Are Change Orders a Contract Control Mechanism or a Risk Amplifier?
In today’s capital projects landscape—marked by digital transformation, complex stakeholder ecosystems, and increasing regulatory scrutiny—Change Orders (COs) remain a critical yet often mismanaged aspect of project execution. While originally designed to formalize scope adjustments and cost impacts, COs have too often become a dumping ground for unresolved issues, leading to post-project disputes, budget overruns, and strained relationships.
Modern-Day Challenges with Change Orders
- Delayed Resolution: COs are frequently deferred until project closeout, when teams have disbanded and documentation is incomplete.
- Scope Creep: Vague or undocumented changes accumulate, distorting the original project intent.
- Digital Disconnection: Teams using disparate systems lack real-time visibility into CO status and impacts.
- Fear of Conflict: In collaborative contracting models, teams may avoid timely resolution to preserve “team harmony,” risking long-term fallout.
Actionable Solutions for Effective Change Order Management
The main goal of any owner project management system is to minimize project changes during execution or after authorization. To achieve this:
- Define the project thoroughly in the front end.
- Freeze the scope at authorization.
- Select quality contractors.
- Adopt an owner policy that no changes will be accepted after authorization unless:
- It is a safety issue,
- Required for operability, or
- Legally mandated.
Some changes are inevitable. If they occur, the following actions should be taken:
Reframe Change Orders as Strategic Levers
Rather than viewing COs as administrative burdens or conflict triggers, modern project teams should treat them as strategic tools for managing change, optimizing outcomes, and maintaining alignment with evolving project goals.
By embedding CO management into the digital backbone of the project and fostering a culture of transparency and accountability, organizations can transform COs from reactive firefighting into proactive project control.
Interested in improving your team's approach to Change Orders? Pathfinder continues to explore practical strategies and tools for effective project controls. For insights, resources, or to connect with our team, visit www.pathfinderinc.com or reach out at info@pathfinderinc.com.
