement of paper documents in the chain of personnel handling documents. It could also be checked for its potential to track change orders at the Physical Plant level. This would allow the project participants to know where (whose desk) the document is on a particular date, and if 131 timely notices are issued if delays occurred. Layers of security filters could restrict/ allow editing rights to selected individuals. At MSU, although FAMIS is not in its final stage of implementation, it has some potential to monitor change orders. Data in FAMIS should be entered at the Physical Plant. Currently, reason codes as well as other information are entered in FAMIS at CGA. There may be administration requirements for this approach, but there is a possibility that all information could be entered directly by a construction representative. CGA could retain its right to change reason codes after consulting with the CR. 6.5 Contributions of this research Contributions of this research towards streamlining the change order process at universities are: 0 The prevalent change order process at a case study organization was mapped, verified for accuracy, and documented. This map can: be used for reference for similar studies. The map can also be included as a part of a training manual or induction manual for management personnel at MSU. 0 An alternate change order process for the case study organization for possible reduction of processing time was developed and documented. Some of the changes were considered useful, others were debated. 0 Recommendations for possible reduction of processing time at MSU and other similar universities serve as “ideas for improvement”. 0 Tools for statistical analyses, process mapping and analysis of process were presented. These could be used for any process improvement studies. 132 6.6 Limitations of this research Taking into account the scope and time restriction of conducting such a study, this thesis has some limitations and the results should be applied taking these limitations into account. Sample 1| A sample of sixteen projects (nineteen contracts), from one organization was used. A purposive sample was chosen, versus random sampling, due to a possibility of replication of project types. A random sample could have brought out a sample with a larger percentage of either renovation or new construction. It could have included more projects procured by one of the departments only, or of only one type, for example, laboratories. This would not have been representative of MSU projects. The Oversight Committee developed a list of possible projects that were fi'ee of litigation and fairly representative and sixteen projects were selected by the researchers from the list. See appendix 1B for details of the sample. The statistical results may not be able to be generalized to other universities. Each university would have its unique processes and project types and a host of different parameters. However the researcher believes that recommendations and methodology can be generalized for process improvement initiatives in other universities. Project delivery method ‘ The sample did not address all project delivery methods as most projects used general contracts or construction management. Further research could include other project delivery methods. 133 Case study A single case study was conducted for this thesis. However, through interviews, change order processes of other universities were understood and documented. Cost savings Although reducing processing time alludes to savings in administrative costs, no assessment of cost savings were made in this thesis. 6.7 Areas of future research This research studied one organization. Future research could include multiple organizations. The sub-processes in the organizations can be studied in further detail, particularly the initiation period where multiple project participants play a role. Both time and cost savings of change orders could be evaluated. If cost savings are actually measured, it could build confidence in the framework for streamlining the process. Recommendations made in this research could be expanded. Detailed checklists and forms can be developed which will be suitable for universities. These can serve as templates that any university can work with to make it applicable for their organization. 6.8 Benefits of streamlining a change order process to reduce processing time The benefits of streamlining a change order process for reducing processing time are: 0 Possible reduction of administrative costs. 0 Reduced impact on project work flow and contractor’s cash flow. 0 Better project relationships. 0 Reduced impact on competitive bidding. 0 Saved project management time could be used beneficially elsewhere. 134 6.9 Cautions to consider in process improvement studies While the researcher conducted this study some discretion had to be applied while . making observations or while conducting interviews. If a respondent is very cautious while giving responses, it may be necessary to assure that the responses are completely confidential and that the study is not an audit. Some of the observations made during interviews by the researcher were: 1. Perception of interviewee that organization is being audited. 2. Respondent may “tell you what you want to hear” or give the “right” or “politically correct” response. There is no “ri t” or “wrong” answer and a researcher must avoid using his/ her interpretation while paraphrasing responses. While probing to get relevant responses, the interviewer should avoid directing a response in a certain direction. In the author’s opinion while mapping a process the researcher has to be careful and accurately document the process. It may be possible, that an existing map of a process may have variations in practice. It is therefore important to actually observe the process and record it carefully to verify the accuracy of the process. Whatever level of detail of mapping is required should be determined at the beginning of the study. While improving the process, it is important to differentiate between process improvement and process re- engineering (Graham, 2004). Process re-engineering is a different approach and will involve more time and a far greater number of changes, possibly in different departments as well. 135 6.10 Research conclusion This research has used simple tools to analyze the change order process at a university. Statistical analysis of a historical database of sample projects was carried out, processes were mapped and analyzed and interviews with architects, sub contractors, contractors and university administrators were conducted to gain different perspectives on the change order process. An alternate process map was developed based on the results of the above analyses. Using best practices suggested by the literature review and the case study, a generic framework to reduce change order processing time in universities was developed and presented. This framework can be used by universities to study their change order process and reduce processing time. Useful tools like the Graham flow charting technique (Graham, 2000, 2003) and the BOLO list (Smith, 2002) were presented. These tools "could be used for process improvement endeavors. The findings of this research were that organizations may perceive that including several approvals will ensure good control over a process. This may be true if every step is value added. It is important for organizations to reassess processes and identify and eliminate redundant steps. When project participants are assured that a certain change order will be processed in a committed and consistent time period, it builds trust and confidence. Ensuring that a step is done right the first time would eliminate several reviews and coordination for lack of information. Standardization may prove vital in streamlining a change order process. Reducing the number of items in a change order, periodically processing change orders, tracking the change order 136 process and establishing time goals for every step were some of the recommendations made in this thesis. In conclusion the author would like to say that although process improvement is recognized as necessary by several organizations, the time involved, documentation involved and additional responsibility to people who possibly may be overloaded with work discourages many process improvement endeavors. What people may sometimes forget is that analyzing the way things are done now could save a lot of time and money by avoiding redundancies, unnecessary activities in a process. It is vital to challenge, from time to time, the way things are being done and look for ways and means of improving the process. 3.11 Chapter summary A generic framework for streamlining the change order process to reduce processing time in university construction projects was presented and explained. The chapter presented a general set of recommendations for change order process improvement in universities. Limitations of the research and areas for future research were also presented. 137 Bibliography Abdo, D. (1999). “A Neural Network Model for Quantifying the Impact of Change Orders on Construction Productivity.” M. Eng. Major Technical Report, University of Concordia, Montreal, Quebec. Assem, I. (2000). “Estimating Productivity Losses Due to Change orders.” Masters Thesis Concordia University. Belle, R. A. (2000). “Benchmarking and Enhancing Best Practices in the Engineering and . Construction Sector.” Journal of Management in Engineering. Jan/ Feb 2000. 40-47. Civitello, M A. (2002). Contractor’s Guide to Change Orders. 2nd edition. Prentice Hall, Inc. 'Delano, D. (2003). “Institutional Construction the Saving Grace of 2002.” Construction forecast 2003.Building Design and Construction. Jan 2003, 44, 1. CF 17. Duff, M. A. (2002). “What Does Change Order Management Really Mean?.” Journal of Construction, Accounting and Taxation. Nov/Dec 2002. Boston. Edward, E. D. III. (2003). “Effective Management of Project Change Orders.” AACE International Transactions, 2003. PMl l 1. Edward, E. D. II]. (2000). “Project Trends and Change Control.” AACE International Transactions, 2000. Ehrenreich, F. H. (1994). “Change Order Management for Construction Projects.” Cost Engineeing. March 1994.Vol 36/ No 3. 25. ENR Editorials. (1998b). “Central Artery Segment Design May Have Led to Cost Overrun.” enr.construction.com February 24, 2003. FHW A. (2001). (State) Department of Transportation and Federal Highway Administration (State) Division Process Review on: Change orders. United States Department of Transportation - . Federal Highway Administration — Infiastructure. More information available at http://www.fhwa.dot.gov/construction/revcoB.htm. (Accessed 2nd June 2005). Fisk ER. (1997). Construction Project Administration. Fifth edition. 