December 2014 Newsletter

Seven Steps to Avoid Construction Change Orders

Change orders on any construction project can lead to increased spending, costs overruns, disputes and in the worst case, lengthy litigation. The following are seven steps that Owners and Design Teams should take to minimize change orders:

Step I – Communicate
Communication during design development is the single most important item to avoid change orders later in the process. Integrative design calls for frequent face-to-face meetings with architects, owners, property managers, end users and engineers. The engineers may include geotech, structural, civil, environmental, mechanical, electrical and plumbing (MEP). All members of the team should be kept up to date on the design changes up to final construction drawings and permits. Where possible, building information modeling (BIM) should be utilized to detect conflicts in design.

Step II – Involve Contractors and Sub-Contractors Early
Even in situations where projects are placed out to bid, BFW encourages all our clients to engage a contractor for constructability reviews and real time pricing. Contractors can give instant feedback on materials pricing, difficult to install items, scheduling and long-lead items. Early contractor involvement on the design team can minimize change orders later.

Step III – Know Thy Site
Looking at Google Maps or satellite imagery does not amount to a site visit. The design team and the contractor should visit the site and know the existing conditions. Placing language in specs for utilities that say “connect to nearest” is a sure recipe for a change order. Site visits coupled with the proper surveys, geotechnical, and environmental testing should give the design team the information needed to include in the specifications and site plan, including location and/or installation of sewer, water and electric, sidewalks, footings, foundation walls, retaining walls etc.

Step IV – Know What’s Behind That Wall
For major renovations, probes or selective demolition should be utilized to see what’s behind ceilings and walls. The contractor is normally entitled to additional fees for site conditions of which they are not aware. For example, if in raising a ceiling the contractor discovers a beam that needs to be relocated, there would be a change order associated with that work. The same would hold true for plumbing pipes, intercom lines, gas lines, sprinklers and streams under basements. The only way to avoid such change orders is to investigate and include in the scope of work.

Step V – Keep the Bids Honest – Lowest Bid May Not Be Best Bid
Bids should be de-scoped to ensure that all bidders have included all the work that has to be done in the construction documents and specs. If three bidders are within the same price range, but a 4th bid is 30% below the other prices, that bidder may have missed a major item in the scope and it may be unwise to choose that contractor without a thorough de-scope.

Step VI – Make sure to have an explicit contract
The construction contract should clearly define the scope and specifications and should be all-inclusive, including all labor, materials, utilities, security, general conditions, trailers, and temporary buildings. The contract should detail the work to be done and not to be done. An Owner should consider hiring an Owner’s Representative to perform a design review of all documents and to review the contracts after Attorney input. This process could expose errors, omissions or conflicts in construction documents and contracts.

Step VII – Avoid Plan Modifications
Modifying plans and specs after the work is underway will lead to a change order.
While one should avoid the urge to change plans after construction is underway, if there must be a change, do so early to avoid additional renovations or design modifications. Modifying a bathroom during design will cost $100; modifying a bathroom after it’s completed will cost $10,000.

Philadelphia Mayor Recognizes BFW Group, LLC

newsletter-2014-12Philadelphia Mayor Michael Nutter recognized BFW Group, CEO Blane F. Stoddart at a reception to honor the recent graduates of the Goldman Sachs 10,000 Small Businesses – Greater Philadelphia Program in August 2014.

BFW along with 31 other businesses, spent 14 weeks – roughly 100 class hours – at the Main Campus of Community College of Philadelphia actively engaged in an entrepreneurial business curriculum designed by Babson College and delivered by the Community College faculty. The curriculum covered all elements of running one’s business, from money and metrics to marketing and sales. The program also included one-on-one business advising, accounting workshops and advice from top law firms and Goldman Sachs professionals. For more information, email bstoddart@bfwgroup.net.

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