So let's just go over a few things here, so change orders. Change orders are changes to the construction contract that occur after award of the contract, while being within the general scope of the contract. So types by who raises the change orders. They can be owner-initiated change order. So, owners often change their mind or want to redesign certain areas. You've already awarded the contract, it's been signed. So you still have to deal with that as a change order. And then you have contractor or subcontractor initiated change orders. So that could be they want to use a different type of material or working with a design team they've realized actually the logistics of that design for that particular component of the build does not work. So they are there for suggesting something else. Your change order could be a plus, or it could be a minus. It doesn't always mean more cost. Universally, change orders often are called variations as well so it's good to know that term. Types by items. So you can sometimes have a lump sum change order. So that's just a one line, with a lump sum cost. You would need a bit more detail to exactly what that would cover. You might have a unit price change order. So that will be an individual split out, broken down, change order, with all the unit prices listed out with full detail. You may also have a time and material change order. So that's basically the time it takes to do something and the cost of the material. An example could be a door that was not on the design. Therefore it's not just the cost of the actual door it's the labor involved to install the door as well. The control process of change orders is really important. A contractor or even a client can't just put in a change order and say, there you go, I now want to be paid. There needs to be a certain process to it. And that's where you play a really important role. So if you look at this very simple five-stage diagram on the screen here. Number 1, there's a request for change. It could be from the client. It could be from the contractor. They are saying, there's a change. So you have to listen to them and take that on board and log it. It gets logged. You then impact the analysis, so as a cost person, you review the costs they're submitting. You review it against the design and any other project information you may have. You will then make a recommendation with the project manager whether to approve or deny it or disapprove it. If it's approved, it will then become an implementation of change. It'll be a change to the contract, change to the project. Obviously if it's not approved it stops there. And that's why it's important you log it on your cost report. It hasn't been approved, they are not due the money, and it's not happening. It has been approved, the change has been implemented, and it goes through, it gets reviewed, and it gets reported further as well. Also there is a certain procedure for change orders that adds more to the organization that is really important. We have a particular form on every project. Typically it will come from a contractor, but at the very start of the project it could be set up by the owner, the client or the project manager as well. So this is just an example of a change order form. You got your date on it, really important. You got the contractor. You might have many contractors on site. You've got your change request number which is very important. So, you need that to tally with your cost report. You want to make sure your change request number you're using or change order number that you're using matches the contractor so we're all on the same page. It's easier to track then. And I say that because believe it or not often on a project contractors works on their own change orders. The cost manager has been logging it differently, most likely the correct way. And it gets completely out of sync, and it gets really difficult to track. The project proposed by, who is the person submitted by? Because it sometimes can be different. It might be someone more senior than the proposed person, or it might even be a client who has proposed it, submitted by, and then who it's going to. So within that you will have description of the change, and you'll have a signature. So the last part of this example of change orders, obviously it's the main, important part, and that's the pricing. Here it lists out the original contract price. It lists out the difference with the new change order for that particular component. Now this might always apply for every change order. It might be a brand new idea so therefore there was no original contract price. And that really is a typical example of a change order form. Just to wrap up on host contract, and the construction stage. A few things to take aboard as a cost manager or cost estimator. Now for you to do your best job, I really feel communication is one of the strongest parts. And that includes even attending meetings and being part of the project team. So just as an overview, what's really important? Attendance at site meetings. You'll have design meetings, you'll have cost meetings, you'll have project meetings. You'll have all different types of meetings. Also, you need to be clear on what meetings you're expected at and required at. Just make sure you go to enough meetings and the right meetings. There's nothing worse than being a cost manager, you're trying to manage the cost of the project and you haven't been to a meeting for months. There's no way you're going to be able to do your job properly so it's really important that you attend meetings. You need to be available on hand and be the trusted cost advisor to the entire team. You need to be able to advise on contractual Implication so you need to know the contract. You need to know the contract value that's been signed. And you basically make sure, you need to protect, ideally, the client, from a cost point of view and the budget from a cost point of view which also brings in the contract value. So that's your role there. So, other areas and that comes into your cost reporting, is negotiations. You may still be doing procurement activities through construction, or everything is ordered at the start. And you need to be really managing the change orders. Overall, your cost report needs to be clear, accurate, user friendly and a useful tool that everyone on the put it team can use. Overall theme to this is on time completion and higher profits for the project. Just to recap on post contract. Post construction is as soon as the contract signs, the construction period starts. That is post contract. Your cost reporting needs to be clear and useful. Your cash flow needs to be accurate and a useful forecast for the project team. Strong communication by the Cost Manager to the project team, and efficient cost control.
