"With today's competitive market, your projects success may very well be based on how your changes are handled. Every construction project has changes to the scope of work. The goal in this process is to determine the real value of the change and keep progress commencing"

Centerline can assist you with expertise using the following 12-Step philosophy of change order management;

1) Understand the Contract: A successful cost-estimating service for changes to the contract work begins with a comprehensive understanding and interpretation of the contract requirements and all of the pertinent contract documents. This understanding of the contract allowances is a fundamental first step to success.

2) Comprehend the Design of the Building: Reading and interpreting the Drawings is a must. Large projects have complex sets of plans and specifications. It is crucial to be able to determine the work that is adequately shown and considered part of the contract along with work that may not be shown clearly described and not part of the contractual interpretation.

3) Establish Accurate Labor Rates: Review and Verify labor rates submitted by the GC for all GC trades and major sub-contractor trades involved in the project confirming the rates are consistent with the general conditions and the local unions and/or prevailing wages.

4) Change Estimate Layout/Formats: Request the GC and major subcontractors to provide their Cost Proposal layout and format. Analyze this material to determine if the proposed layout is consistent with the general conditions of the contract with regard to the allowable mark ups on labor, material and equipment.

5) Overhead Allowances: Check the added cost factors in the submitted estimate for items such as: supervision, incidental labor, material procurement, implementation of the work, estimating. This is a very important step to determine if these added cost are justifiable, or if they should be considered part of the overhead allowance.

6) Tracking System: Build an electronic database with capabilities to track the status of all changes is imperative. As the progress of a large project continues, the abundance of changes normally becomes substantial and can overwhelm the CM Team.

7) Schedule Impacts and Changes: The ability to track these changes as they relate to schedules can ultimately save the owner from a claim at the end of a project. Set the negotiations up to include any schedule impact costs. It is always best to capture this during the construction. If it can be determined that special working conditions are necessary as the result of a change, include cost for these conditions in the Change Order settlements throughout the progress of the project.

8) Immediate Review of Changes in Work: It is absolutely imperative to research all change the scope of work in depth. Establish if the change adds and/or deducts work with regard to the original scope of work contract. Visit the field to see the conditions first hand. Discuss the change with the architect. This complete understanding could be your best asset. It allows you to first and foremost produce a quality and accurate estimate along with having the ability to fully understand the value of work. Execute a CM estimate immediately after you have studied the changes and understand the new scope of work. This is preferably accomplished prior to receiving the GC change estimate for the same work.

9) Change Estimates by the General Contractor: Upon receipt of change estimate from the GC initiate immediate negotiations with the contractor on the submitted change estimate. This step has proven to be a very beneficial for both the owner and the contractor. It allows actual Change Orders to be written into the contract simultaneous with the work therefore giving the contractor a mechanism to get paid for this extra work in the monthly progress payments. When this process is successful, the submitted costs will no longer factor in delayed payments, impacts to the flow of work, and will ultimately save the owner money.

10) Negotiations: This can be one of the most challenging aspects with regard to changes on a project. Researching and understanding the change to the necessary detail level is a key point to productive and successful negotiations. A complete understanding of the contract documents is required prior to negotiations. Analyze the changed conditions and compare these changes with the original scope of work. This includes an evaluation of plans and specifications, code interpretations, and knowledge of industry standards. Job walks, actual production analysis, and obtaining material prices from local vendors are very useful in negotiations. These measures reduce the reliance of independent judgments that can subjective and disputed by the contractor. The ability to have a complete and accurate estimate will promote successful negotiations establishing fair and reasonable costs associated with the change, for all parties involved. This phase of the process can be carried out with an amicable approach when all of the above mention preparations have been accomplished. We pride ourselves by having experts who have many years of hands on experience. The most influential and effective negotiation tool is firsthand knowledge of the scope of work in discussion at the negotiation table. This hands on experience combined with a first-rate estimate will result in success. Make certain that ALL COST IMPACTS are recognized and INCLUDED in each change order negotiation. Pay for these costs throughout the project, not at the end in a possible claim situation.

11) Post Negotiation Documentation: Prepare a record of negotiations with the agreed amount and detailing all pertinent information on adjustments made during the negotiations. This record of negotiations should be signed by all parties involved. Subsequently, prepare a Justification Record indicating the reason for the change, i.e.: Owner requested, design error, field conditions etc…include a summary of all circumstances involved with the development of the change and the overall impacts. Relay any schedule impact information immediately to the responsible party for job schedules. This overall informational summary can prove to be invaluable in the event additional cost impacts are submitted in a claim form at the end of a project.

12) Claims Avoidance: When the Change Order process is handled as described above, you can avoid a claim at the end of a project for stated impacts by changes in the scope of work. The accumulation of changes do impact work, work schedules, crew sizes, etc…the main objective is to have the knowledge base to recognize these impacts along with an understanding of the actual value of the changed work and compensate the contractor fairly, promptly, and completely during the course of the project.

We have a proven history with substantial cost saving results working on large commercial construction projects for the Construction Manager.

The following is ONE EXAMPLE of a recent project listing a summary of accomplishments by Centerline:

Project: CalPERS Headquarters, Sacramento CA

Construction Manager: Turner Construction

Contractor: Hensel Phelps

Office SqFt: 550,000

Parking SfFt: 650,000

Project Value: $192,000,000v Client: Saylor Consulting

Summary of Estimating Assignments and Negotiations by Centerline:

Estimated over 300 Individual Changes in the Scope of Work Throughout the Project

Value of Centerline's Estimates: $7 Million

Review, Analyze, Comment on over 400 Hensel Phelps Estimates: $9 Million

Cost Negotiations representing CalPERS Directly with the General Contractor

Total Cost Adjustments as a result of Centerline's Negotiations: DEDUCT $2.3 Million

Our involvement on this CalPERS project helped keep the costs reasonable for added and deleted scope of work changes. We worked on-site in the Turner Construction offices representing the owner, CalPERS. Our function was to develop an independent estimate for change orders on the project. The GC, Hensel Phelps submitted scope of work cost proposals for changed conditions. Centerline reviewed these cost proposals, compared them to our independent estimates and ultimately negotiated directly with Hensel Phelps to arrive and a fair value for the added and deleted work. Our hands on building experience in the field gives Centerline a solid position to discuss and negotiate the value of changes. We accomplished a good working relationship with the GC while protecting the owner’s best interest as our priority.