1997 Prentice Hall. Graham, B. (2003). “Detail Process Charting.” published material of The Ben Graham Corporation. www.processchart.com. (Accessed 2nd June 2005). Graham, B. (2001). “Graham Process Charting Software -Multiple Flow Charting for Analysis.” published material of The Ben Graham Corporation. www.processchart.com. (Accessed 2nd ere 2005). Graham, B. (1996). “Process Improvement.” Published material of The Ben Graham Corporation. www.worksimp.com. (Accessed 2nd June 2005). 138 Hanna, A., Russel, J ., Gotzion, T., and Nordheim, E. (l999)a. “Impact of Change Orders on Labor Efficiency for Mechanical Construction.” Journal of Construction Engineering and Management, ASCE, 125 (3) 176-184. Hanna, A., Russel, J., Nordheim, E., and Briggink M. (l999)b. “Impact of Change Orders on Labor Efficiency for Electrical Construction.” Journal of Construction Engineering and Management, ASCE, 125 (4) 224-232. Harma, A., Camlic, R., Peterson, P., and Nordheim, E. (2002). “Quantitative Definition of Projects Impacted by Change Orders.” Journal of Construction Engineering and Management, ASCE, 128 (l) Jan/Feb 2002. 57- 64. Ibbs, W. ( 1997) “Quantitative Impacts of Project Change: Size Issues.” Journal of Construction Engineering and Management. September 1997.123(3)O8-11. Kasen, B., Oblas, V. (1996). “Thinking Ahead with Forward Pricing.” Journal of Management in Engineering. March-April 1996. Kettlewell, F. (2003). “Proactive Change Order Management.” AACE International Transactions; 2003. CD16.1. Leonard, C. (1988). “The Effect of Change Orders on Productivity.” M. Eng. Thesis, Center for Building Studies, Concordia University. Montreal, Quebec. McCally, B. M. (1997). “Change Order Management.” AACE International Transactions; 1997. 65. McCaskill, C. (2002). Performance Audit. Missouri Department of Transportation, Contract Change orders. Report no. 2002- 96. McGreevy, S. (2001). “Oral Change Orders can be Expensive.” www.constructionmag.com McMahon, L. A. (1984). “Estimating and Negotiating Change orders.” Transactions of the American Association of Cost. Montreal, Quebec, Canada. MoDOT. (2002). (State). Missouri Department of Transportation: Change order process audit report 2002. . United States Department of Transportation. Moselhi, 0, Leonard, C. and Fazio, P. (1991). “Impact of Change Orders on Construction productivity.” Canadian Journal of Civil Engineering. August 1991. 18 (3): 484-492. Moselhi, O,Assem, I. and El Rayes, K. (1991). “Upfront Cost Estimating of Change Orders.” Canadian Journal of Civil Engineering. August 1991. 18 (3): 484-492. PEER committee (2002). The Bureau of Building’s Management of Construction Change Orders- Joint Comrrrittee on Performance Evaluation and ExpenditureRreview-2002.PEER report # 429 More information is available at http://www.peer.state.ms.us (Accessed on 29th March 2005). “Personal Integrity, a Prime Quality of Proven Leader.” available at http://mi.agc.org/PDD_2004.asp. (Accessed on 2nd June 2005). Associated General Contractors Michigan Chapter. 139 Sarvi, H. (1987). “Overhead and Profit on Change Orders.” MS. Thesis, Concordia State University, Canada. Semple, C. (1996). “Construction Change Order Impacts.” M.A. Sc. Thesis, Department of Civil Engineering, University of Calgary, Calgary, Alberta. Smith, M (2002). “BOLO (Be On LookOut) List for Analyzing Process Mapping.” httpzl/www.isixsigma.com/library/content/cO4030la.asp. (Accessed on 29th March 2005.) Copyright © 2000-2005 iSixSigma LLC — All Rights Reserved. Reproduction Without Permission Is Strictly Prohibited. Snowdon, R. A. and Informatics Process Group (2002). “Levels of flowcharting.” Informatics Process Group, Manchester, UK. Thomas, R. H. and Napolitan C. L. (1995). “Quantitative Effects of Construction Changes on Labor Productivity.” Journal of Construction Engineering and Management. September 1995. 121(3): 290-296. Yelakanti, V. (2005). “Development of pre-construction change order prevention strategies for. reducing design errors and omissions in university construction projects.” MS. Thesis, Construction Management program. School of Planning Design and Construction. Michigan State University, Michigan. 140 APPENDIX A Details of sample 141 Details of the sample The oversight committee developed a list of projects that could be studied. 16 projects (19 contracts) were chosen from this list and are shown below. Change Order Summary of Project Percent Change Project % ID Pro ect Name Initial Cost En Cost Change 0365 Hannah Administration $217,000.00 , $243,548.29 12.23 1707 Agriculture Hall Annex Renovation and Window replacement $6,260,300.00 $6,605,238.00 5.51 3482 Jenison Fieldhouse Locker Room Renovation and Addition $6,394,000.00 $6,931,214.96 8.40 2474A MSU Bio-Physical Science Bld. $1,647,000.00 $1,662,272.00 0.93 24748 MSU Bio-Physical Science Bld. Cd#2 $4,522,200.00 $4,698,577.00 3.90 24740 MSU Bio-Physical Science Bld. Cd#4 ”6,124,074.60 ”8,164,009.00 2.68 2124 Nisbet Building Chiller Installation $385,000.00 $396,501.34 2.99 Spar-tn Stadium-East Concourse 3067 Restoration $2,565,000.00 $4,955,991.54 93.22 3119 Brealin Center - Berkowitz Addition $6,138,747.95 $6,359,798.69 3.60 3147 Chemisty Building Renovations $931,889.00 $991,284.00 6.37 3158 Wilson Hall Alterations $313,000.00 $312,208.00 (0.25) 3282 Life Sciences Alterations $420,531.00 $469,489.92 11.64 3347 Spartan Child Development Carter $2,035,000.00 $2,324,281.03 14.22 3496 Campus Fiber-Optic System Phase VIII $1,995,000.00 $2,028,923.00 1.70 MSU Cyclotron Building Office 3981 Expansion $3,205,108.00 $3,533,998.09 10.26 02140A Intercollegiate Athletics New Track and Field Facility Phase I $242,500.00 $265,776.00 9.60 02le Intercollegiate Athletics New Track and Field Facility Phase II $2,547,000.00 $2,572,226.18 0.99 0584 Food Safety/ Tox Lab $18,737,710.00 818.813.068.00 0.40 99072 Parking Lot #89 Expansion $3,020,000.00 $3,433,123.58 13.68 10.64 Totals $137,701,060.55 $144,761,528.62 avg Total Project 96 Change 5.13 142 Project 0365 1707 2124 3067 3 147 3158 3282 Project 2474A 24748 24740 3119 3347 3496 3981 02140A 021408 0584 Change Order Summary of Project Percent Change: New vs. Renovations W Pro ect Name Initial Cost En Cost Hannah Administration $217,000.00 $243,548.29 Ayicultm'e Hall Annex Renovation and Window replacement $6,260,300.00 $6,605,238.00 Jenison Fieldhouse Locker Room Renovation and Addition $6,394,000.00 $6,931,214.96 Nisbet Building Chiller Installation $385,000.00 $396,501.34 Spartan Stadium-East Concorse Restoration $2,565,000.00 $4,955,991.54 Chemisty Building Renovations $931,889.00 $991,284.00 Wilson Hall Alterations $313,000.00 $312,208.00 Life Sciences Alteratiom $429,531.00 $469,489.92 Totals $17.486,720.00 $20,905,476.05 Total Project % Change m Pro ect Name Initial Cost End Coat MSU Bio-Physical Science Bld. $1,647,000.00 $1,662,272.00 MSU Bio-Physical Science Bld. Cd#2 $4,522,200.00 $4,698,577.00 MSU Bio-Physical Science Bld. Cd!“ $76,124,074.60 $78,164,009.00 Breelin Center - Berkowitz Addition $6,138,747.95 $6,359,798.69 Spartan Child Development Center $2,035,000.00 $2,324,281.03 Campus Fiber-Optic System lese V111 $1,995,000.00 $2,028,923.00 MSU Cyclotron Building Office Expansion $3,205,108.00 $3,533,998.09 Intercollegiate Athletics New Track and Field Facility Phase 1 $242,500.00 $265,776.00 Intercollegiate Athletics New Track and Field Facility Phase II $2,547,000.00 $2,572,226.18 Food Safety/ Tox Lab $18,737,710.00 $18,813,068.00 Parking Lot #89 Expansion $3,020,000.00 $3,433,123.58 Totals 143 $120,214,340.55 $123,856,052.” Total Projed $6 % Chase 1223 5.51 8.40 2.99 93.22 6.37 (035) 1 1.64 17.5 1 average 96 change 19.55 7. Change 0.93 3.90 2.68 3.60 14.22 1.70 10.26 9.60 0.99 0.40 13.68 5.63 Average 96 Change 3.03 APPENDIX B Interview responses from contractors 144 Feedback from Contractors Response M and safety administrator. Vice presidents preconstruction, estimating, area). ject Director. Fenior Estlmator' , Project Manager for GC. lPToject mgr. [Licensedsn'uctln'alengineen SrProjectMgr&VP&ProjectEng. Q2 you provide 35M, Institutional, hospitals, prisons, schools. mostly hard bids. approximate recent 'onchrtaforyour 40pmjects, 300Mannualvolumc. HeathamHistodcpruervation, (or department) eavy Commercial, K—12, Institutional, 2,6,8,10,11,7 CSI divisions. as approximate 5% of construction volume subcontracted ofmjm WP“ 50 million inplace annually. K-12,retail, commercial, mdustrial and f projects, dollar value . No residential orpmlea mfilfl? 90 million, Hospital, Industry, K-12 and Imiversities, no residential less detail. 100-200projects.1billion.Education,health,sports,indusn'ial. Q3 youconductanyforma very project>$10,000. Usemasterbuildersoftwm'e.Proceasof constructionanaiysis formallykeepingrecords. fprojcctswithmwctm FormalAnnlysisarpreconsrrllctionmiscomlctionpoa etschedldechange ‘constrtlcticmNotaggregatedpostconsuIrctimFinancialstatus WNW“ Yes,Gatherinfoforfutmeprojects.Analyzesqftcost,manhrs, partiminvolvod? theschedule,informallyfindoutcausesofCO 1’" Areproject InternallyYea,notformally.WhenownersaskforCO,youtendto . agyegatedforthe ushmorenumberofCO's,whichisnotagoodth_mg.’ ofdetermining oautopsydone eragechangeorder av 7 Izoformalprogerualityanalysisleasonslear-nedonjobin notspecifictoChangeorders. Q4 Has any analysis been at as a company, but individually PMs have. Have studied about undertakentodetermine 500itemsfornegotiation. changeordercauses7Can [40. “m“?ml’f‘m“? really,errors&omissions,poorqualitydeaign,ownerscope,field Whatweneltsfindmgs? conditions,sitewodt.Givearohampletimetofollow,payarchitect WererecommendatJons frontformoredetailedanalysis.Contractlanguagedoean’trequire and rmplemented? architect to do any detailed analysis. Give university personnel ample fordetailedanalysis. [NdformalanalyskLeasonslearntreport lNo. dwgs, lackofcoordinationofdwgsmwnersscopechanps. field l'l' 145 I Feedback from Contractors I ' Ree use [No. such scope, ($30er Easillboneonlyformar'ketingpmposenmnersaskforcm mom)“: 'be. wherethecostscanbereduced. lNo. o.A/Escauscerrorsandomissions.Persomllylclassifyasowner, fieldandscope. [fibecausewedon’twanttogetintofingerpointingattowhowasat fault. Q6 ve you drawn any change scope, lack of info/ contradiction/vagueness. field conchlsionswithreapecttoconditions.nooflayersofpeoplewhomakechangesbutarrivelate dominantcausesot' ‘ mjmnotupdatedstandards. WM?W"‘ Scopeehangee,Fieldconditions,docmnenterrors.Varieswithjobs and parties. Usually projects for big owners have scope changes. For projectsusuallywehavefieldchangesanderrors.8cope dependonendusersinvolvementinprogmnmingand arehitects.Moretimerequiredonplanningandmockupcomtruction bringinenduserinput. I. ofinfornntionanddetails.