Ensuring Accuracy and Compliance in Your Construction Projects 

In the world of construction, changes to the original scope of work are common, but ensuring that these changes are legitimate and properly documented is crucial for both project success and budget control. At Pond Robinson & Associates (PR&A), we frequently assist our clients in reviewing change orders, proposed change orders (PCOs), or change order requests to ensure compliance with the construction agreement. 

What is the Goal of Our Review?  

When reviewing change orders, we focus on the following key objectives: 

Confirm the Legitimacy of the Change Order: Our primary goal is to determine whether the requested change represents a legitimate deviation from the contract documents and if it is payable by the owner. We achieve this by:

Reviewing the Construction Documents: We examine the original contract, construction drawings, RFIs (Requests for Information), ASIs (Architect’s Supplemental Instructions), and any other referenced documents. These documents help us understand the scope of work and identify any modifications.

Requesting Comprehensive Backup: We ensure that all backup documentation (including any supporting documents from the contractor or subcontractor) is provided for review. This ensures full transparency and helps us better assess the legitimacy of the request.

Classifying the Change 

Once we determine that the change is legitimate, we then categorize the change to understand its nature. This is important because the reason for the change can affect how it’s handled. Some common categories include:

Owner Upgrade: Changes initiated by the owner, such as requests for better materials or additional features.

Error or Omission by a Design Consultant: Adjustments required due to mistakes or oversights made by the design team.

Code or Authority Having Jurisdiction (AHJ) Requirement: Changes driven by new or updated regulations, codes, or local authority requirements.

Force Majeure (Delays and Costs): Changes resulting from unforeseen events outside of the contractor’s control, such as weather delays or supply chain disruptions.

Cost Escalation Allowed by the Construction Agreement: Adjustments based on market conditions or fluctuations in material costs that are permitted under the original contract.

Evaluating the Reasonableness of the Costs. 

After confirming the legitimacy and category of the change, we focus on ensuring that the costs associated with the change are reasonable. This is accomplished through spot-checking of accounting and a detailed review of the provided backup documentation:

General Contractor’s Breakdown: The general contractor’s backup should include detailed information, such as subcontractor pricing, overhead/profit fees, and possibly insurance costs like Subguard. We review this breakdown carefully to ensure everything aligns with the contract.

Subcontractor Pricing: We examine the subcontractor’s pricing breakdown to confirm that it includes materials, labor, and associated overhead/profit. The quantities and pricing should reflect the scope of work accurately and coincide with the current market and regional pricing.

Taxes, Fee and Overhead Compliance: It’s crucial that the general contractor and subcontractors bill overhead and profit fees in accordance with the construction agreement. We carefully verify that taxes, costs, and other charges are not being double billed. Any discrepancies are flagged for further review.

How Do We Communicate Our Findings?  

At PR&A, we recognize that client preferences vary when it comes to how they want to receive change order reviews. Some clients prefer a concise email summary, while others may require a more formal letter. Regardless of the format, all submissions are pre-reviewed by the Director of Construction Services or Client Manager to ensure accuracy and completeness before being sent to the client. 

Why Is This Review Process Important? 

By thoroughly reviewing change orders, PCOs, and proposals, we help our clients avoid financial pitfalls and ensure that every change is justifiable, reasonable, and compliant with the terms of the construction agreement. Our detailed analysis helps mitigate risks, avoid unnecessary cost increases, and ensure that projects stay on track. 

In Conclusion When it comes to managing change orders and PCOs, our goal at PR&A is to provide clear, accurate, and actionable reviews to our clients. We leverage our extensive experience and technical expertise to ensure that any changes to the original scope of work are handled correctly, fairly, and in compliance with the construction agreement. If you have any questions or need assistance with reviewing change orders or proposed changes, feel free to reach out to our team. We are here to help you navigate the complexities of construction management and ensure the success of your projects.