Change orders and productivity loss quantification using verifiable site data

Change orders occur frequently in most construction projects, where contract modifications that increase the contract value between 5 to 10% are expected. Changes occur not only because of errors and omissions, but also for other reasons such as scope of work changes, or changes because of unforeseen conditions encountered on the site; a problem which is very common in most heavy construction projects. Changes themselves might not cause productivity losses; in this case the damage calculation will be straightforward. However, changes may cause disruption in unchanged work where the working conditions are impacted, and as a result, lost productivity (inefficiency) is encountered.

Delay and loss of productivity are the two main types of damages experienced by the contractor when the owner issues a change order. Courts have recognized Critical Path Method (CPM) schedule analysis as the preferred method of identifying and quantifying critical delays. As for the inefficiency damages, there is no way of directly measuring inefficiency due to its qualitative nature and the difficulty of linking the cause of the productivity loss to the damage.

Most of the scholarly work published in this area was based on productivity data supplied by the contractors. The owner's viewpoint was seldom considered; and that explains why there are discrepancies between what the contractor asks for and what the owner believes the contractor is entitled.

This research focuses on analyzing the change orders and the productivity loss from public owner data. The study addresses the need for a statistical model to quantify the change orders and the productivity loss from verifiable owner's data such as owner's daily reports, change orders, drawing, and specifications, rather than rely on contractor surveys.

Two models are developed and validated; the first model is to quantify the percent increase in the contract price due to the change orders. This model will provide the owner with an estimate of the cost of the changed work, where it can be used for forward pricing or retrospective pricing of the change orders. The second is to quantify the productivity loss of the piping work due to the change orders. The productivity loss study analyzed two set of data; the first included all the predictor variables which both parties, the owner and the contractor, contributed to the productivity loss, and the second one included the predictor variables, from the legal view point, only the owner is responsible for. The study showed the difference between what the contractor asked for and what he is actually entitled. This model can be used by both the owner and the contractor to quantify the productivity loss due to change orders.