(smalladollaramormt),Architects ' coordinationbetweerlA/EandM,E.Scopechangesby wnerlargedollaramormt). EEmaeGQDBleastMethodofconnactingismajorsouce. ' ionissuea.3weeh-lmonlhtimegiventoconn'actor.CM checkthedrawingsaswellasA/Es. kofskiflhdrafimpeoplelmawareofblrildingsystems. ' 'onisbiggectprobleminfastn'ackprojects.8arnedetails putinandareusedoverandoveragain,withoutthinkingifthey applicable.Documentsarenotlaidoutinawaythatitiseasyto 'fy. . Q7 Ifyoucaneitherfrom ln:w3, complexes 6, remove 7, science 7. statisticaldataorfiom = 2.5% dg'm usualchangeorderrate 5'10” . es of original 5, 7-10, 7-10, 7-10, 2, 5, 5-7%. 1°“ W f°f m °f 10, 12.13, 1243, 15-17, 25, 25. followmg moject 7 8, 10-15, 10-15, 10-15, smalleramormts, smalleramormts. Sports 12- 20 depends on My ofdocs. 146 | Feedback from Contractors 0 I uestlon Ree . nnse Q8 2 - any analysis been at typically. While bidding consider 7% contingency, we don’t bid ... edwhichhelpsyouforexnas.Photocopyingcostsalonearealot.Notapredictor. predictchangeorders Variabilityisaccormtedforinbids. tes for projects? “80 can[Define the change orderprocecs, define change orders wdescribeyomprocm odetailedanalysis.Welookatcontingencyofaproject.Analysis ° "1‘1““?me jobspecific,forex&pendsonwhattimeofayear,schedule ° ruleot'thlunb. F40,Detailsmissing,maybemoreerrorsindrawings. F0. lilo. Q9 Isthatrateofchanges lDon’tknow. ordersseenasacceptable [sjmemyucitaswceptablesomedon’t owners? Explain. lSophisticated owners accept change order. wledgeableownersacceptitnowanddlenit’saproblem Yes, A/Esare considered forchangea, as itrefiects their design. Vohmeofchmgeordaaspeedofprocecsingisimportant. No.butmoneyisanissuewiththem. Q1 Areyou aware ofany 3% perhaps. ublished industry averagelcn don’tknowwhattherate isactually. changeorders? for [Bon’t know. There mightbepubfisheddamblrtbewont rely. o,maybemeaningleas,itdependsonhowconnactorsreportit. Thereismpohninjustredlrcmgchangeordaameqmlityhasto improvefirst. lilo. ‘ lfiaybe. Q11 Areperformancerecords IInformally. of “Mum and trade'Encl ofproject review of Subcontractors not specific to co. W monrtoredor InformallyassessSCforCOandworkcthicn. Yes,moreinformally.Forlmfamiliarcontractors,weaskreferences. No,Subsaremonitoredforfinanceandperformance.Their faencenmecheckedlSOformisusedmdtiedwithAlA ' cationdocuments. Yes, Constantly. [freason forchange islegifimatehowdoee itmatter have many changes? In performance records, look for organization, financial stability, past performance and quality. . perceptionPerformanceisnotnecessarilyameasme.Basedon ' workNotkeepingn'ackofChangeorders. 147 r Feedbackfro-Contractors o ouestion Ree-unse Q12 What are the typical 60 days typically fiom date bulletin is approved to MSU authorizatio dlu-ationsforproceesing .Yestheycontn'bute,earliawecouldacceptwith8°/.O&P,now Meorders?Dotheee itis4%wecannotacceptit.Pricesincreasewhenexecutedlater. II I Arms MW” additionalcostssuchasfor Cosarequickinnegotiationsduetoleashierarchyinapproval(l WSW proceesing+30dayspayment).1‘heycancontributeto "H'W fiPPkCM generalconditiom'l'helstCOmaynothaveamajorefi‘ect mammalian? acsmwmmwcmnmvccmmmmcmmw onSC,relationshipsbreakdown,detrimentalto " 'onOwnershavetolmderstandthatSCpaymentis hnpomfldehyinpaymeruisanficipatedtheyinchldeitintheir Iftheytrusttheproceastimetheywillquoterealistically. [90—120days,withoutthepaymentperiod.Yea. weeksforchangeorderdratling. fromtimeinitiatedtoMSU ' ' 3months.Yesdleydo.-Mostotherplacestakele-15 195dnysinMSU(paymentproceuisinchrded).Subsareproblems. amonthrequentforpotentialCOtoProjReptogeneratea 1notherp1acesitis30-40days,StateofMichigan60days. Identificationot'changetoMSUauthorizationdatenotinchlding entisZmontlnonanaverage. Yes absolutely. Higher%of overhead.Negotiationtakeaawhileandanmoretimeistaken,subs tochargemoreforchangemdasVeryfewwillinfiatechange though,butbusineasisbusiness.sanetimesthereisnochoice todoitinordertosurvive. Q13 Areprojectcontingencies owtheyarespentisimportantMaybespentonscopechangesnot establishedbyowncrs vingenoughondoeaanderrors.Nobutdon’tthinkitshouldbe.lf nerallyreasonableorare lndpassedduoughmeproceeatheyshouldnotbedisputed. umealistic? [Reasonable but should be quoted upfront. bid (owners wont disclose contingency). CM projects owner, ' CM decide contingency) [Reasonable {Generally reasonable. [Reasonable 148 Feedback from Contractors ~ Ree No No.a1thoughthereisaquestiononbudgetedcostandactualccst. whichisnotenoughtodrawconchlsionsandhenceisinappropriate. operformancedataissolicited. Informalinformationissought. willow-1W: Iificrco'scnnmmcqmmyoroccrorcmvccva. INF. otreally.Personalexperience,size.finances.Wanttknoworiginal andchangeorderswhichislmfair.Whataboutscopechanges toowners.thatisn‘tafairrepreaentationofom'repmation. ' Q151nyouropiniondo No. . 'onordeaign o Probablymoresinceitinstituteeamorerigidproceas.Cannot O n o . so “balm“ Ffiadtohaverelationshipbaseddecisions. vereduoedchmgeorde,Itsrelativelynewtoconstruction.Yes,itshwldreducechange onprojects? ° '20,notatall.1farchitectsimplement,thenitmayimprovechange lNo. |:otreally,Canreduceermrsmaybe.ISOcannotcontrolchangeorderr . asithasmmyvariafiomNobodyknowsrightanswersin constructionindustry.AFrameworkdoesnotreallyapply. Wheninterviewingfor Yearmfa}. . onstructlonmanagement Pvtownersdon'taskforquectionsregardingchangeorderhistoryas ”lam?“ m:éydefrgfctchangeorders.Whenthereisalurnpsumfeether'eisno consi byorders changeordersbyconstructlonmanagementsemcns. wh . . “1"”? 7;“flmmhm‘h‘“ ° arebm'elyrelatedtomalyficaldeer'for'mancerecords inf "0“me areansweredbyowners(mformal,1ikehowwillyouprotectmefiom ,savmgcosts?). Sameasbefore. No. Yes. ButthebestthingtodoisGivethebesttotheownerintermsof iqualityandmoneymotjusteducechangeordersorpayment. 149 F Feedback tro- Contractors | I 0 estlon Res . . use Q1 I . you have any opinion es. Gc more, then CM, then DB. or m, Sis,” whether the Design build- least only scope changes but owners have less control I“ J°°“'°"‘f“7m?"‘°d desimCMmmethanDBlessdlanCMJlanreviewisbctter, suchas deslgnburld, controlismore.lnGCmostnumberofCos.Plansandspecs "In “er bmmd I". ammuyml es,gotanalyficaldata.CMDB,GC(Lowesttohighest),CMis “WWII“!- ecnveleyelofsauceprogrammanagementlsbetter.GC'slook forprofitabrlrty.DBreducesfingerpomtmg. l1 GC. 2CM,3DB high to low. F0. compareanddoem’tmatta'.'1‘hedialoguebetweenpartiesis importantHowevainDBownerhmlesscontrolonprojects. Q1 youhaveanyopinion IShouldbeintuitively, butideallyitwonthappen. whetherthespread willscnrtiniaescopeincredibly.CMwillsautinizemoreon .varratlon)ofbldsrece orderprocess.SCwilllocatepotemia1changeordersbutwill “may” informGC&willshowonbids.Varlatl' 'onisaredflag-needto itmmmdbutrsnotnecessanlyagoodpredrctor. ' ofchangeorders aproject? es.Notsureregardinggoodpredictors,largespreadindicateunclear drawings.1nlowbids,bidderwilllookforopportlmityforCost ‘o.notreally,butthereisaperceptionthatvaylowbiddercandig forchangeorders.lfthereisanerror,wewillaggressivelyfoflowitlofi ‘ forlosseaifweuelowbiddersorwemadeamistakeonbid day. [No Sometimes it is indicative. Poorset ofdrawings indicate change order better. Q1 owcommonisitfor lMostcommon. changeorderstobecausedl thedesignerlmd A ' failedto [fairlycommom communicateonaspectso Itscommon. design,1eadingto , . scopechanges to135/6areduetobadprogrammmg.Frequent. thedesignwork lCommon.20%-30%ofchanges. lyfortheowner‘? l 150 Feedback from Contractors ] 0 bastion Recluse Q2 construction I obody‘sperfect.Standardofcareofarchitectsisveryhigh.With documentsincluding - netcrrtsitisdimcultCoordinationhoweverisalwaysanissue. “yum" (100111116018 ;.-. . ”Why It! . . . . . . _ , gettmgrncreasmglyworse.QClspoor.MSUdoesagoodjobon A/Efirmsprlortoblddlng ingA/E. . lain. EXP theylookatitdifi’erentlycomparedtocontractors. lookforcompletionandiftheirdesignsareemciently doagoodjob,buttheyhavetbeirstumblingblocks. ' 'onwithotherdesignersispoor. [No.moretimeshouldbeallottedtoA/E. Q21 university projects, are lYes, multiple layers of review, not adequate though. documents lMSUbetterthnmostownerthsgood. formallylevrcwedbythe . ’ . 'versityindetailprlorto candobetterjob,theydonthaveenoughtrme.PPandCGare idding7Exp1ain. lAssumingso..Notsme lNo. abmmcysfiflhaveproblemwidlconformancetodrawingswith Subsrecogniaenonconformanceearly. Q22 yourorganizatron ' [1710. _m"°“',°d““h «www.mmmmnm jectswhlchhaveuse: satisfaction.Commissioningfindsoutfiaws&moremoneyisspent 'mgw'm, onCO&fixinggoesovertheyearsandispaidlatu.T&ngbrhrgs , vethesebeenefi’ectrve moreCosbrrtitsnotbad. mreducmgchangeorder ? YeanotslueJdon’tthinktheyreduceCOJtsmorequalityrelated issue. www.mmwstingchangestoachievetheulfimate igngoal. es, No. Actually increses CO's. Commissioning services have gone fiomgivinganowneraserviceableproducttoexpectingittoperform theultimatedesign. . Yes. Don’tlikeitJustonemoreincreaseincost.Commissioning serviceshavenorealrnsponsibilities. 151 j Feedback from Contractors j r Nation Resume Q23 lfyouhaveused Yes,nobenefits. , "M”W GoodatnegotiatingC0.0K-butmaynotreduceCO.SCandowners onprojecmohavethose fitfiomit. l‘ 00°13'30“” . . . expefiencedlowerchange Yeagoodandbadexpmencalftakenserlouslyrtsgood. ‘ “" ”my? Yes, No. No. I partnering 5? 've in 1 ing Yes, No, No. - ._. orders? YeaessentiaLPartneringfailsattimesJormalpmmeringsometimea Yesreduceschangeorders,asmiscommrmicationisrerhlced. es.Yes. offimeefi‘ectiveandirnportantbutinrealityNo,dming . lddingitonlyraisesquestionsduringbidding. es,notsure,No. Yes. Yes.Notsureasdesignintentisclearu. Q25 Which CSI divisions seem cause the most clunge for your “on? Explain. 15 15,16, 2,9. 15,16becauseofcomplexity. 15 MIE, andgeneraltrades. Dependsontypeofprojects. M. E. P. Which design professions cause the most change foryour ' ? Explain. [MechanicaL E,P.lackofcoordinationbetweenthesethreepartiesandwith .Iheyarenotinvolvedindesigrlprocessear'lyonUnforeseen conditions. l15,16. ' coordinationbetweendesigninterfaces.15causesmore, archchangeshappentoaccommodate. 15,16,Lackofcoordination.lackofdetai1.1ackofattentionto ’ ions. [Architects 152 Feedback from Contractors —I uestion Res use Q27 Which construction trades M and E. end to be most fi'equently involved with change ' orders foryour 2.15.16 7 organization? 7.15.16. Drywallandacoustical. Architectural. M and B. All ofthem. 028 Based on your work with ultiple rings of authority delay work. 0“” lame mm, “M firmly defined decision network. CM allowances. 