A user defined process enables review and signoff based on single or multiple layers of management. State law designates the Department of Finance and Administration as the agency responsible for the erection, repair, and renovation of state buildings. PEER reviewed the bureau’s management of cost changes to building construction contracts and its selection of professional architectural and engineering consultants for building construction.
A change order is a written agreement between the bureau and the general contractor to change a building construction contract. As the entity responsible for construction of buildings that are funded with state money, the bureau is ultimately responsible for the approval and oversight of change orders.
Of the parties involved, the bureau’s consulting architects and engineers (also referred to throughout this report as contract professionals or professionals) have the most hands-on role in project management, including planning, designing, pre-approval of contractor payments, change order preparation, and on-site inspections. The bureau’s oversight of cost changes to building construction contracts is incomplete, inconsistent, and fails to assure that cost changes to building construction projects are reasonable. The bureau has not established a structure for selecting contract professionals that ensures consistent use of pre-determined selection criteria or rating of the candidates on such criteria or that documents its basis of award. The bureau’s process does not require selection committees to use its evaluation form containing selection criteria. Also, the bureau does not have written policies or procedures designed to result in increased competition among contract professionals working with the state to administer construction projects. In at least half of the change orders PEER reviewed, the bureau’s change order documentation did not identify the change order requestor.
Without understanding the source of the change order request, the bureau cannot fully understand the reasons for the change order (including whether the change was caused by error or omission on the part of the contract professional) and whether the change is necessary. Despite the disincentive for professionals to scrutinize costs, the bureau’s standard contracts do not require professionals to analyze the reasonableness of change order costs. Also, in twenty-five of the thirty-one cases reviewed, the bureau did not require the contract professional to certify in writing that the cost of the change order had been analyzed and found to be reasonable. The bureau has no internal process in place for analyzing the costs of change orders presented by the contract professional for accuracy or reasonableness or for verifying that the change order is not already a part of the original contract. No bureau policies require that staff confirm and document that they have verified change order costs. The bureau has not established a training curriculum or continuing education to assure that its staff construction administrators are adequately trained to review detailed change order costs and to oversee the work of contract professionals. The bureau also has no formal process to identify professional design errors and omissions. The bureau operates a management information system, the Project Accounting and Tracking System (PATS), which accounts for project budgets and maintains certain types of information regarding building projects, including data on specific change orders. Also, the bureau does not formally evaluate the performance of contract professionals after they have performed their work, which could help to identify those with poor performance and a poor record of controlling change order costs.

The bureau should require its selection committee members to rate contract professionals against pre-determined criteria for selection and complete evaluation forms documenting that process.
The bureau should develop policies and procedures to implement its goal of increasing competition among contract professionals who are awarded construction contracts. The bureau should revise the standard contract with the general contractor to require that the contractor always provide change order cost quotes to the contract professional that include quantities of labor, equipment, and materials (unless documentation in files gives a specific, legitimate reason for a waiver).
The bureau should inform the contractors in the pre-construction conferences that they will always be required to itemize their quotes into quantities of labor, equipment, and materials. The bureau should implement policies and procedures requiring its personnel to review change order proposal costs and document their review. The bureau should determine the types of training that a staff construction administrator needs to analyze and determine the cost efficiency of proposals for change orders.
The bureau should develop policies and procedures related to errors and omissions to give guidance to staff construction administrators in identifying, investigating, and resolving problems that might arise.
In some cases, all or part of the increased costs due to errors and omissions may be owed to a third party such as a contractor, and the professional may elect to negotiate directly with the contractor and pay the contractor directly for the work. The bureau should consider prohibiting construction oversight work on a given project by those professionals who perform design work on that project.
The bureau should study its system of compensating contract professionals and also study the compensation systems and contract provisions of other state building agencies. The bureau should begin to collect and analyze information and develop reports to help in the overall management of change orders.
Bureau personnel should comply with the bureau’s policy of evaluating architects and engineers on their performance twice during a project. Create proposed change notices and circulate to project team stakeholders, customer and subcontractors for collaboration and approval. Change orders in 4castplus blend seamlessly with the rest of the system, but underneath the covers, they are treated like their own sub-project with a unique budget, resources, schedule, etc. 4castplus enables you to track a variety of metrics such as Source, Reason, Vendor, RFI, Funding Source, and more. For more on the differences in these change events, please read this article: What’s the Difference Between a Change Order, Budget Transfer and Change Forecast? The 4castplus tracking system enables users isolate labor, equipment and materials tracking to the exact change order. Users can build multi-level approval workflows for change orders using the built-in workflow management system.
Change order costs are assigned directly to line items within the bid sheet along with their reason codes which can be assigned and tracked on a historical basis. Well known program managers also use TotalBid to support their development goals and the goals of their clients.

Change orders add to, delete from, or otherwise alter the work set forth in the contract documents at the time that the construction contract was bid. In the change order process, bureau staff review the change order documentation provided by the contract professional, determine that funds are available to pay for the change order, and sign final approval for the change. The bureau does not compile and retain documentation of the investigation and resolution of potential errors or omissions, thus increasing the possibility that the state will pay for changes that are the responsibility of the professional.
Create customized change Reasons that are unique to your business.  Trend this information over time and uncover key performance indicators about your vendors, customers, project managers, etc. This enables project managers to know, for example, exactly how many hours have been consumed on a Change Order and how many are remaining. Take control of project costs with the only Change Order Management system linked seamlessly to your bid process. Owner & GC auto-notification with every change order action ensures real-time collaboration. TotalBid has been recognized by the Federal Government, granting a patent for the unique and widespread Multistage Bidding system. Control the approval status of change orders as they move from Proposed to Submitted for Approval, Approved and Rejected. The budget created will be linked directly to that change order for visibility in tracking and reporting.
There is additional capability for managers to override the placement of labor hours and move them onto the correct change order and cost code if originally entered incorrectly.
You can also route approvals to people outside the organization through the approval portal. This user-friendly system operates in the same secure TotalBid environment and provides you with an easier way to track and manage additional cost items, so you and your team can better track and understand proposed versus actual costs in real-time. The excel logbook comes with built in information thus making it easy to fill in change requests and create a change management logbook from this change control template.
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