Improving Change Management in Construction to Minimize Project Overruns

Change management in construction is the process of integrating a balanced procedure for recognizing, planning, and evaluating capital project changes in an effective manner. Poor change management practices can hinder project success and lead to significant timeline delays and consequently, cost overruns. Change orders are often the result of:

• Changes in and omissions from the project scope.
• Dividing the project among multiple contractors working in parallel.
• Errors or omissions within engineering drawings.
• Inaccurate specifications in engineering drawings. 
• Omissions in the gaps between the engineering, procurement, and construction (EPC) phases of a project.
• Unforeseen site conditions.
• Late arrival of equipment or materials.
• Schedule changes resulting in a different execution plan and indirect cost impacts.
  

While a well-defined and fully detailed project scope reduces the likelihood of extensive changes occurring in a project, a handful of changes to the project scope are likely to occur in any undertaking. With well-structured and highly disciplined change management processes, such changes can be effectively and efficiently implemented.

Below, we detail methods for change management in construction that may ultimately lower the chance of project overruns as well as how EPC delivery methods can help reduce change management challenges.

Change Management Best Practices

When timeline delays and overruns occur as a result of poor change management practices, it is often due to mistakes such as delayed change identification, late or inconsistent communication of changes to project owners, lack of alignment between the contractor and the project owner before change execution, or implemented changes that lack credibility or adequate supporting documentation. 

Project changes bring risk, cause delays, and increase costs. Therefore, changes must be communicated so a plan can be implemented and the risks can be mitigated. To improve change management in construction, the following best practices should be applied.

• Utilize a change management work process: Contractors should use a consistent and structured change management work process to streamline the workflow and to mitigate potential risks.
• Ensure alignment: Contractors must ensure alignment with the project owner before proceeding with implementing changes. If this step is missed, it can result in significant rework and thus increased timelines and cost overruns.
• Promptly notify the project owner of identified changes: Project owners should be notified by contractors as soon as a potential change has been identified. This will ensure alignment as early as possible so the change can be evaluated and implemented promptly.
• Maintain consistent communication: Everyone involved in a capital project is responsible for effective change management. Thus, having consistent and open communication between project owners and contractors, as well as between all team members, can further ensure alignment. 
• Complete documentation of change: Contractors should always complete documentation including notices, change order forms, and supporting documentation. They should also utilize a change order log for tracking, managing, and communicating change orders both internally and with project owners.
• Have dedicated change management resources: Ideally, contractors should have a dedicated change team with strong change management experience.  
• Ensure appropriate change criteria: A well-defined and proven process should be used to implement changes into the project’s budget and schedule. Changes to projects must be both credible and defendable to avoid unnecessary or otherwise inappropriate changes to the project.

How EPC Delivery Methods Reduce Change Management Challenges

With Design-Bid-Build approaches, there is sometimes a lack of  integration between the design and engineering company and construction company. This can lead to inconsistencies between the engineering deliverables and what is actually needed, resulting in numerous change orders and thus extended timelines and cost overruns. 

EPC, or Design-Build, delivery methods utilize a cohesive team that collaborates across all disciplines and project phases. This methodology integrates processes and collaboration across the gaps between the three project phases. Having one contractor for the scope mitigates the project owner’s risk of change caused by the division of execution across multiple contractors working on the same project. 

The H+M Approach to Change Management in Construction

At H+M Industrial EPC, our highly collaborative team, strategic EPC approach, and superior work processes allow us to incorporate the most effective and efficient change management processes to help reduce timeline delays and cost overruns.