100% fi'ee 'onaltraitsor ' ' ofowners.Shouldbeusedtohandlechanges. contributeto ive numbers of ot Imder'standingwhatthey are buying. Not involved with design, :hange orders? levelsofdecisionmakingDecidewhowillbeassigned. oomanybosses.Scopechanges,decisionmakingpowers,enduser involvement. ethod ofcontract. overmanagement. Layers ofapproval. shouldn’t powerstruggleinfileorganintions communication process. Approval with respect to dollar amounts ofchange orders. Have lessprocessingtime. less layers ofapprovals d have more trust. ' Q2 Based on your work with Lack of info. mechanical eng changes equipment without updating other large owners, what standards. Talk more. - contribute to . . . Evelofexpernse ofownersandpersonnel. Ablhtytomake nnpacts' f ban 0 c ge decrsions.Lessleve1sofapprovals.Notaclearprocess.antiquated ? . Tends to change. People don’t follow procedures. Decision should be fixed. And reduce levels of approvals. Sameasbefore. SpeedrrpprocessinggivemoremdhofiufiontoproceedOwners vetobemoreresponsibleandalsofollowtimecomminnents. 153 I Feedback from Contractors I Rea use Pricing strategies. MSU doesn’t pay for difference on iterm if there is a deductive change. standardsofMichigm eedsupdafingblntheymefahiyokReducesCOJessguessingby State University have on contractors and owners. - “WWW“ Standardsareoutdatedsomematerialandequipmentarenotused chanswdmnwhim .A/Eshouldcheckthestandards. [No impactonCO's.Newdssignershasmoreproblems. MSU standardsareflexibleaudgoodSomedesiguersdon’treadstandards. oimpact.StandardsrefertoAIA 1982,whichhabeenrevised 'cenow. . otveryclear.notb1ackandwhite,nocommunicationbetween ' andMSUstaudards.’l‘heyarefiequentlyupdated. ' Q31 Howareoverheadand Incontracts. profitnormallydetermlned DictatedbycontractCausesdisputessometimes. on ov your rmiversity . jects?Arerates Negonatedafeeforprofit. Size ofproject smaller.Lessdmationof icallyallocatedinthe jects.Markupisincontracts,sonoconflicts. construction contract? Are lilo, YES, not common WW‘i'm‘ ’tknowY eneral 159’OH&P s -upsfor [Don . es,g 1y e .No. mmmfitm es.Yes.15%isasma11margin.Thatisnotcnouylprofittokeepa changeorderscommon? r going. Q32 Are disagreements over Fommorr Remobilizatiou nd productivity are legitinlate. I ' ded general todaflrvitylosses common. Affects sequencing. General conditions dltlons costs, W . bilization costs or loss owner's generally Yes, They don’t. Owners don’t understand extended General {WW common? lYes. owners don’tlmderstand. MostGCs prefernochang‘es. standindirectcosts ditions,theydon’tlmderstandhowmuchitcosttobeonajob. youincuron ilitytoprocessCO’squicklyimpactsus(Contractors),not es?Explain. .DilficulttopaySubs. otvery common, andthey don’tunderstand. Yes.Genconditionscostsaretoughtoprove,mobcostscanbc vafldatedlossofproductivityarenotpaidbyowuers. 154 APPENDIX C Interview responses fi'om sub-contractors 155 Feed back from SubContractors Response 5-30 million annually, 400, 450 projects. 30% county work, 25% andfederaLoftheresthalfifcommercialandlnlfisretail. workingwithothertrades,ifwewerethiukingahead).Yes ° .WeusetimberlinePMmmodule(since2years)andhave reportsonjobsiM.Actuallyownersmuctputeverythingon internettoo:RFIs,invoices,alldocmnents. othingformaLdailyreviewofjobcost,dailylossandprofitis ’ Nothingonchmgeorders. Q4 anyaualysisbeen o.InformallyYES.Inuewprojectsforroofingthedesigndint todetermine . thestandm'dsofthelmiversity.Designershavetopaymore ordercauses7Can attentiontoMSUstandards. mdwaflaethism? lPMandestimatorscompnrechaugeorderstobids.Welookatitfor wereits findings? requestforchange(money change).nochange (nochangeon Wererecommendations .Forexampleshifidoorsbeforewallisbuilt)andN/A andhnplmwd? changeorders(oneswhichdonotafi'ectus).Thisistheonly lassificationweuse. ' Yes,notformaLmissedouplans,specificationsarenotanissue. Somecoutractorreviewcanhelp.Experiencepeoplearerequired. training of design Eugg. QS Have you staudardind E0. systems for classifying 0. causes (such as scope. No. document error or field conditions)? Describe. Q61-Iaveyoudrawnany No. mMiOMWimeNmmghfimmmeMmoughfimefwmhMmm dominantcalISflOf drawings.RFIshou1dbeanswered.Poorcommlmication.Useof hangeorders7Whatare ' manggernentinsteadofGeueralcontracts. Designsworkonpaper,notonfie1d.1ackofexperienceiudesign 156 I Feed back from SubCoutractors ] Res use O COWMWCIIM'P‘YW o. Mostcontlactorsdouotwautchangeorderscontrarytoowuers predict change orders [inch ' for projects? lfso canrfio. describe you process QSIsthatrateofchanges Sophisticatedownersundastandldou’tknow. ordersseenasacceptable W. getauprised,butnoproblennwithMSU.Dealingwithone fMSU‘sorganiutioudirectlyortluoughaGConEASprojects. Q9 Are you aware of any INo. blished iudmtry average INo. ‘ for change ordas? lNo. 1 performancerecords /A.MSUdoesgoodjob,itisverythoroughandstream1ined fyour lower-tier . bcontractorsformallycr o.Butweratetheotherpeopleweworkwithandom‘competitors. Mm‘mmWehavesetupadatabaseofcosts,marlmps,bids,whoweredie ”WWW? leinvolvedineachjobwithinolu'firmsandotherproject yfimmm 'ipants.Weuseaweightedratingsymmthatratesthemfor WWW” fahuesaschedldeestimatedprojectprofit'l‘benwe afactorinolu'bidsdepeudingonallthis. eathmughjobcostingNoworkisdoneunlesschaugeordersare signedandapprovedChangcordersarenotnacked. “76m long, 60-120 daysiiom discovery of change including process.ProblemsareinMSUauthorizationtime. contn’butetoextendedgenaalconditiombutwedou’t increasecost. « -10months.IdentificationofchangetoMSUauthorimtion. It afi‘ectsom'moralemorethananythingelse. Dependsontheschedule,processinghappensquicklyifitwillhit schedule. Takes 2-3 weeks fi'om identification of change to MSU authorimtion date. CO's don’t impact us much. 157 I Feed back from SubCoutractors r o cation Resuuse olWhen generalcontractors ToavuysnafleMnoexperienceassuchJowbidistheouly .~ cousuuctioumanagers factor. MW 'Idon’tknow,butlike1saidwedo. ...tracts,arechangeorder e I. ..- .'esofsubcoutractors 0' “wider-ed indetermm' mg' iftlieyare'qualified'for uwmkHowisthis informationsolieited? No. Nonotconsisteutly.ISOishighlyoverrated.Qualityisvery Iimportanthavingaqmlityplmismoreirnportantthanusinglso. WhatisISO?N/A. werealwaysbetter. GCsbidthejobharddollar, more wasgivenobidatlainedskilledpeopleweretheretoanswer 'onsandtheyknewwhattheyweredoingCMswhenthey ganwereGCsdoingCMjobsandtheystillemployedskilled '.encedpeopleonjobs Nowthatgenerationbasretired.We vefieshgraduateswithlittleexperiencebroughtontojobswith training.'Iheyshouldbetappedforotherskills.notfieldskills. We need answerstoopenitemsandincomplete drawings. CMsdo poorjobandworkfortheowner.notfortheproject.1dontkuow aboutduigubuildbutlguessowuerhaspoorcontrolon pmjm lYes.LowestDB. CM,GC. CMshavebetterfieldofcivil. in Doyouhaveauyopiniou Yes.byruleofthumb. Iflowbiddermissessomethingwhowould forchmgeordaabrnitisrnagoodpredicta'ofchangeorders. fi‘ectsalot. Lowerbidderwillniarkupchangeorderstou’tlike lowbidsystemltsbettertohaveprequalificationsystem. 158 I Feed back from SubCoutractors 1 o t i .. r n Res: use 01: owcommonisitfor Bigoue. veryofien. changeorderstobecaused Verycommoqunea'ueedtotakeresponsibilitymdcommitto "" “MW“ ' emeyshouldhireexperiencedarehitectsnotpeoplewbohave mam” workedwithMSUbeforeandputthemonimportantjobs. ...uunicateonaspectso design,leadingto scopechangesnecessaryufim" m. “WWW l' ..., fortheowner’? 101 construction ThaeisamomforimuovanentlnfewpmjecQMSUdidu’t documentsadequately detailtheprojectsenough'lbeydinthadenoughtimetofinish WWW” isnotmuchtimegivenforthat.RFIsdon’tgetanswered p. . tobiddingDrawingsarealwayshastilypreparedZOyears andarehitectwoulddisctissploblernsbeforedrebidNowwith jobsarchitectsueuolongerdoingthatjobanddon’ttakeany . Opportlmitiestogetanswersforbetterbids,betterdetails, "unleteddrawingsarelost.MSUispreventinggettingabem w foritselfbyblockingdirectcommunicationwitharehitectsby ~ ofCMjobs. Specificationsarenotspecificanymore. Youre WNW ' ‘ ~ Speedinkevaydriugspeedondrwaiugsafl’ects ' .Peoplearentgivenenoughtimetothink. Yes and No. We basically verify the quantities. l Ouuniversityprojects.are No,MSU doesn’tunderstandalotabout ”"”'.Architectsdon’t ctiondocuments designasperMSUstandards,moreconfiictswithArchitectmal iewed adequately byth Don’tknowconsnaintsof““"‘ projects.0riginal 'versityindetailpriorto standardsareOk! , iddinsmxphin- Ibeyspendmneonthsomehowthingsalwaysslipdu'ough. ike I said give architects their powers like earlier, don’t'shifi these vitalresponsibilitiestoConstructionmmgers.Sometimes architectsdon’tevencomeonsite,thcyareoutofstateandnever commrmicate.WhatanswerswillnewhiresonCMteamsgiveus? IQI Has your organization No . “WOW?“ with Yes worked very well. Also involve more experienced people when recs girlish Wm: drawings are at 80% completion stage bring qualified people, job “WWW site leandsomesubconnactorsGet letalkrng‘ likebeforc. ve these been efi‘ective peop poop . in reducing change order 7 [m 159 r Feed back from SubCoutractors LQ I Question Response IQ2 lfyou have used Yes, worked on partnu’ing. Not effective in reducing change ordersr "partnering” agreements es. It works. But nobody partners with employees. Get everybody iinvolved, itsaveetimeinthelongnm. No. Yea, needy always. They have been effective in reducing CO's. An mereconsh'uctimmeetingsneedtobepubfishedl'his lpsincoordination. Fee. Yea.Sometimeetheyarenotverygood. amefimeelheyuenotalwaysefi‘ecfiveinreducingCO’s. maynotpoirrtomdeficiencyincashingomCO'slaterJf wasaglaringerror,mntractorwillnotbringitout.lf larificationisrequired,tlreywillask,forexarnple.Material pruentinbuiltwork. hitectureprofeesion. Moretheexperience ofarchitects,the itis. lN/A. lSitework. Basedonyourworkwith [Don’tknow.Designshouldbecloselywatched WWW“ theleader,whoismakingallthedecisoinsandwhatkindof isions.MSUhasmadegoodprogressoverdrelast5years.‘l‘he RsandPMsareverygoodassetsnow.Itwasn’tsoearlier.But needtomakemor progress.'l‘heyshoulddefinetheir clearly. ltsnothingtodowithorganintimi'l‘s erythingtodowithpeopleandattitude. ’t know. Toomanypeopleinthepiemaynottalkenough. ownershavetalentedandexperiencepeople.‘l‘heyare supposedtomakequickerdecisions.Whydebateonpricesover andoveragainafiernegotiations.Evenafterworkisdonewecant ' forhmdforsolongSomehnwsinlargeorganizations documentsevengetlost.Subsarenotallowedtodirectly commrmicatewithownerssonobodyknowsifflreGCismeesing ortheowner.”talkmorewithindeparunents"anddefine .Assigndefinedresponsibilitieaandtrustthemwithit. construction reps. Don’t start work unless change orders approved. "“” has a good process. rahofexperienceinsitewortqualified fieldsupervisorand 160 change orders? Explain. Feed heck fro- SubCoutractors Ree use Largeimpact. Archiectsuseincorrectmaterialordesigmtosome oneveryjob. Don’tknowaboutnmnberofchanges. MSUhasgoodsmndardsOfalltheimiversitiesMSUtmderstands itsprojectsbetter.Butthearchitectsthatareemployed,doesMSU suretheymderstandthemtoo? 2 -‘ How are overhead and otincontract. Forchangeorders-itisdictatedinthecontmct. .fitnormallydctennined ' arecommon,l$%isnotfair. .yourunrversrty contract.MSUhesbeenegoodteecher.lS%isfine,butwhen ' :fif’mmm wnersextendprocessingtimeanddontconsideryouonyouryears A ’ coated fexpenence’ loyalty bid ,itshowsdisreapect.’ rm“ .OIIWAN m on day disagreementsovermark- . . .foroverheadand- HfiYaYeeNodrsagreementswrthMSU. » disagreementsover I otanissue.Notafactorexceptdelivery change. WSW . lYeabutwedon’tchargethemtoMSU.‘ butt ransom, mnilintioncostsorloss fiNo,MSUunderstandswell. cfproductivitycommon? Doowner'sgenerally ...n standindirectcosts I. lyouincurm 7Q2Canymmentoucoonthe Don’tknowtlretotalprocess.Projrepdoesn’tprocesspaperwork. fi'ectiveneesof Michigan NeedcommitmentontimeJ’emltychargeforlatepaymentwill State University's change force them to approve. ' .~ .... procees7What , . . . shouldbechanged? WedontknowrfMSUsrtsonchangeordersorthecontractoris ' m not paying us. Otherowners care for project, relations. If con umelateditmrsinchangeordersandduetosomeproblemon someothersubsitemsomitemsgetlwldup.Bothconu'actorsand ownersshouldbegoodleeders.lfyouexpect110%,yougetit ifyoutreatpeoplewithreepectfortlreirtimeandworkbont ' RFIs. prettywell. Weworkcloselywithoneofthedepartments havenocomplaints. . l6] f Feed back from Suonutrectors 1 o Onestiou Recluse t Fromyourperspectivedo : -— revieworarchitecturaldocuments.Closercoordimtiou of uuhaveanysuggeaions SUandar'chitectRequiresmoreclearerdesignintent. " ' couldbe employedby everyoues time. Trust more. Define your responsibilities as Michigan State University leaders. Define your process. Have prequalified contractors for WWW“ ' projectsandlookatthesubstheybringtothetablebefore ' lowbidisrueverythhrgCleauyourdocmnentsaud andhaveopencommtmicetion. [soilconditionsimprove IQ Doyouprovide Fes,morecommitment. WWW” «.mvifingbidsfiompreqirelifiedconn‘actorsandsubsfor W‘m'tmmm jects.l..etthepeoplewhojustenteredesbiddersforMSUlear-n amigwbhcm mdastandsitsprojectvaywelbetterthanmostothers. you ”hm” TN/eMSUdoesgoodjothlverydroroughandsn'eemlined.‘ 3 Doyouhaveanyother o.lncommetedrawings.Approvalshouldbedonewithmore commentsregarding authority,suchthatpaymentprocessshouldnotbedelayed.Define changeordersthatyou CO'saresothatitwillbeeasytobidforchangeson Wouldadd? incompletedrawingsVsmorecompletedrawingsPaymentprocess isreasonable. , suchanimportantpmcessisnotgettingdreattentionthatit ires. Don’t avoid necessary changes. The product should ' end user, those are legitimate. Avoid unnecessarychanges like wingserrors,ommissions.MSUinterferesinthecosntructiona oproblemswithCO’sSofltesdngisabingromA/E‘softhe owners. TirningofsoilWareirnportantMSUaceeptsdre blems. . .l 62 APPENDIX D Interview responses fiom architects 163 Feed back from srchitects/ gestueers Response R VP. Al Senior associate. (civil engineer). A2 20 million, 100 projects. Mostly commercial, industrial (dry Al Wall, plaster, restoration, partitions and lathes) No residential work. 285 employees, 30 M(design fee)notsmeaboutotherwork. A2 300-400projects. Sitework,utility,steammnnel,ramps, [Imam waste water plants. ' Al A2 etc). Generallyallpmjectsarestafl’edlikethis. ForMSU jectsspeciallyweusepeoplewhoare familiarwithMSU' 'obs. 0. Al ormal post construction analysis ofprojects with L311“ internal. Post project evaluation, peer review of protect A2 to budget, looked at. Written and documented. schedule, change orders, A3 ormance of the 'es involved? Describe. 164 F Feed back iro- architects] engineers . . jectrepresentativesfi'omownerssidetakealotof WSW 'bility. Westilltakeresponsibilitytomonitorehange. Macadam? Wekeepn'eckofitforuseonproposals.0wnerseskforitin QG Hasanyanalysisbeen 0. Al mmmm rlnformally.0urgoalistokeepclnngeordertominimum. A2 | “minus” 7AggressiveondocmnentatiouAualysisisnotclientspecific. What _. l. ? Projectsvarysomuchthatwedon’ttrackcauses.Coutinuous Wmmmm improvementproceupmgnmisusedtoimplementsome recommendations . andimplemented? Q7 veyoustandardized ieldworkorders,butdon’tgetaddressedtoCCD,change Al systemsforclassifying . (suchasscope, lientshaveclassificaflomWeonlytmckdollaramomtsand A2 ““5““ theyrelatetoourClP )7Describe. ' r A3 08 Have you drawn any omission, incomplete drawings. scope changes, end Al conclusionswithrespect changes. Jobswherebidsarecalledwith incomplete tiredominantceusesof wingswiflhavefieldchangegandtoomanyRFIsare changeorders7Whatare brouglitommatarenoteveuanswered. otnecessarilydominantGeneraltrendisthatschedule A2 driven, fastnukprojecmpushchangeordersup. Design nviewgbidprocmesareshortenedinsuch ‘ jects. 165 Feed back from erehlteetsl eufleers Qloflasanyanalysisbeen 0. Al WWMM Yestheresrestatisticelsmnmaries.%givenearlierorlower A2 topredictchange m ratesforprojeets? Ifsocanyoudescn'be 5.3.. processormethods? 25 areyourchange A6 orderrates? Qlllsthatrateofchanges lgricingisaproblem,15%overheadispoor.8tateofl\flis Al seenasacceptable 7.5%. owners‘2Explam. Yesandno. A2 Q12 Areyou aware of any 0. Al blished WWW EJCDC havelots ofdata.%given earlier wouldbe A2 forchangeorders? le. Inla Al esweaskforchsngeorders.Basedonpreviouswork,based A2 nlafiomqualityreptuationismoreimportantthanchange orders.Wedon’tworkwithnewconnactors.Willworkonly ughsomeprevioriscontacgexperienceorknownmember ftlntorganisation. ' A3 166 Feed back from architects] engineers i mention Res: -use R Q“ Whatarethetypical 60-90 days, sometimes4-5 mouths.Bulletinsarefaster,takes Al dmationsforprocessing 0days.CCDsandbulletinsforceustoworkahead,but wugeorders‘7Dotheee paymentislate,thereforeweneedtomarkupmoreonchange dluationsconm’buteto r -.~- deductchangeorders. L” nonalchangeordersts Dependsonamomrtandcomplexityofchangerder.8etween A2 m“”°"’f‘?“‘°‘_ identifyingproblentoMSUtakesfi'omaacoupleofdays 1"‘""" Wmle order)tocoupleofmontin(Forformal/major ;. ornnpactchange orders? 015 Are project contingencies lDon’t know. Al establishedbyom Wen-ytoadviseonwhetisreelisticButthey-sistonzero A2 MW“ zeroisnotreesonable. ‘ aredreyunrealistic? , | A3 I A4 a . Al Jointdecision. MSUprovides. A2 A3 A4 A5 A6 A7 WOnly for specialintions, check on quality of drawings. Al - A2 A3 A4 A5 errors,omissionsand A6 hangeordersconsidered? A7 167 Feed back from architects! en neers t 0' estiou Resuuse R 018 When advising ownerson n/a Al awardofconstruction Itiscertainlyafactor.Contractorssometimeshavevery A2 mtracts,arechang‘eorde aggressivenputafionsforchangeorderabuttheirworkis Im'ofgeneral goodqualityandgoodonschedule.Soitisonlyanawareness mtractorsconsideredin factor.NO.Changeisnothingmorethananindicationofthe determiningiftheyare ircumstancesintheproject. "qualified”forthework. A3 Howisthisinformation solicited? 019 Inyouropiniondo NotatalLlikepartneringit’sadogandponyshow-only Al constructionordesign lmerketingstrategies. firmwhichpatficipmin SameparallelasCIP.Firmsthataggressivelyinvolves A2 130W usually 'typrogrammakesthinpgoodforeverybody. vereduccdchauge _ lonprojects? I A3 Q20 When advising ownersinln/a A] ' [Notmuchinfoonthat A2 I A3 A4 A5 A6 A7 Yes,no. Al Yes.Yes. A2 A3 A4 A5 A6 A7 168 ?Deeeribethis l I.“ r Feed back from architects/ engineers I I I estiou ' Reel-use R Q22 Do you have any opinion Yes, CM has less change orders, they walk for owners, but Al oranalysisonwhetherthe mmedisagreementswithalbgbidswillbehigher.GCbids ... Ijectdeliverymethod arebetter,buthavemorechangeorders,GCthinksforsubs, ' suchas designbuild, ...- drawings,subswouldratherworkforaGC.DBhas constructionmanagement lesschmgeordasgonlyschangeorderspeChangegpfices orgeneralcontracting .. higher,leeschangeorders. WWW es.GCisgoodisadequatetimeisgiveutodesignerstodo A2 ~?Explmn. jobs.lnDBownersareuotinvolvedwhenjobbegins asawareueasincreesesscopechangescomein. Q23 you haveanyopinion I- Al onwhetherthcspread o,ownermaythinkthatway,ifbidderislowonajobor A2 veriation)ofbids ' ani will tomakeit receivedinfluencesclnug A3 rates?Aretheye A4 predictorofchange ordersonsproject? Q24I owarebuilding dbe,itshowsonthejob.0ccasionallytoofien,not Al p ograms(needsbriefs) ‘ istently. "”"W Verystongemphasisofourappmachtohrgn.’ Direct A2 """' "'76” 'gswithownes,wntten’ responsestoreviewcomments. “" W ostprojectsweveworkedonwehaddirectcontactwith II: I14 :u. occasmuullyor enduser. m-mw aceuseof scopechmseebydwmd ‘3 lime. II. Q25 - construction a A] Wfigmlfl‘m Yes. Difl'erentlevels ofreview, discipline specific, A2 {0 || reviewedbyyour independentreview,QA(.).C,standardsanddesigndocmuent . WWW . clasheheckaconstructabllrtyrewews. bidding7Arechecklistsl 52. A4 169 Feed back from erehltectsl engineers es. When time is available-they do a thromghjob. Follow IWWRM upisusuallyfacetoface.Multidisciplindleviewteam.If ' issomethingdonethatconformdsMSUstandardsitis ’edinwrittenformat. Q27Hasyourorganintion 0. Al involvedwith es.Yesefl'ectiveiugettiugthesystemworkingproperly. A2 .mm’ll'olmm Notchangeorders. veusedcommissioning A3 servicesfllavethesebeen A4 efl‘ectiveinreducing A5 changeorderrates? Q281fyouhaveused . Yes. NotatalLPamfingisinn'odeedafierbiddingbut Al “par-mering'agreements ' willremainandchangeorderstyoumoney. mmjmhavethose commrmicationwillhelpmarmeringdoesdiscusson jects typically valtime, bindoesn’tgetimplemented. mermenmemedthlmachang? e cw projects. Good idea to improve project comlmication.l A2 been ’tknowaboutchangeorders.Procesisngtimeisdiscussed m . inthesemeetrngs,’ howtoreducechangeorder's,italso ‘3‘“me finesaccountabilityandresponsibilities.Setexpectatrons' memws ontimelycomrmmrcatron.’ ' Peoplefollowittotheend. Q29Areprebidmeetingsor es,always.onlyifitsmandatoryitwillhelp.8pendmore Al ' onp-econsnucfionstagebettertoqualifycontractors andnegotiatewiththem.Sometimesownerforcewithouta iddate. ecessaryforcontnctorstosubmitabetterbids.ltsto A2 everybody'sadvaneagleconn'actorsasksforinformation ' tomndadate. 170 | Feed back in. architects! elfueers Res and Subs while considering bids. scopechange.Poorsetofconstructiondr-awings.lf idscomelowownertendstobringsinthingsthattheyit notafl'ordearlier.Scopechangesinerease.Nothingto withorganizationlguess. oretimeinbidding,notgetbnlletins,CCDsatendof jects,answerthemupfiont. Al eownmmayhavepoorcommicafiml‘heyshould veirlternalcomminnerlttogothroughchangesfast.8heer' hnneofprojectshandledbyMSUmakesthemdifl'erent fiomotha'lmgeowml’ossiblydreyarelmderstafl'edas ll. . 171 Feed back from architects] en :4 users Helpsreducethemifowneeraflycommrmrcates‘ with mnumbel’lfldmff istencyanddesignersknowwhatMSUneeds.Standards CWM7EXPM arealsopresentonliue. Al Q36 How are overhead and [Yes, should get more, state of mi 20% time. 15%isenough. Withstateprojectsmaybe makelessmoneyandhenceneedmoreprofiton consu'uCfiOHWAfl changeorderiMSUallowsreasonablemarkupmutif disagreememsovcrflle areupsetoverploeessingtimetheyshouldvoice ' concernsclearlytoMSU. Q37 disagreements over No, mainly it spoils customer relations. Al Yesblnnotprevalemltcmlldalsobeduetocontractors (,me claims intital schedule. Contractors deal withplojects pretty . aggressivelyiftheystillseeaproble-withtheeethingsand ’tdiscllssititistheirproblem. Q38 Can you comment on the lRefer to previous answers. Al °Mvm°f “my“ iegoodNeecaeobedoannennednndneedsnpeedin ' Foreachdepartment defineanacceptableperiod offimeforprocessmgandmivemreMRIfconn-actoris laidbackintitallyitturnsintoaproblemlateronandthen pmslreigwhenitistoolate. Q39 Fromyourperspectivedo Preconstructionandwalkthrus,architectshouldbepre ouhaveanysuggestions qualifiedlikesubsandGCs. Al .