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Counting Costs: A Complete Guide to Change Orders in Foundation Construction
[DATE]
Change orders can significantly disrupt a construction project's budget and timeline. Crashing into your plans out of the blue, they can turn a well-planned project into a chaotic and costly mess.
How expensive can change orders be to the industry as a whole? According to myComply, a construction information platform, they estimated that in 2020 alone change orders cost the global construction market anywhere between $535 billion and $1.07 trillion.
That's a lot of money.
Our team at VersaPile was recently thinking about change orders and discussing different strategies to avoid them. That discussion ultimately turned into the post you're reading here - your guide to identifying the causes of change orders and knowing the simple tricks to avoid them.
In this article, we're going to dive into the impacts and common triggers for change orders. We'll uncover the true impact of change orders, identify why they happen, and most importantly what you can do the reduce your risk.
You might not be able to avoid 100% of change orders, but with the information in this article you should be able to minimise your exposure to them. Let's get into it!
What's The Real Impact of Change Orders on Foundation Construction?
Before we can talk about the causes of change orders in foundation construction and how to avoid them, it's important to talk about the impact of change orders.
As we saw from myComply's data, their estimates for money spent on change orders across the global construction industry are staggering. But, while financial cost is a key impact of change orders (that we'll discuss in a moment), your budget isn't the only aspect that can be negatively affected.
What are some of the potential impacts of change orders on your foundation construction?
Increased Project Costs
The most clear-cut effect of change orders is that they increase the overall cost of a project. Research done by Peralta Community College found that change orders led to a 5 to 10% cost increase in 40% of the construction projects they studied. Depending on the size of your project, these extra costs could range from a few thousand to millions of dollars.
Even small change orders can result in extensive re-engineering, additional materials, and revising or undoing already completed work.
Behind every change order is a large amount of time, effort, and planning, required to implement it
These extra costs don't just strain the project's budget, they can also stress the working relationships between contractors, subcontractors, and clients. Miscommunications can increase and tensions rise, leading to even more misunderstandings and changes.
One thing to keep in mind is that good contractors rarely make a large profit off of change orders, despite how it might appear. In fact later in this article we'll reveal our own statistics regarding change orders on our foundation projects. We'll even tell you what percentage of our revenue comes from change orders.
For now, let's talk about delays.
Delays
Along with the financial blow of change orders comes the significant delays they can trigger in construction schedules. Time lost to reviewing, processing, communicating, and executing each change order can be as hard-hitting as the monetary cost. It causes a knock-on effect that can disrupt the entire project timeline.
Delays, however, aren't just time lost. They create logistical headaches, cause downtime, and can result in major disruption.
Lengthy delays from change orders can even land you in court as a contractor or sub-contractor.
As ConstructionDive reports, in 2017 the company Hunt Construction slapped a subcontractor with a massive $27 million lawsuit when extensive delays impacted a hotel project in Austin, Texas. A reminder of how serious time costs tied to changes can be.
Lost Productivity
A frequently forgotten impact of change orders is the disruption they cause to the workflow of a project and the toll it takes on productivity.
The compounding effects of changes, which may require reworking elements of the foundation, can lead to a domino-effect where all aspects of the project are affected. Time and effort that's already been spent is wasted. Productivity losses could dwarf the direct costs of the change order itself.
There are countless moving parts during foundation construction, and lost productivity due to change orders can create compounding headaches
Productivity also takes a knock when resources must be reshuffled to accommodate changes. Altering plans and timelines throws a wrench into everyone's work. The juggling act that results can end with more delays, inefficiencies, and costs.
Common Reasons for Change Orders in Foundation Construction
Change orders don't just pop up, there's always a root cause. It may come from the contractor, the client, or an external force. Unfortunately, some change orders are unavoidable. But, a good many of them can be completely avoided.
Our VersaPile team took a deep dive into our projects to understand change orders and their effect on our foundation projects. Here's what we found:
● Change orders featured in 10% of our projects● They resulted in an average cost of 9.29% of the project's total value● They comprise 1.81% of our revenue
These helical piles are being installed for an extensive load test, one of the benefits of the technology is they can be removed after testing without leaving a trace (as these piles were)
What's most interesting is change orders only comprise 1.81% of our revenue. This amount is so small it's essentially erased when we consider the additional time and resources change orders cost our team.
Also worth noting is that we found most change orders originated from client needs or requests.
In the sections ahead, we'll take a look at primary triggers of change orders in foundation construction and walk you through some ways to avoid them. Let's get into it!
Project Scope Change
A common reason for change orders in foundation construction is modifying the project's original scope.
When our team starts a foundation project, we work with the client to agree on a specific scope of work. We can then make plans, assemble resources, acquire materials, and set pricing based on this scope.
