Change Management

Question 1

What is change management?

Answer 1

Management of skills, tools and techniques that enable change to be carried out effectively at both pre- and post-contract stages

Question 2

What is change control?

Answer 2

The process or processes that can lead to the alteration of the timescale, the cost or scope of the project

Question 3

Do all changes require instruction?

Answer 3

Some require instructions, but not all.

PS: Not all instructions are variations, as they may not affect cost or duration

Question 4

What constitutes a change? (JCT D&B)

Answer 4

Under Clause 5.1:
A change is any alteration to the works, materials and goods, removal of works executed, or a change to the obligations and restrictions imposed in the Employer’s Requirements

Question 5

What is the RICS process for managing change?

Answer 5

1. Identify the reason(s) for change
2. Investigate the impact of items such as costs, timescales and locations
3. Strive to mitigate risks and maximise opportunities in relation to the overall objectives of the project
4. Review and accept or reject the change.

Question 6

Who can initiate a change?

Answer 6

• Employer - altering the scope, or increasing the volume of an item
• Contractor - if changes to contractual requirements are necessary, or if a submission could benefit parties through reduced timescale, durable product, or lower cost

Question 7

Who is authorised to make changes to the contract? (JCT D&B)

Answer 7

Employer’s Agent

Under Article 3:
‘the Employer’s Agent shall have full authority to receive and issue applications, consents, INSTRUCTIONS, notices, requests or statements and otherwise to act for the Employer under any of the conditions’

Question 8

What are the types of and reasons for a change?

Answer 8

• Requests - made by an employer or contractor.
• Value Engineering
• A Relevant Event - JCT
• Revisions to statutory requirements and regulations
• Agreed tender assumptions prove to be incorrect
• Unforeseen ground conditions are encountered
• Specified items are unavailable in the programmed timescale
• Additional works are required
• Discrepancies in or between contract documents
• Non projects factors:
  ○ Change in employer’s business needs
  ○ Changing market conditions
  ○ Changes in planning regulation or law
  ○ Changes in technology

Question 9

When can the change control procedure be initiated in the pre-contract phase?

Answer 9

• towards the end of concept design, if the project is tendered at this stage as design and build contracts are
• at the end of the concept design stage, when the project brief might be frozen; that is, when the design is fixed
• when the detailed design, technical design and specification are finalised
• during the tender stage, when documentation needs amending or additional material needs to be added to reflect changes identified by the tendering process.

Question 10

When can the change control procedure be initiated in the post-contract phase?

Answer 10

• when the contractor has been appointed and any further changes may qualify as a change or variation
• when the employer instructs the expenditure of a prime cost or provisional sum
• under JCT Design and Build contracts, when the contractor proposes and makes an agreed change that is within its scope.

Question 11

What is the definition for change under each form of contract suite?

Answer 11

JCT - Variations
FIDIC - Variations
NEC - Compensation Events

Question 12

What is a key difference between change under JCT and NEC forms of contract?

Answer 12

• JCT split time and cost into separate elements
• NEC deals with time and cost together

Question 13

Who carries the risk for change?

Answer 13

Employer - under JCT Standard Form Contract - Example: Requested change from stainless steel to brass ironmongery.

Contractor - under JCT D&B or contract with Contractor Design Portion (CDP) - Example: Rectification of poor quality work

Question 14

How do you manage risk?

Answer 14

Risk Register - Risks ranked according to priority, which is discussed at regular intervals.

This should contain:
- the name of the risk and associated probabilities
- a planned response for managing each risk
- provision for monitoring and controlling the risk so that it is reassessed and re-evaluated
- provision for additional identification of risks throughout the project.

Question 15

What is risk allowance?

Answer 15

NRM 1 defines risk allowance as an amount set aside as a precaution against uncertain outcomes

Question 16

How are risk allowances / contingency funds used on projects?

Answer 16

Suitable funding is set aside to be used to pay for any changes that occur, whether they have been explicitly predicted (provisional sums) or not.

Example: The cost of installing a marble staircase where the specific type of marble, and therefore its price, is not yet know

Question 17

What four categories do NRM 1 use to classify risks?

Answer 17

• Design Development Risks (allowance in Contractor’s tender price for design to reflect the risk of changes)
• Construction Risks (e.g. site conditions)
• Employer’s Change Risk (e.g. employer-originated changes)
• Employer’s Other Risk (allowance for issues such as early handover)

Question 18

What are compensation events (NEC)?

Answer 18

Compensation events deal with the cost effect of the change, together with any extension of time and loss or expense that is due

Question 19

How is change implemented under JCT?

Answer 19

Employer or Contractor introduces a change and a variation is instructed in writing.

(via Employers Agent Instruction - Design & Build; and Contract Administrator - other forms of standard contract)

Question 20

Who is responsible for change between a main contractor and subcontractor?

Answer 20

The main contractor is responsible for its obligations to the employer for change, whether work is carried out by a subcontractor or the contractor itself.

Question 21

What should you consider when evaluating a change?

Answer 21

• Who is proposing the change, and reasoning
• Desired outcome for the change:
  ○ Quicker construction (Time)
  ○ Improved performance (Quality)
  ○ More economical project (Cost)
• Proposals for mitigating onerous consequences of the change
• Risks associated and who bears them
• Effect of not making the change
• Timeline to instruct and dangers of late instruction (delay - additional payment or extension of time)

Question 22

What are deemed changes?

Answer 22

Necessary changes.

Examples:
○ Changes to statutory requirements after the base date
○ Reinstatement of loss or damage under JCT insurance options B&C
○ Exceptionally inclement weather

Question 23

Why, commercially, is it important to track changes?

Answer 23

• It is integral to accurate forecasting of cash flow, which in turn makes commercial decision making easier later in the project
• It can impact the contractor’s ability to apply for monies relating to the works (valuations)
• It makes the final account easier to manage and finalise

Question 24

How can you minimise change at an early stage of a project?

Answer 24

• Appointing a project team with relevant expertise and experience
• By carrying out detailed site investigation and condition surveys
• Maintaining detailed risk registers
• Scope of work be specified as completely and accurately as possible

Question 25

How does change impact cost throughout a project lifecycle?

Answer 25

• The opportunity for change decreases over a project life cycle, whilst…
• The cost of change increases over a project life cycle

Question 26

How long after an instruction must the Contractor complete the works? (JCT Standard Forms)

Answer 26

Clause 3.9 - ‘if within 7 days after receipt of the notice from the Contract Administrator requiring compliance with an instruction the Contractor does not comply, the Employer may employ and pay other persons to execute work of any kind necessary to give effect to that instruction.’

Question 27

What is the impact of stakeholder engagement on change?

Answer 27

• A project with several stakeholders, stakeholder engagement will take longer and be more complex, as will agreeing a change
• Accurate information needs to be shared in a timely manner

Question 28

What is selective stakeholder engagement for change?

Answer 28

Sometimes change does not require all stakeholders. For example:
- a narrow matter such as landscape planting in a bed will require less of the project team (landscape architect, grounds team and employer).
- an internal layout change will require more of the project team (M&E, architect, employer, contractor).