Serag, E; Oloufa, A; Malone, L and Radwan, E (2010) Model for quantifying the impact of change orders on project cost for U.S. roadwork construction. Journal of Construction Engineering and Management, 136(9), pp. 1015-1027. ISSN 0733-9364
Abstract
Change orders are very common in almost every construction project nowadays, often resulting in increases of 5-10% in the contract price. Understanding the consequences of such trends, several studies have attempted to quantify the impact of change orders on the project cost. Most of the studies aimed at the quantification of the change orders were sponsored by contractors' organizations, where statistical models used to quantify the impact of the change orders on the project cost were based on data supplied by the contractors; a situation that can lead to owner-contractor disagreements related to the quantification method used. In addition, most of the studies tackled commercial and electromechanical work, and very rare studies tackled the field of heavy construction; a field that suffers from change orders because of errors and omissions, scope of work changes, or changes because of unforeseen conditions. This study addresses the need for a statistical model to quantify the increase of the contract price due to change orders in heavy construction projects in Florida. The model is based on data collected from 16 Florida DOT projects with contract values that ranged between $10-$25 million, and that encountered an increase in the contract price from 0.01 to 15%. Eleven variables were analyzed to test their impact on the cost of the change orders. The study concluded that most significant variables that impact the value of the change order, which are (1) the timing of the change order and (2) when the reason for issuing the change order is unforeseen conditions. Two regression models are developed and validated as follows: (1) a model to quantify the percentage increase in the contract price due to the change orders that increase the contract price from 0.01 to 5% and (2) a model to quantify the percentage increase in the contract price due to the change orders that increase the contract price from 5 to 15%. Those models will provide the owner with a retrospective or forward pricing of the change orders, and hence, allow the owner to estimate and utilize contingency amounts.
| Item Type: | Article |
|---|---|
| Uncontrolled Keywords: | change orders; claims; heavy construction; multiple regression |
| Index terms: | pricing, construction project, estimate, change order, regression model, multiple-regression, owner, quantification, statistical model, heavy construction, project cost |
| Subjects: | economics, financial and cost management, production management, economic analysis, sociology, data science, contractual condition, statistical analysis, infrastructure and transport systems, measurement and scaling |
| Topics: | Business Strategy, Contract Administration, Stakeholder Management, Engineering Principles, Cost Management, Project Management, Research Practice |
| Descriptive scope: | 3 PCA |
N.B. Descriptive scope is a count of how many of the five facets of empirical research are indicated by the words used in title, abstract and keywords. It is not intended as a judgement on the research; merely a count of the kind of word we would expect to indicate Phenomenon, Concepts, Theoretical framing, Empirical techniques, Analytical techniques. If all five are present, then a code of “5 PCTEA” will indicate this. If you feel the coding for this record is questionable, we welcome discussion around the terms we matched or the way we categorized them. The facet you would expect may not be coded, or a facet may be coded inappropriately. This can also bear on a larger question, of which facets should be treated as defining in construction management research. Please get in touch, and we will look at it. More details here