If the scope of work changes after it's already been defined, it can result in us having to make significant revisions to the foundation. It could lead to redoing designs, finding new materials, changing schedules, and scheduling around ongoing work. This is one reason change orders can be surprisingly expensive to implement.
Even small changes can lead to countless challenges and extra work to accommodate them
Let's use an example.
Pretend a client asks us for a helical pile foundation suitable for a five-story multi-use building. Based on the information they provide, our engineers design an effective foundation solution.
However, during construction, the client decides to add another structure to the site which requires additional helical piles.
The client might think the change order should only cost the price of the extra piles and labor to install them.
In reality, even a small change can lead to a lot of extra work.
A change like that could mean our team has to spend time and resources with our engineer to plan the pile setup for the new structure, send more piles to site, and change our schedule to install the new piles. This could even affect other projects we have scheduled, causing further problems.
This is why it's so critical to provide an accurate and detailed project scope from the start. Being proactive in this way greatly reduces the odds of a change order, saving time and money for everyone.
Inaccurate Information
Inaccurate or incomplete information is a frequent catalyst of change orders. Even relatively minor discrepancies can snowball into an expensive headache.
Let's explain with another example...
A client approaches us seeking a helical foundation for a 330ft communications tower. They deliver the tower design and load figures to our team, along with other important information.
We then use those details to design a suitable and efficient helical foundation.
What if, after the design phase is done, the client returns saying they provided incorrect load numbers and the tower in fact needs to support more weight than originally indicated?
Having accurate information about a project is crucial to avoiding change orders - even small errors of information could lead to big changes later
In this case, we may be facing a complete redesign of the helical foundation to handle the "new" weight. If the new loads are significantly different or affect certain aspects of the initial design, our engineers have to reassess the entire foundation to ensure it meets the correct numbers.
A redesign of the foundation may not even be the worst consequence, however. If we've already shipped materials and equipment to the site, we may have to re-mobilize if the new foundation design calls for additional or different helical piles.
You can see how even small discrepancies of information can lead to a chain of events that require large portions of the foundation being redesigned and re-stamped by an engineer.
Change orders caused by wrong information, no doubt, annoys both contractors and clients. Thankfully we can completely avoid these problems simply by double-checking the info we all provide is correct and reflects reality.
Project Phase Delays
Foundation construction will often involve different trades working alongside each other to complete various aspects of the installation. That means multiple contractors have to plan their work around each other.
When we work with a client to organize the project stages, we make a careful plan that accounts for who needs to be on-site and when. This plan considers both our client's needs and the demands of other projects.
Unfortunately, if there's a delay in even one stage it can lead to change orders and further delays.
Time for another example.
Let's imagine our team is working on a foundation project that requires eight days to complete. We may schedule this installation months ahead of time and organize other work around it.
Suddenly, a week before installation is scheduled to begin, our client tells us there's a delay in getting permits. Now the schedule is getting pushed forward by a few weeks. (Sound familiar?)
Technically challenging work that requires multiple contractors working together can be difficult and costly to re-schedule if project phase delays are encountered
Re-planning and rescheduling a project demands a lot of time and resources and can result in major expenses, meaning a change order is needed to cover these costs.
While it's can be hard to predict change orders caused by delays in project stages, planning ahead for possible delays can help reduce risks.
It's important to be realistic and allow for unexpected challenges when setting project timelines. Remember Murphy's Law?
"If something can go wrong, it probably will."
Keeping this in mind and adjusting plans as needed can help clients and contractors avoid change orders due to delays.
Poor Communication
Foundation construction will often involve different trades working alongside each other to complete various aspects of the installation. That means multiple contractors have to plan their work around each other.
When we work with a client to organise the project stages, we make a careful plan that accounts for who needs to be on-site and when. This plan considers both our client's needs and the demands of other projects.
Unfortunately, if there's a delay in even one stage it can lead to change orders and further delays.
Time for another example.
Let's imagine our team is working on a foundation project that requires eight days to complete. We may schedule this installation months ahead of time and organize other work around it.
Suddenly, a week before installation is scheduled to begin, our client tells us there's a delay in getting permits. Now the schedule is getting pushed forward by a few weeks. (Sound familiar?)
Projects like installing a successful deep foundation in an existing electrical substation is a complex challenge that requires excellent communication to achieve
Re-planning and rescheduling a project demands a lot of time and resources and can result in major expenses, meaning a change order is needed to cover these costs.
While it's can be hard to predict change orders caused by delays in project stages, planning ahead for possible delays can help reduce risks.
It's important to be realistic and allow for unexpected challenges when setting project timelines. Remember Murphy's Law?
"If something can go wrong, it probably will."
