When changes need to be made to a project after the project has already been approved by the client, a professional service firm needs to create a document called a change order. Change orders are used in various industries, from IT consulting and project management to construction and plumbing.
The purpose of a change order is to keep everyone involved in a project on the same page about what needs to be done and how much it will cost to make changes during the process. Continue reading to learn more about change orders, their use cases, and their numerous benefits in project management.
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What Is a Change Order?
The change order is the document that specifies changes that need to be made to a project or project scope. It is a formal document that delineates the specific changes that need to be made to the original project contract between all business parties.
The change order documents specific changes to a project, including any added costs or new items in the project scope. After the change order is drafted with necessary changes, it is signed by both parties so they can move forward with the renewed project scope.
Change orders come in many different forms and vary widely depending on the industry. For instance, construction projects often use change orders to ask for additional funds to complete the project. In contrast, IT consulting firms use change orders more as notifications that more time or resources will be needed than initially planned for the project and tasks involved.
Types of Change Orders
There are many types of change orders that can be drafted when structured change management is necessary. Either the client or the project team can request change orders. Below are four of the most common types of change orders utilized across different industries:
- Project scope changes: Changes in the project’s subject matter requirements or specifications. Project scope changes typically involve increasing the amount of work or tasks that need to be done.
- Project schedule changes: When a contract requires a change in how long it will take to complete work on a particular part of the project.
- Project budget changes: Asks for a change to the original contract when additional or fewer funds need to be issued for parts of the project.
- Project team changes: Requests that new people be brought onto the project team or that current project teammates be fired.
What Steps Are Part of the Change Order Process?
Change orders require a change control strategy to guarantee that changes are documented and approved by all parties before they are implemented. During the change order process, several steps should occur for the changes to be recorded and put into action for the project. These are the main steps that are part of the change order process:
Request for change
The individual submitting the request must submit a draft of the change(s) needed in a change request form. This form should include all relevant facts about what occurred and why it needs to be changed for the project to continue.
Acceptance of change
Once the project manager and clients review the change request form, team leads can accept, range, or renegotiate the terms of the contract. This step often determines whether a request will be accepted based on cost, time frame, safety, and regulatory compliance issues.
Approval of change
If all parties accept the change request terms, formal approval will be given. This step often requires official documentation to be provided and approved by management and the client. This documentation finalizes the cost and time frame for implementing new project plans. It also details how changes will affect different departments within the organization, including the IT department and finance teams.
Why Do Project Teams Use Change Orders?
Change orders help manage risk, mitigate the cost of change, manage scope and schedule, and provide a documentation trail for project audit needs. Using change orders also helps project teams continue building their projects in the right direction.
Change orders can help professional services firms keep up with changes in technology, new information, and unexpected challenges that may come up during their projects. They also help project teams stay on track with their goals and guarantee that they promptly address any issues.
Finally, change orders help project teams effectively communicate project changes and progress to stakeholders. This type of documentation helps to prevent misunderstandings and disagreements when it comes to final project deliverables and costs.
Benefits of Using Change Orders in Project Management
There are countless benefits to employing change orders as project needs change. For example, change orders allow teams to track risks that develop during the project and make adjustments as needed.
A change order can also ensure that the project team doesn’t miss any deadlines or goals when making changes, which helps things run smoothly throughout the project lifecycle. It also helps teams manage both budget and time constraints within a team or organization more effectively. With a change order as supporting documentation, they can prioritize features based on their importance and ensure they get implemented according to the project schedule.
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