Changes - Impacts Beyond the Direct Costs

Contractors don't typically see the full negative impact of changes and, therefore, don’t put the right level of resources into their management.

D. Brown Management Profile Picture
D. Brown Management
March 16, 2019 2 minute read
cash flow customer satisfaction estimating financial management foreman training labor productivity project management
Share

Typically overlooked impacts that must be quantified include:

Change Management: Impacts Beyond the Direct Costs.
  • Dilution of management on the project, which causes overall loss of productivity.

  • Cash flow that incurs financing costs, as well as potentially keeping a contractor from taking early-pay discounts unless they are very well capitalized.
      
  • Risk of not getting paid for completed change orders is typical and a significant cause of margin fade late in the project.
      
  • Lowered customer satisfaction impacting future work can be the biggest cost of all. However, this does not mean avoiding real changes to the project. 

  • Productivity on the project suffers from many factors related to excessive changes, including dilution of management, schedule compression, overtime, additional mobilizations to the work area, and lower crew morale. 
     
  • Extended project overhead - general conditions.

Contractors, project owners, and architects that fully understand these put the resources in at the earliest design stages driven by weekly meetings and continue managing the project with the same discipline.  

This Series (8 of 23)
Change Management Fact #1 - It Will Happen Underlying Causes of Changes on Projects Changes - Impacts Beyond the Direct Costs Change Management Workflow (From Identification-to-Payment) Tracking Change Progress (The Funnel): Basic Status Categories
Related Training
This Series (8 of 23)
Change Management Fact #1 - It Will Happen Underlying Causes of Changes on Projects Changes - Impacts Beyond the Direct Costs Change Management Workflow (From Identification-to-Payment) Tracking Change Progress (The Funnel): Basic Status Categories
More from D. Brown Management
Learning, Doing and Teaching
Growth in life, career, and business is about a continual cycle of learning, doing, and teaching.
Related Article
Executive Briefing - Understanding Industry Trends
The construction industry is changing at an unprecedented rate. The challenges for contractors are compounded by the shortage of talent at all levels, including craft, management, and technical experts.
Related Article
Be Specific About Problems
The business of construction is filled with constant problems. It’s not that great contractors don’t have problems, it's that great contractors have learned how to troubleshoot first, which allows them to learn from their problems faster.
Related Article