‘Pu'db‘m'?’°d.by laisnbnlnncingaeeoodnnngnednomngndecignpmm “‘9'“ 5“” ”mm” and givetimechangeordels go down,butifyoutakeaway W°mf°mm scheduleindoingsochangeordersgouthhinkone m shohldnotpushtlrescheduletoohard'l‘heymustalsospend ' onreviewprocess. 172 I Feed backho- erehitectsl eulueers I 0%— I '—.lim Q40 Iuyouprovide 'mwukestoolongdiereissomethingwrong. architectinalor MW” es.Pvtsectorarebudgetdriveuandhencearemore 9mm“°mu}m . "velfthereisanopenitemtheywilldiscussitand chlganStateUmversity fixprcesaggreesivehlublicownustakethehmoney - orotherlargepublic lightly. sectorowners? Canyou commentonwhataspects Iftheirchangeorder men-:ementprocesses shouldbeconsideredfor Itletl commentsregardmg ' theyshouldpaypremirnnforacceleratimgive Q41 youlnveanyother Ifliquidateddamagesarethereaudnotmeetingcontract changeordersthatyou ineentivesforfinishingearly.Preqiialificationofarohitects. Wild“? verybodyinpiocesshasaresponsi’bilityandwhenwehave reasonabletimefordesign,oustatisticaldatashow changeordersarelow.Welookforwardtofasttrack jects,butrisksgoupandeverybodyshouldbemore ible andaler't. 173 APPENDIX E Interview responses from university administrators 174 Feed back from MSU administrators uestion Response 01 W is the title of your ““ response not reported but available "” 'tion widfinyow firm? rm response not reported but available rm ' ‘ ”” response not reported but available “" ”“ response not reported but available “” ”“ response not reported but available ”“ ”” respome not reported but available ““ ”” response not reported but available "” ”” response not reported but available “” ms response not reported blit available rm ‘ ”” response not reported but available "” already given. projects, 300M annual volume. Health Care, Historic ' Heavy Commere- ial, K42, Instrtutr' 'onal. EAShoushgconstructionauddesimandlandmanagement. ‘ contractsandgrmts,landmmagement,interior ityhousingandinteriordesign,CP&P,Physiaclplam, plmtlandmanagement. Informationalreadyprovided. Info provided earlier. Info provided earlier. Info provided earlier. Q3 your omce provide lUnoficial, yes. Just inforrml discussions. generalrecent ormalanalysisatpreconstruction,midconstruction,post constructiondataforymn' 'onNotaggregatedpostconstrrrctionFinancialstatus ersity (or department) go through change orders, schedules, projects. suchasnumberof i'ecIs. annual dollar [information already provided. and/or project ° en er‘alier. a: an won ...... me information? Information already provrded. Information aheady provided. Info provided earlier. Info provided earlier. llnfo provided earlier. 175 Q4 Feed back from MSU administrators Iuestion r...- unorganimtioual chartexistwhichoutlinesquo Res-Iuse es,Reasoncodes. A/EorCRassignsReasoucode. I“ “WWW“ llnformatronaireadyprovrded. In IIIwIW given. ' 19“,?“ firmer... l’ ' '-' so,canwe H, 'IIacopyofthis WMMWM L I ., Hum)“. [Informationalreadyprovided identifytheomceswhichllnfoprovidedeariier. - WW? llnfoprovidedeariier. Ilnfoprovidedearlier. [Yes,RcasoncodesW [No linformaaonelreadypmvided designer, PIA, open orders most, bid work for “000+, alipaperworkisperformedbyPIA. eaprflhninaryplmningafierprogi'amingisdevelopedfor occupanyseveraiorgconsulted. lhoaueprojecmmonfiabudgfiprepareconnactsforsignatine. [Info provided earlier. llnfo provided earlier. Q6 your office conducted iscipline coordination. Non-compliance to university 'ons made implemented? Will changes. For bonded projects usually we have field changes mid errors. Scopechangesdependonendusersinvolvementin lNothingformalmainstreamsystem EoformaLtheconsnucitonpioceesisreexmainedonongoing YES. fies, informalstudies,havingP0issuedindirectpayvouchers. [No.informally. EnformaLdiscusstofindeasiestwaysconsistanevaiuafiouYes, 176 i Feed back rro- MSU admiubtrators 1 I I Iestlon Res I . use Q7 Do you conduct any 0 answer. schedule, change orders , . . _ . or performances of the Fee. Project closeout debnefing, phyiscal plant wrth cheat. No. .... .. involved? [Noflfinsfomal I «n ’be.Arefiudiugsot [lamprojectsthatexceptionallygoodandbadNO reportavailabieforom IZeaiessthingsiearmFinalbudgetreportexceufimdsto l o I. Definetinchangeorderprocesadefinechangeorders. A N/A No. N/A aprojecttheydon’thavetheexperience,poordesigndocs, Solicitedideasaboutwhatfacmwentwellcontractorsthrowu FemiaeandinattentionbyA/E. [See above. MI- postedtothewrongaccounts,thingsshouldn’tbethere, errors. Q9 Towhatextentdoesyour [Noanswen omcemonitorchange [Somemayseeitasacceptablesomedon’t . withinyour [Doom .w «process? lWhattheyareandhowmuchtheyare.No.N/A item.No.No. wedforthc “hie”? . . III-mwofdetermining lrevrew/discucssquestronswihmdqit.No. veragechangeorder “Wgfimwmdfiimmamrmmm m?Arediesechange A. . ratestatisticsor [‘Startwithattendingprogressmeetings,bulletinsandCCDsare oggedinexcelandfamis.Reasoncodestracktime.YES. [A lot manged directly. NO. NA ll-‘ullytotalagainstiedger,totalagaiustcontmctor>NO. 177 Feed back frorn MSU administrator's 1 uestion Res use Ql Has any analysis been lmdertakentodetermine [Cildon’tlmowwhattherateisactually. eordercauses?Can|‘No. describethismmeeponsegivmnisouseedwitnfinnn Whatwereitsfindings? Yes.Donebyconsultantsreasoncodes.Skewedbasedonsource Wmmommendafim whoassignsthecodes)no. and implemented? N o. Is a copy of the report Yes available? No. Scopecharrgesbyclient,rmforseenconditions,consultantspoor [design [? Qll ve you standardized Design engineers-very informally (known for missing contract systems for classifying items). University project managers—informally. (”has 3°°P°I ofproject review ofSubcoutractorsnotspecifictoCO. error or 6°” ormally assess SC for 00 and work ethics )? Describe. es, reason codes Yes. Yes. No. Yes. Yes. No. Information already provided. Q12 Have you drawn any No answer. No conclusionswithrespect PutCosarequickiunegotiationsduetolessheirarchyin the dominantcausesof approval (Iweek processing+30dayspayment). Theycan changeorders?Whatare contributetoextendedgencrealconditions.’l‘he istCOmaynot dominant causes? ve a major efi'ect but the 5th will have a cinnmulative efi‘ect. Impacts include, financial binden on SC, relationships wn,detrimentaltoadministration. Owners haveto derstandtiiatSCpaymentisirnportantlfdeiayinpaymentis 'cipatedtheyincludeitintheircostthheytrusttheproeess theywillquoterealisticaliy. nforseenconditions,errorsandomissions,scope Document errors. Field conditions, documents. Field conditions Depends on proj, customer change scope, renovations, hidden iconditionsI new desigge error. 11 play a role Sco c consultant design. Scopegjeld conditions. I 178 I Feed back from MSU admiuktrators . . ' ”“0. R -.‘ I l 0” Q! If you can, either fiom Experience/Rule of thumb. l0-15% statisticaldata,orfrom IReasonablebutshouldbequotedupfiont. . I . experienceindicate 3.4%, 3.1%,3.20%,3-12%,10,12. I. . usual change “d3 2.3, 3.4, 2.3, 3.4, N/A, N/A. W8“ f 5, 5010, 10, 10+, lo or less, 10+ of the following o,no,10,no,no,no. ,. .jea my [4-5,4-5,7-8,7-8,10 and a. I4-5,6,7-8,lO,3,5-6. [110. no, lo-ls,no,no,no [ii/a. Q1 Has any analysis been lilo conductedwhichhelps o.Althoughthere'naquestiouonbudgetedcostandactuai topredictchange whichisnotenoughtodrawconclusionsandhenceis rates for projects? ' . are your change - rates? INo. comultants are informally asked their experience with chang M). [historical data,perform lots of same type of buildings 0. Yes,historieal data, 7% Nothing formal. A No, 5-6% small projects. Q] Is that rate of change orders seen u acceptable lain. N/A 179 | Feed back frorn MSU administrators 1 uestion Res Ql Areperfomancerecords 0. N/A. ofprojectparties ownersdontaskforquestiomregardingchangeorderhistory mouitoredortracked dieyexpectchangeordersWhenthereisahimpsumfeethere formallyorinformaily isnoneedforchangeordersbyconstructionmanagement withrespecttocluinge ' orders?lfyes,cuuyou Informaliy,rnentally. describehowtheyare kilo. filo . forthef IInformallyforalllisted. o wmssmupso - - j” .. ? lfiomm onlynesauveperformmoemnespermoncsMN [Informal [No,infornnliy [No. INo. PleaseoutlinetheprocesslNoanswer III Ilondesign.CMmoretheanDBlessthanCM.Planreview isbetter, ownerscontrolismorelnGCmostninuber-ofCos. “bulletin, quote, review, pay or reject Info aheady provided. Items discovery, discussion, issuechangeordersorrejector Info already provided. Q1 Whatarethetypical No,experiencetellsyouwhatthespread durationsforproceesing scrutinisescopeincredibly.CMmoresautinyonchange orders?Dothese orderprocess.SClocatepowutialCObutwilluotiuformGC& diu'ationscontributeto ' showonbids.Variationisaredflag—needtokeepitinmind "onachsuchas ' ' ' . forextendedgeneraly 2months,yessometimes. rippleefi‘ects 2months,yes. mummies? 2-3months.Yes. 2days,no 34months,usuallynot,priruarlycontractorisauthorizedto viaCCD. weeksiswhatwetry,80%ofthem,No,notdirectly. Rarely extendedgeneralconditiom. [Adm- Il-zweekroroalonguonemomaiio. 180 Feed back from MSU administrators I forprojects?Whatare asedonMP'sof ro' vedbudetallo 845%. ‘ icalrates? DesignatedbyboradofmistesstohaveIMmayincreaseif ~ 1.. 'I . [By designer,new5%, reuovatiou10%. linasedouhistor-icaldau. ' natrneofthepmjechuew=lowestS-7,reuovation ' 8-12,undergroundhigh10-15%. lhojmangerrecommendsaninnber. [10%orless,historicaidata. Ilnfoalreadyprovided. Whathappenstounspent fiommanagementofiensubmittedtoA/E.AIE ject contingenciesas inwritingtoeachissue. projectprosrm? Itsgettinginaeasingiyworse.QCispoor.MSUdoesagoodjob MSW [mohoosingA/B. vailableforusewiththe ISitsthere.DepeurBonfimdingsources. “pmij to [Don’t know. Not generally. Jaw” [Sitsthere.Yes. lSitsmerepossible. [RemaininconstructiouaccomnuntiiprojectcompiaYBS ISitstiiere.Dependsoufi-omwherefimdingcomesfrom.30+ [Sits inaccouut, [infoalreadyprovided at all. Schematic review. Design and development review. 30%, Q21 e and 90% review. [EASJtdaadequate # [A/E.basedonsoiiborings.0k. ; ' inconsultationwithUnivconstrirctionsiiper-visor.l’ast |...:,,.,.gemnybe¢n experiencemcalinormationmadequateforcornplicated Goflnwshphysplmtsoflnwahphysplantm ' coderequhemeneadequateusualllyinchidedin tractforcontlol' contractdoesn’tchanceon ' . igner. [PhysplnntadquI F? 181 r Feed back from MSU administrators i I estion ResIInse Q22 How are design es. No answer. . Ifessionalshiredfor otluialysedwithchangeorder.1‘heyhavebeeneifectivein III Ijects?Whenselecting satisfication. Commissioningfindsoutflaws&more .. consider-lugdaign isspcntouchangeorder&fixinggoesovertheyearsand .I Ifessionaisaretiieir ispaidlater.TetsingbringsoutmoreCosbutitsnotbad. lI- . "I“ recordsfor qualitybasedselectionprocess.Yes.Askaboutclaims -.. WINS.