Before developing a strategy for managing change in construction projects, it is imperative to understand why change occurs, Bruce Hallock, vice president of Marsh Risk Consulting, told attendees of a webinar that CPC/BIM sponsored June 22.
There are six primary causes of change in construction, Hallock said during the webinar, entitled "Change Management: Managing Change vs. Administering the Change Order Process." Such causes include the following: differing site conditions; design revisions; errors and omissions; performance errors; market conditions; and conscious decisions.
Among other things, it is important to prepare for changes in site conditions within crowded settings, Hallock said. "Consider construction in an urban environment, requiring excavation of streets and encountering existing utilities, be they water, gas, electric, or communications. Most cities do not have very good as-built drawings for the utility [equipment] in their streets. It's a fact of life. You've got a number of agencies that are putting these together and, quite frankly, there's not a coordinated effort to try to pull all of the as-built data. So, the engineer designing this project in an urban setting thinks he has as-built data on the utilities, but I can promise you that he does not. And most of those utilities have been installed or maybe modified over time, and none of those drawings ever made it to the city planning office.
"Knowing that you're going to be working in a city environment and digging up a street, you'd better anticipate that you're going to be encountering utilities you didn't expect in both size and location. If the project is planned ahead, you might consider an alternative for how you want to deal with encountering utilities."
In addition to underground site issues, project leaders should be aware of weather variables when preparing for differing conditions, Hallock said. "Here in Florida, we have hurricanes. We have hurricane season right now. Our contracts here call for both time and compensation in the event of a hurricane. Jobs have to be shut down ahead of time, the equipment secured, and materials [addressed]. Typically after hurricanes, you've got to [do some] cleaning up. So, it's recognized here that time should be excusable and compensable, and then the cost to implement a hurricane-protection plan" also should be accounted for, he asserted.
Biological, environmental, or archaeological conditions also should be taken into account when preparing for differing site conditions, Hallock noted.
"Comprehending the dynamics of change -- why they happen, what causes them, and the impact of the project cost and schedule -- serves to avoid incorrect conclusions in the management of a project and when applicable, demonstrating values being added to the project," according to Hallock. "All parties need to understand that to manage change successfully, they have to communicate effectively.... In summary, we need to be proactive and not reactive. Develop a plan and processes to manage change, plan the work and work the plan, and remember that construction is a communications process."
Hallock also offered the following other observations and advice for webinar attendees:
- We often resist change although it is often inevitable. Construction projects are a continuum, and a good project management requires a vision and overall perspective. It is a journey. We need to be engaged and involved in the process itself rather than react to it.
- A recent survey of professional engineers identified change as the major cause of project failure.
- What is change management? First, what it's not: it is not administering the change-order process, although that is ultimately a part of the overall process. It is managing the process of change. The reality is that managing change is the horse and administering the change is the cart. All too often on construction projects, the stakeholders tend to put the cart before the horse. We need to refocus on the horse as no cart ever won a race. Let's go through this scenario for a minute: how the horse got hitched to the cart, who's driving the horse, and what role do the reigns play. If we think of a team of horses, and they're not equally yoked, that one is not pulling his share of the burden, consider the horses as the stakeholders in the project. The owner, the designer, the subcontractors, labor, and suppliers.
The wagon itself is the project that they're all committed to carrying successfully across the finish line. The project manager is the driver and change champion. The reigns are the lines of communication of the team of horses, indicating the speed and direction they are to take. Absent the reigns, there's no communication between the driver and the team and only chaos results. The speed and direction will be left to the individual whim of the team of horses, and usually the stronger will set the pace and lead the way. Construction is a communication process, and it is vital to effective change management.
- Change is about when, not if, and change is risk. Like any risk, it is better if it is borne by those who are best able to manage the risk. On most construction projects, the contractor is usually the first to feel the effect of change in the form of delays, the increased costs associated with the disruption, and loss of productivity. Not unreasonably, the contractor attempts to deal with the change to his best advantage. As a result, the contractor may not consider other possibilities to not only improve his position but to benefit the owner as well.
- So what is the change management process? By definition, it is an orderly and transparent way of arriving at the facts and solutions for change as soon as possible. Without that, the party who carries the risk of change may manage the risk most effectively. That's a lot of words to say it's basically good project management. Why manage change? Because change of any type at any stage will affect cost and/or schedule.
- While we know that change will occur, we don't know when or what kind or how big. By knowing that change will happen, part of the battle is already won, and we can focus on dealing with the unknowns. Consider the change management process as akin to the fire department. Like change, we know that fires will happen; we just don't know when, where, what kind, or how big. However, the fire department has the equipment and resources and training in place to deal with any eventuality. I'm suggesting that contractors and owners need to develop similar tools to manage project change.
Experience has demonstrated that there are two typical responses to change: the kneejerk or reactive response; and the anticipatory or proactive response. Managing the change process argues for a systematic, structured process, knowing that change will take place. Project stakeholders need to act in a collective manner to cope with the changes in an efficient manner and not in a reactive mode dealing with the unplanned consequences of delay completion dates and claims for extra cost.