Keeping this in mind and adjusting plans as needed can help clients and contractors avoid change orders due to delays.
Permit Issues
Problems with permits add stress and frustration to managing a construction project. Even worse, they can trigger change orders and create a cascade of issues.
Common permit problems that can lead to change orders in your foundation project include:
One way to reduce your risk of change orders related to permits is to work with an experienced foundation contractor.
Experienced contractors are better at predicting the required permits and meeting their standards from the beginning. This forward-thinking approach lowers risks and makes the project more straightforward and cost-effective.
Unexpected Soil Composition
Soil composition can greatly affect both the plan and cost of your foundation. Specifically, unexpected changes in soil composition can lead to change orders.
There's a certain amount of art involved in foundation science, since it's often difficult to predict the exact soil conditions below the surface. A thorough geotechnical report can give important insights into your soil conditions and is something our team highly recommends. It can lower the risk of being surprised by difficult soil compositions.
That said, even with a detailed geotechnical report there may be times you run into unexpected soil conditions that weren't identified. There might be a hidden layer of weak soil or a pocket of rocks - issues like these can cause problems once foundation work has started.
This helical foundation for a custom luxury home was installed near a river, where soil conditions can be very challenging to predict with a geotechnical report
In a previous project our team worked on, we only discovered there was an unexpected layer of weak soil once we were actually on-site and installing the helical piles. Because the jobsite was near a river, the soil conditions were difficult to fully identify on the geotechnical report.
We ultimately had to extend certain helical piles to account for the weaker soil, which was a straightforward solution and only resulted in a minor change order. In technically challenging situations like these, a change order can sometimes be unavoidable despite the geotechnical reports.
However, you can lessen the chance of surprise soil types leading to change orders. We suggest a two-part approach for complex sites:
Get a good geotechnical reportThey're not perfect, but having a geotechnical report is still better then going into your project completely blind.
Ask about Soil ProbingSoil Probing involves installing temporary helical piles at chosen spots on your site to understand the soil conditions and find potential problem areas. Combined with a geotechnical report, this helps us prepare a reliable foundation plan that considers real-world soil conditions and lowers your risk of change orders.
Geotechnical Assumptions
We strongly recommend getting a geotechnical report to reduce the likelihood of change orders and increase design efficiency. We also admit these reports aren't perfect and could even lead to a change order themselves.
Despite the fact humanity has created ways to see into the farthest regions of space, we're still waiting for a way to directly see undisturbed subsoil conditions. So, a geotechnical engineer needs to use various methods to estimate the soil's properties and makeup.
These engineers, though skilled and armed with advanced tools, can't create a perfect model of the soil's conditions. Because of this, they have to make educated guesses about soil properties based on the data they collect.
The soil underneath your feet can hide a surprising range of varying conditions and compositions
We use the geotechnical report as a starting point for designing the helical foundation. However, sometimes the real soil conditions on-site don't match up with the conditions outlined in the geotechnical report.
If actual soil properties are substantially different from what was expected, the the original foundation plan may become unworkable and a change order might be triggered.
Understanding soil conditions is inherently difficult, and trying to avoid every surprise is probably a lost cause. Still, we can reduce the risk.
Using methods like helical pile load testing or soil probing gives us a more accurate view of soil properties before we start foundation design or installation. This helps to confirm the educated guesses made in the geotechnical reports and can lessen the risk of surprise conditions once foundation work begins.
How to Avoid Change Orders On Your Foundation Project
We've examined several situations that can lead to change orders in foundation construction and we've hinted at some steps to avoid them. In some cases the change order is due to the contractor, sometimes it's down to the client.
As long-time contractors, we understand the confusion, frustration, and extra costs that change orders bring to a project. And, like you, we want to avoid change orders.
Throughout our 13-plus years as a deep foundation contractor, we've identified several ways you can use to steer clear of change orders for your foundation project.
Steps You Can Take to Reduce Change Orders
While it may be impossible to eliminate the possibilty of a change order affecting your foundation project, there are some tactics you can employ to reduce the risk.
In our internal study of projects that resulted in change orders, we discovered that often times those changes are initiated by the client. That doesn't mean we're blaming clients. Instead, we want to equip you with some tips you can use to avoid the common pitfalls that lead to change orders.
Set a Precise Project Scope
Altering the project scope after foundation design or even after construction begins can cause costly change orders. While some changes can't be avoided, it's critical to share as much information about the project as you can during the initial phase. Be open about potential project additions so your foundation contractor can account for them in their planning.
Provide Correct Information
Incorrect information is a typical, and avoidable, source of change orders. Ensure all information and figures you give your foundation contractor are 100% correct. Even small mistakes can lead to big headaches later.
