Quantifying the Cumulative Impact of Change Orders for Sheet Metal Contractors

Researcher:
Awad S. Hanna, Ph.D., P.E.
Professor and Chair of Construction
Engineering and Management
Program Department of Civil Environmental Engineering
University of Wisconsin Madison
2314 Engineering Hall
1415 Engineering Drive
Madison, WI 53706
Tel: (608) 263-8903
Fax: (608) 265-9860
Email: hanna@engr.wisc.edu

Summary

Change on construction projects is inevitable, but the effects of change are often disputed amongst owners and contractors. The complete effects that change orders have on a project are noticed by the contractor but are difficult to quantify because they involve direct costs of extra materials and hours, as well as changes on the flow of work (its effect on labor) and a “ripple effect” through the project, causing dilution of supervision, out of sequence work, rework, and schedule acceleration. This negative effect on productivity caused by cumulative impact is difficult to quantify. Contractors may seek legal claims for their loss but often fail to convince the court because of the lack of hard data. Past research on the impact of change orders has primarily focused on general construction and the labor-intensive trades of electrical and mechanical construction. The New Horizons Foundation formed a research team to focus on the impact of change orders on labor productivity specifically for the sheet metal industry. The team developed a model that can estimate the productivity loss on a project impacted by change orders. The model can be applied to projects to generate a percentage loss of productivity due to changes. The study includes recommendations for contractors, owners, and architects/engineers on increasing the likelihood of project success. [Hard copy includes accompanying software CD.]