“ in c ordersratedoue ' theinterview. ~I:I: ordersconsidered.Basedoufee.Beiow50,000dolars.Selectionbasedon If they are considered experience and availability. Above 50,000 there is a specified IIIhh'inghowisth'n formalslectionprocessadvertisedinMichigmcontractand II . unwed?“ 'der.Experiencebasedonbuildingtype.6%present,reduced 64%andtheymeintaviewd.informally. ' 'onbasedselection.Yes.'I‘lnoughtherequestfor wwww' . esatphysplanuinformaliy. BS YES determinebasedoncontactwith iousclients. a Emwvm Q23Whenawuding INoanswer. consmictionconnacts,are atnegotiatingC0.0K-butmaynotreduceCO.SCand orderhistoriesor wnersbenefitfromit. generalcontractors l o. nsideredindeternriningllNo. iftheyare”quaiified"for work?Howisthis o 0 information solicited? 0- o es, opinions from previous projects. es.Yes.Apublishedtimeforpre—bidwalkthruisestablished. 182 Feed back from MSU administrators ' r ruestion ResIuse Q Wheuawardiug oanswer. . e. I -. (“mu liS,l6,2,9. . I commute ["0- “(neorderhistoriesof [No ificsubcoutractorsor ° N- I-I 600m ... ideredindeterminiugllnfmmy iftheyare ”qualified" for “Graham“ IIwork‘HIowisthis No. ? No answer. E,P. lackofcoordinatioubetweenthesethreepartiesandw nforeseen consitions. based selection promNo. Advertising, Soiicit shortlist. Same as A/E process. No informally. [Qualification based seiectiou.No. [quality based selection process. Informaliy. [QBS,basedoninfofiompastciients. [Ne _ In“. fl Q2 ' your organization Yes. Very iuefiicient depends on nature of project. designbuildfirms Yes.Rareiy,forsimpiestructuresDBwillbeused. fOIPIOJ'm? If so, Yes. Once, specialised construction, where there is limited “9"qu desi and contractorswiththat ' ”alt/P“. . ' Yes. One. 0. Rarely,pole barns, specialized medical facilities. Yes, pharmaceutical, polebarus: IOuce,badexperince. I? 183 Feed back from MSU administrators j I uestion Res-Inse 028 veyoubeengenerally esandNo.aslongsswecenmaintiancontrol.Thereare wIifiedwithpoojects IIIIlernswrthI. 'I_coutrol. . liveredthroughthc Clearly defined decision network. CM allowances. 100%free I...~I..bui1dproject descretionofowners. ShouldbeusedtohandlecII _es. .. liveryrnethod?Explain. o. Verylinleconuoloverthepmcess'l‘heypsyforchange Irders II didn’t believe were warranted. o.Noslectionprocesstoldwhotouse.’l‘hereisatoughtime LLM—L intoMSUconstructionmmdards. n'a o,ownahadhssdaytodaycontmlofproject,badfor owledableowners. o,GMP,disputesinscope. [No,DBwumisthrowntogethu. IHardtocontrol. Q29 youhaveanyopinionl analysisonwhetherthelDefinepmcess. jectdeliverymethod, aMmechaugeorderswithGCJl'heyduowthebidstogedia asdesign build, auditismore adverserial desi “Mm Processdoesn’timfluencemuchasdieteun. generalcontracting INo. influenceschangeorder' INO- 713mm id‘zignbuildthenannepsyforCOinsdvanceJiddnen l . isbuitheitlrerreduceownerscost. guaranteeCMwillcomelessthanGC.Fsrlesslikelytobust budet. canhaveCOpmblemhasmoretodowithdesigntimespent iton. notmuchdifi‘erence. Q30 youhaveanyopinion o. 'ecetelle ouwhatthe is. ' ific. whetherthesprecd eedsupdatingbtlttheyar'efairlyokkeducesco, lessguessing variation) of bids contractors and owners. ivedinfluences o.No. hangeorderrates7Are Yes,canbe. a good predictor of Yes. No. .mordersona Yum- ' J Yes,itsnnindicstionofdocmnentquality. Notreelly. No,no 184 I Feed back from MSU administrators 1 Dictated blcontrnct. Causes disputessometimes. specified7Whatarethe YesJSmdS. standardspecifiedrstes? Yes. lSandS. Ifnoghowisoverhcnd Yes. lSandS. {MM‘PW Yes,5%onsubs,20%mamrials. mtotheconnactor's Yes, 155 madam t fimmzmm llnfoah'ecdyprovided. Q32Hssoverhendandprofit IOcccssionally,someconunctorsthinkitshouldbehigE. markupbeenasomceof " lossescommmAfi‘ectssequencingGener-Il ' uteonprojects? " alwa . Explain. es.Contractorsfeelitisinadequste. Yes.Conn-sctorsdon’treadthecontrsct. Yes.Contnctorsfeelitisinadequatetocovercosts. No. Yes,notadequate.ofcoforWorktobedoneorrtofsequence. No. Notgenenllymonflcatrrallynowhengoinginto sproject. ? conditionsitemsor annaldisuarstReducenegotiation timebylnvingupfiom claimsincorporaredinto egotiatedassepsratechnngeoafierflrefactYes,dimcultfors changcorderpficingfl-Iascontractortoprovehiscasefietstheggeforconflict. ' Mumof lTrynototdo/negotiate. Variesbypmject. ' uteonprojects? Cantheconn'actorsjustifytime7Yesjustifyingtlrenueimpoctof Explain. . orwork. [No. hwmmmaddfimeforCOfmwhichignmedYesbmore deligentsbouttimeimpact. Makeconuacmrshowthereisapmblem.YES,bmfew. ° 'culrelationshrps.’ [n/a - , I? 185 | Feed back rm- MSU administrators i . .I—Jll. RIM s - I ownrebuilding Descirptionatconcepmslstagehowmuchdialogueexchange I I;IIII (needsbriet) .. .-. psrties.MeetingminM,problemsstatements,memos, .. lishedIand 43M. emails. Personnel turnover how :1» -.. .. ....-. .I Are unckchmgeordaaPRshsvetopushToomanylsyersof ...”... -I.I...‘abou..;.. approvahMSUmustphnforchangeordasSometimestakes l' Immionaflya' aboutémonthstoI I .~ ~III;eorders. ..I....... .mof Establishedbydepartmeutanddoaunnetedinwdformtheir scopeclnngesbytheend ..--.e Yes.Notatotsl|mderstandingofwhattheneedssre. “' W IAdocmnentiswntten.‘ No,unlessyouhave personnelchanges. '"" ' andendusa.0ccsssioanlyA/Edidn’texplainorcapturethe intent. mmmmwammm todo. finebyfacilityplanningandspmmgnnpmcessJflo. addingtopmjectcompletiondsteforecchpersons ' asdesignatedsmountoftime.Limitthenmnberofbullefin itermonabulletinandshouldhavethechangeordersprocessed inncertainamormtoftime. should know. YES, people clients don’t know whattheywant. I? Q35 Are construction at all. Schematic review. Designand development review. 30%, documentsformslly 60%and90%review.Commentsformainmnecnearesubmitted 'ewedbyyour A/E,whorespondtoecchissue. organizationindetail . [Seeodrerinterviewresponsegsndnotalwaysdone , ”b‘mm es.Bachdisciplinegoesd1roughthedocmnentsfor m‘ completeness. Informationwasprovidedearleir.Donestthe50-90%No longerat 30, 60, 90 96 design completion stages. Distributedto stafl’positions,(M,E,S)alsotoshops,telecom,firemarshaL custodiaLclientJtsdoneinameetingwithallparties. es.A/Ewalksthmtothermiversitysndthenbreskupinto I]. 'l' HYegPlAandsrchitectreviewsndcomment. es,reviewedbyA/eandmaintenanceshopsupervisor.large jectssndindependnetreviewfirm. Fxpectedtimeweofl‘erthemequalsquality. lbig projects selfperformed. ? 186 Feed back from MSU administrators contolonCOJoomanylevelsofauthorannd approvals. Yes . Occasionally. Yes. No. Occasionally. projects by designers? Y“ N0- Is failure to follow these Phys planncan be. standardsbydesignerss Yes,yesthcydeviatefi'omouconststandar¢h. fi'equentsom'ceofchsnge o. “373‘th plant,yes,contrsctorsthinktheirworksuperiorto l? youbelievethereiss I , difl'enncemchangeorderYesJfigherwhenmedmnsideJecuneoffihuetouse designedwithiny standardsNotfamiliarwithom'buidlings,theydon’tspend . 'on i . . 03 Yes,ertperincetaketimemaskquestionstodesignandsolve lproblems. _ [Yes,outside larger projects, more things easily missed. Q Has your organization IYes. Don’t know. utilizedcommissioning Yes. No. Problemareflushedomindesignsdiatare incorrect services? Have these been and don’t work as intended. efl‘ectivc in reducing Yes. No. Adds due to problems that are identified duyring m1 . changeorderrates? Yes. No comment. Yes. Yes. No. Yesms 3, reduces them ifggent use them in design No. 0. 187 APPENDIX F Types of Changes . 188 Types of changes What is a Change order? “A change order is a written agreement to modify, add to, or change work that is defined by contract documents. There may be different reasons to have change orders in a project. Some of them are: Owner initiated changes; errors or omissions in the drawings, misinterpretation of the contract language or specifications; noncompliance of specifications or drawings by the contractors or subcontractors, substitution of materials, price changes, and schedule variations, changes in order of work or methods of construction. Although change order and addenda are close when it comes to the function they perform, they differ by the time they occur in a project life cycle. (Refer Fig 1) Although change orders may have their root causes to a time before signing of agreement, changes by change orders occur only after signing of contract, (as shown in Fig. 1) unless there are other provisions in a contract. Usually a price change accompanies change orders.” (Fisk, E. 1997) MOM Bid Award Sign P “‘9 Opening Date 39mm '31:: 0 (2) ® 9; s ‘ cm h j ‘ a "908 Y Chan as Cha 0 order addenda 9 by "g cm" Fig. l. Addenda and Change order. (Modified. Edward R. Fisk 1997) 189 Explanation of terms: Differing site conditions This term is usually seen in federal contracts. It is‘also referred to as ‘changed conditions’ or ‘unforeseen conditions’. These are changes that arise when during progress of work subsurface conditions differing materially or of unknown nature are encountered. Sometimes differing site conditions (actual conditions differ from contract represented conditions) and unforeseen conditions (unusual situation not reasonable anticipated) are categorized separately. Although a differing site condition typically occurs below surface grade, there exist certain contract instances whereby such a circumstance may be encountered above site surface. W.H. Armstrong v. United States, 302 So. 2d 1009 -197 8 (Jensen, D. 2001). It is fair on the part of the owner to share risks of unforeseen site conditions. Acceleration of work “Acceleration may be owner initiated (directed acceleration) or when a contractor attempts to take extra measures to make up for delays, by using extra resources to accomplish the objective (constructive acceleration)” (Dept of Neighborhood development. Housing policy. City of Boston)1 Weather conditions “Changes that occur due to weather conditions qualify for claims only if the weather conditions are abnormal or unforeseen. Irrespective of severity or destructive nature of weather, if it could be anticipated by the contractor or is not unusual for the season, the ' from website of Dept of Neighborhood development. Housing policy. City of Boston. See housing development — housing policies - Change orders http://www.ci.boston.ma.us/dnd/D_2-2_change_order_and_contingency.asp "' note links may not remain active always“ 190 contractor is not entitled to claim for excusable delay or extension of time. It is therefore essential for the owner/ architect/ engineer to maintain weather records for any delays caused by weather. AIA A201 Article 4.3.7.2 requires documentation of unusual weather by data that "weather conditions were abnormal for the period of time, could not have been reasonably anticipated and had an adverse effect on the scheduled construction." (Dept of Neighborhood development. Housing policy. City of Boston)2 Non Design-related Change order: “These Change orders include