According to a study by the American Society of Civil Engineers, projects that utilize independent change order reviews report a reduction in change order costs by up to 15%. As an independent cost estimator, OCMI’s sole objective is to present accurate cost data to the Owner. With no stake in a project’s financial outcome, we remain wholly impartial as we perform change order analysis and estimating, with no hidden fees, expenses, or motives to skew the data we report. Further, our consulting costs are typically offset by the value of the savings we provide through change order management. This approach protects the Owner’s interests while maintaining fairness and transparency between the Owner and General Contractor (GC)/Construction Manager at Risk (CMAR).

Additionally, modern construction projects are highly challenging, often with complex MEP and building control systems, large quantities of specialty trade partners, and detailed sustainability and performance requirements. To achieve success, the GC/CMAR must be laser-focused on what it does best – expertly delivering the project and managing day-to-day tasks – and not overwhelmed by other responsibilities best performed by others. Utilizing OCMI as a third-party estimator relieves the GC/CMAR of this responsibility and ensures an industry expert performs cost management. In this role, we monitor, analyze, and estimate change orders as they occur, not as an afterthought or at the end of the project, thereby ensuring overall project success.

Achieving Cost Savings Through Independent Change Order Management

A utilities and infrastructure Owner recently engaged OCMI to perform independent change order analysis to understand cost overruns related to a recent contract modification. The change was due to two main causes: 1) a desire for the contractor to accelerate the schedule, and 2) repairs to an undocumented damaged water line struck while the contractor performed excavations. The change order was approved for resolution on a time and materials (T&M) basis – a variation from the original lump sum contract.

By performing a diligent review and validation of the T&M contract provisions, time-related overhead (TRO) rates, labor rates, financial effectiveness and logic of the charges, and actual hours charged, OCMI uncovered three primary causes for the cost overruns:

1. The contractor was charging TRO rates significantly greater than the overhead rates allowable in the original contract;
2. Identical, recurring activities were being charged for different durations from day-to-day, e.g. two hours one day, and four hours the next for the same work; and
3. Excessive and unreasonable overtime was being charged to the owner.

As a result of our findings, the owner received a transparent understanding of the change order costs to date, allowing them to alter course with the project’s delivery and realize $330,000 in total savings over the remainder of the contract.

For more information on independent change order analysis, contact Conor Clarke at conor.clarke@ocmi.com