Account for Project Phase Delays
Unexpected situations and delays may come up, but you can still plan for them. If you expect to encounter hold-ups in the environmental assessment phase due to regulatory issues, for example, then revise your plans and project phases to fit. Don't rely on hope as a strategy.
Focus on Communication
Good communication can avoid a host of change orders and save a ton of money. When hiring a foundation contractor, go for one with a proven record of solid communication skills. As a client, make sure you're readily available to provide details and direction.
Plan for Permits
Anticipate potential hold-ups in the permit process, and you'll avoid pricey change orders due to delays. Allow yourself plenty of time to secure permits and partner with a knowledgeable helical foundation contractor who understands the permitting process.
Know Your Soil
Soil conditions can lead to change orders whether due to unexpected conditions or by relying on incorrect assumptions. By combining geotechnical reports with methods like helical pile load testing or soil probing, you can either support or refute these assumptions and avoid change orders down the road.
Best Way to Avoid Change Orders: Work With a Great Contractor
The last, and maybe most important, way to avoid change orders is to team up with a top-notch foundation contractor. Contractors who are experienced, honest, great communicators, and well-versed in engineering, will provide a strong protection against change orders.
Contrary to the belief that we contractors enjoy change orders because they make us more money, the truth couldn't be more different. The additional money from change orders is rarely makes up for the time, effort, and materials wasted. In fact, they often result in a net loss overall.
Good foundation contractors are just as eager as you to steer clear of change orders. Their goal is to install your foundation on time and within budget, making sure the process is efficient and streamlined for everyone involved.
Partnering with a quality foundation contractor not only promises a smoother project cycle but also helps prevent surprise change orders. Essentially, picking your contractor carefully could be the difference between a project that stays budget-friendly and one that racks up unwanted extra costs.
Summary
Recent estimates by myComply suggest that the global construction market incurred between $535 billion and $1.07 trillion in costs due to change orders in 2020. In this article we explored the cost of change orders, their causes, and strategies to avoid them.
Costs of Change Orders
Increased Project Cost: Change orders can lead to a 5% to 10% increase in overall project costs. Seemingly minor changes may require extensive rework and can strain relationships between contractors and subcontractors.
Delays: Change orders can cause delays as they require review, processing, and implementation. Delays can lead to logistical challenges, downtime, and even legal disputes.
Lost Productivity: Change orders disrupt workflow, resulting in significant productivity losses. These changes often necessitate redesigning and reallocating resources, further contributing to inefficiencies.
Common Causes of Change Orders
Project Scope Change: Alterations to the project scope, such as adding new structures, can lead to change orders by requiring redesign, sourcing new materials, and disrupting schedules.
Inaccurate Information: Providing incorrect project details can result in change orders when adjustments are needed to accommodate the accurate information.
Project Phase Delays: Delays in one project phase can create cascading delays throughout the project, leading to change orders to accommodate the adjusted timeline.
Poor Communication: Lack of communication between parties can result in misunderstandings, delays, and change orders. Open and accessible communication channels are crucial.
Permit Issues: Permit-related problems, such as delays, design modifications, extra inspections, or environmental and zoning issues, can lead to change orders.
Unexpected Soil Composition: Unforeseen soil conditions can necessitate changes in the foundation design, resulting in change orders.
Geotechnical Assumptions: Assumptions made in geotechnical reports may not always align with actual soil conditions, leading to change orders. Verification through techniques like soil probing can help mitigate this risk.
Strategies to Avoid Change Orders
Define an Accurate Project Scope: Provide detailed project information during the planning phase to minimize scope changes.
Give Accurate Information: Ensure accuracy in all project-related data and figures.
Anticipate Project Phase Delays: Plan for potential delays and challenges to avoid change orders due to unforeseen issues.
Emphasize Strong Communication: Maintain open and timely communication channels with contractors and subcontractors.
Plan for Permits: Account for permit-related complications and work with experienced contractors who understand the permitting process.
Know Your Soil: Invest in quality geotechnical reports and consider soil probing to validate assumptions and reduce the risk of change orders.
Work With a Great Contractor: Collaborate with experienced, communicative, and knowledgeable contractors to minimize change order risks.
Conclusion
Change orders in foundation projects aren't fun for anyone involved, whether it's the contractor, sub-contractor, or client. Plus, they rarely bring in much more income to the contractor. At VersaPile, for example, change orders only make up a fraction of our total revenue. Considering how much time, effort, and resources these change orders demand, they're not a profitable part of the business.
The best way to steer clear of change orders is to team up with a seasoned foundation contractor. They'll want to work with you to avoid change orders which saves you time, effort, and extra costs.
If you're looking for a group of deep foundation experts committed to smooth project execution, contact our dedicated team at VersaPile today. Because we dislike change orders just as much as you do.
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