unforeseen conditions, code-related issues, and building inspector changes.” (Dept of Neighborhood deve10pment. Housing policy. City of Boston)2 Design-related Change order: “These Change orders include unforeseen conditions that affect the appearance, layout, functionality, dimensions, and/or quality of the project.” (Dept of Neighborhood development. Housing policy. City of Boston)2 Emergency Field Condition Change orders: “These Change orders include any condition that causes an emergency situation where safety or other immediate losses may occur.” (Dept of Neighborhood development. Housing policy. City of Boston) 2 Scope changes: “These include changes in the scope of contract that may occur due to the owners need or due to misinterpretation of contract documents by any of the parties in contract. This type 2 fiom website ofDept ofNeighborhood development Housing policy. City ofBoston. See housing development - housing policies — Change orders http:l/www.ci.boston.ma.us/dnd/D_2-2_change_order_and_contingmcy.asp “ note links may not remain active always‘ 191 of change can be additive or deductive in nature. Additive may not necessarily be beneficial to the contractor and deductive may not necessarily be harmful.” (Dept of Neighborhood development. Housing policy. City of Boston)3 Donation/Contribution Change orders: “These Change orders include changes resulting from the donation of materials or labor. Some contracts recognize donations and contributions and require them to be processed as a Change order. Any savings realized could be added to the hard cost contingency.” (Dept of Neighborhood development. Housing policy. City of Boston)4 Value Engineering and Betterment Change orders: “These Change orders include those upgrades in equipment and materials deleted for budget reasons during final construction contract negotiations.” (Dept of Neighborhood development. Housing policy. City of Boston)5 3 “d ‘ fiom website ofDept ofNeighborhood development. Housing policy. City ofBoston. See housing development - housing policies — Change orders http:l/www.ci.boston.ma.us/dnd/D_2-2_change_order_and_contingency.asp * note links may not remain active always" ‘ "" ‘ from website ofDept ochighborhood development. Housing policy. City ofBoston. See housing development - housing policies - Change orders http://www.ci.boston.ma.us/dnd/D_2-2_change_order_and_contingency.asp ’ note links may not remain active always‘ 192 APPENDIX G Sub-process charts 193 Total time taken to process change orders D1 Duration of Change Orders for Project ID 3347 u g V or 4 §E§S§§§ H —r—+—+~+ Ar ti n—t \l OI duration (days) 5? E88 -i—t— 0838 Change Order Number - duration of change order ——-averoge duration of change orders in project I l Duration or Change Orders for Project to 99072 1 duration (days) Chcmge Order Number - duration of change order —average duration of change orders in project 194 Duration of Change Orders for Project ID 3282 150 v I 140 t 130 4» ‘ 120 4» HO .— 'g: 100 -, 90 -n ii so -_ .Q 70 «~ *5 60 «— 5 so -_ '0 4o ,_ . 30 ._ . LI} 20 -. ' . 755 2 10 —r- , .. ‘5 ‘ 0 "Lg” «“2133 I 2 3 Change Order Number _ duration of change order 3 average duration of change orders in project Duration of Change Orders for Project ID I 3147 E i t: .2 1 ° 1 5 . . o l 2 3 Change Order Number 1 i - duration of change order average duration of change orders in project 195 Duration of Change Orders for Project ID 24748 125 E1001 I O E 75 ‘ C .9 50 g 25 U o Change order numbers , —average duration of change orders in project - duration of change order I I Duration of Change Orders for Project ID 3482 §§§ +4 ~++A+ I‘ I j. Iw—r—rfrrrrrlliriiril g Mg V U! L duration (days) 8 01 441i Change Order Number - duration of change order av erage duration of change orders in project 196 duration (days) H—t—t—t—P—I—I—I §§§§§§§§§§ 25 1(1) Duration of Change Orders for Project ID I707 I 2 3 4 5 6 7 8 9 IO II I2 13 Changeordernumbers - duration of change order av erage duration of change orders in project 1 duration (days) Duration of Change Orders for Project ID 2474A $1 I 2 3 4 5 6 I Change order numbers 1 — duration of change order I —-average duration of change orders in project 197 duotion (days) Duration of Change Orders for Project ID 021408 Change order numbers - duration of change order —average duration of change orders in project duration (days) 0 8 § § § § § *5” § ’5‘ § j—t—t—H—r~+—+»+A+ A I Duration of Change Orders for Project ID 0584 Change order numbers - duration of change order I —average duration of change orders in project I 198 603.6 E 2090 00:06 .0 c2826 3055' .280 omcoco co cozosnv I 50:52 .590 00:06 sesassassaegagsmsssssaasamgsgss a—o—o—.—.——p—.—.___ _ 2 _m o. .039“. .2 2090 355 Co c2550 (MOP) uosionp 199 duration (days) Time taken to process Change Orders Project ID 3981 Chmge order numbers - Iime taken to process Change Order —average Time taken to process Change Order Duration of Change Orders for Project ID 0365 I 200 ml 100 i 5° 1 l 0 . ~i-I»~ »+* I 2 Change order numbers duration (days) _ duration of change order —average duration of change orders in project 200 60.05 5 £90 3:20 .o 8:03 3296' 5.20 00:20 .o 5:93 I cages—800990 9"an.wuwxaxxwmuwmaaawnnauwmui I. lllll. 8‘9g'e7vl 93 a. 629m .2 286 8:90 .0 5.850 I. 068199'87Vl. r f asssséassg (“WI “0.40” sass 201 Boat 5 23.0 09.020 .0 3.55.0 @0905 596 3:05 .0 5:28 I congz .090 00:05 A o n v m noon Q .Uomot ..2 2090 00:06 .0 c2550 asmsaeaseeaeaereno (SAUDI UOIIDnP sage 202 Duration of Change Orders for Project ID 3496 duration (days) I I I Change Order Number ‘ - duration of change order —average duration of change orders in project 203 Initiation sub-process duration (days) Time taken to intiate Change Order documents for Project ID 3347 Change Order Number - duration of change order average duration of change orders in project Time taken to intiate Change Order documents for Project ID 99072 duration (days) i 2 Change Order Number - duration of change order ——average duration of change orders in project 204 duration (days) 0688888588 Time taken to intiate Change Order document for Project ID 3282 Change Order Number - duration of change order —av erage duration of change orders in project duration (days) Time taken to intiate Change Order document for Project ID 3] 47 l 2 3 Change Order Number _ duration of change order average duration of change orders in project 205 Time taken to intiate Change Order document for Project ID 3482 duration (days) Change Order Number _ duration of change order average duration of change orders in project 206 Time taken to intiate Grange Order document for Project ID I707 E o E c .g o 5 o I 2 3 4 5 6 7 8 9 IO I I I2 I3 Chcnge order numbers - duration of change order average duration of change orders in project Time taken to intiate Change Order document for 1‘ Project ID 2474A j i E I F ; :2 , . 2 5‘ Ir 3 1 Change order numbers - duration of change order average duration of change orders in project 207 duration (days) Time taken to intiate Change Order document for Project ID 02I 408 Change order numbers - duation of change order average duration of change orders in project duration (days) Time taken to int iate Change Order document for Project ID 0584 §§§§§§§ ISO 1(1) 08 Change order numbers - duration of change order average duation of change orders in project 208 Time taken to intiate Change Order document for Project ID 3i I9 duration (days) I 2 3 4 5 6 7 - duat ion of change order average duation of change orders in project duration (days) Time taken to intiate Change Order document for Project ID 398i Change order numbers - duration of change order —average duration of change orders in project 209 Time taken to intiate Change Order document for Project ID 0365 duration (days) l 2 3 Change order numbers - duration of change order average duation of change orders in project Time taken to intiate Change Order document | for Project ID 3496 duration (days) Change Order Number . - duration of change order average durati on of change orders in project 210 "m .0205. c_ 2090 00:20 .0 c2320 0O0.0>O .020 09510.0 :25? I 2095:: .35 09610 €$ERRWEREW£EZWRWV ”N69199'83 UV. ,.-. ,. 9:” o. 30.2,. .2 E2808 520 856 2.2.5 2 :32 2:: +I « + . ., (“mi uqrnm 211 .00—05 E ”.090 09.050 .0 CESSU 090.0201 .090 oucucu Co c2650 I 20952. .090 09.010 9.qu 9 .00—0.... .0. 2053000 .090 09.9.0 30:5 o. :30. 0E: on. §§§§§§§§§§$§§§§ §§§§§§ (Mop) uorpnp 212 duration (days) Time taken by process before achitect authorizes Project ID 2474A Change order numbers — duration of change order —av erage duration of change orders in project Time taken by process before achitect authorizes Project ID 24748 6 J I durationidays) O -' N (A, b (It Os \l 0) ~(It l 2 Chmge order numbers - duration of chcnge order ——average duration of change orders in project 214 duration (days) Time tdnen by process betore achitect authorizes Project ID 398! Charge order nunbers - duation at change order —average citation of change orders in project 215 30.0.0 0. 200.0 000030 .0 co=050 000.001. .008 09.050 .0 00.550 I “.00—.5: .003 09.9.0 Diva Q .003... 32.230 00:50.0 0.0.00 3000.0 >0 :30. 0E: (5‘09) venom 216 Contractor sub-process Time taken by contractor to process portion of change order Project ID I707 duration j days) 9 IO 11 Chmge order numbers - time td01 5.00....00 >0 :00. 0E_.| 3000.5: .005 00.9.0 non.wmammxwwmuwxawawzwauwmiI 11 oeflmmflmml06919979~ot Diva o_ .005... .005 095:0 .0 5:05 30005 0. 5.00.250 >0 000.0. 0:...— COVNO 220 (M09) uosionp Time tdzen by contractor to process protion of charge order Project ID 0584 duration (days) - time tdren by coriractor ——average time tdren by contractor to process portion of Chcnge order 221 Appendix: MSU sub process bar charts Time taken by MS U for Project ID 021408 90 80 ~70 560 E50 §4o 530 520 1’10 o Change order numbers - time taken by MSU average time taken by MSU Time taken by MSU for Project ID 0365 duration (days) Change order numbers - time taken by MSU average time taken by MSU 222 duration (days) Time taken by MS U for Project ID 0584 - time taken by MSU average time taken by MS U Change order numbers duration (days) Time taken by MSU for Project ID I 707 - time taken by MSU Change order numbers average time taken by MS U 223 duration (days) Time taken by MSU for Project ID 2474A Change order numbers - time taken by MSU average time taken by MSU duration (days) Time taken by MSU for Project ID 24748 l 2 Change order numbers _ time taken by MSU average time taken by MS U 224 wnmvnmwm ma as. .5 :05. 0...: 000.051 :92 >0 :05. 0;... I 209:2...0050Qg Eflfifluuwwumflflmflmuum681997€31 ‘41‘ 3 J a 1.0we .... Denvm n: .005... .0. :92 >9 :93. 0E: (“091 ”0110119 225 A U JIVLHSVIT' .1 III ‘I mi EI *L r BRAHIF: I I ‘ ‘ I 1i I j1j ‘ ‘11 I i ‘ “I Hi ‘ I I :I u I s 1293 02736 2965