Managing Change Orders and Claims

It seems that disputes over change orders and claims are inevitable for all construction projects. This has arisen from projects in which the players did not anticipate and provide for change orders and claims. Management of changes and claims is the management of risks. It begins with the allocation of risk in the project owner’s selection of a particular construction method, continues in the prime contract, subcontracts and purchase orders and culminates in the prevention of and, if necessary, the successful resolution of changes and any claims that occur during a project. Ultimately, those who manage risk best are those who do the following four things: 1) recognize that no construction method or risk-shifting contract clauses will be a panacea for all the risks of construction; 2) know the risks of that construction method or those contract clauses before choosing a particular construction method or risk-shifting clause; 3) plan ahead so as to minimize the allocated risks of the actual construction method or contract clauses; and 4) provide a cost-effective means of resolving changes and claims that will inevitably arise during a project, regardless of all the risk-shifting, either by construction method or contract clause. In the end, successful management of changes and claims goes directly to bettering the timing and final cost of your construction project.