Sunday, July 17, 2016

The Change Order

One of the most misunderstood documents is the change order. Basically, the change order is the admission that something on the project must change. Whether it is the schedule, the resource(s), or the budget, the change order is sometimes looked upon as an admission of failure. I strongly disagree with the failure mantra that so many managers have, falsely believing that a change order means that something went wrong with the project. Here is where the project manager (PM) must be at his/her best in communicating the reason for the change order. This is where the PM should have communicated to management BEFORE the actual change order is placed in front of management and definitely BEFORE the change order is placed in front of the customer.
So what are the reasons for the change order and what is the best way to communicate the need for one?
Change in schedule

A change in schedule is the most common change during a project and is the easiest to communicate, as long as it is communicated early. When a PM, along with the project team, comes to the realization that a change is needed in the schedule, the PM must begin communicating this need. There are multiple reasons for a change in schedule, with the main ones being:
-  A deliverable will be late because of unforeseen reasons.
-  The client has requested a change in schedule. 
-  A project member has been taken off the project.
-  There has been a change in the budget.
-  The scope of work for the project has not been scoped properly.

Of these, the last one is particularly important: the scope of work has not been scoped properly. In this case a PM must be quickly aware of this and begin communicating this as soon as possible.
Change in resource

A change in resources is not always the main reason for a change order, but I see it happening more frequently. If the change in resource is aninfrastructure change, this is easy to communicate. Basically, the initial scope did not include an infrastructure need that may have been excluded or more possibly, may be delivered later than expected. However, if a human resource is the reason for a change, the PM may have a more difficult communication to management and the client. If the resource is changing early in the timeline of the project, the communication is fairly easy. However, what I see happening more often, especially in Professional Service Organizations (PSO), is that resources are being moved more frequently and usually later in the project. This is harder for the PM to communicate and the PM should be enlisting the support of senior management before informing the client. But even if the PM gets the support of senior management before communicating to the client, this doesn’t necessarily mean that communication will be easier, but at least senior management will be prepared when the client contacts them.

                                                    Change in budget

A change in budget is a frequent reason for a change in a project and can be driven by change in schedule and/or resources. This is the hardest communication that a PM must deliver to both management and to the client. Basically, this states that whoever scoped the project did not take something into consideration. That someone is usually senior management, and this usually occurs because a PM is not brought into the initiation phase early enough to make an impact in the scoping of a project.
However, communicating a change in budget early is vital, and the earlier the better. Any delay can lead to multiple issues for the PM and the project team. First, the PM must enlist support of senior management. But before the PM does that, the PM must ensure that the reasons for a change in budget are well documented. The PM must provide the evidence or the communication will not be received well. Second, the PM must provide senior management the communication before delivering the message to the client. This gives senior management a heads-up and an insight to what objections the client may have. Lastly, this proves that the PM is in control of the process of change for the project. The PM must communicate this change effectively and with evidence for the need for change.

A change order is not a failure of the project, but it can lead to a failure to communicate. The PM must be seen as a leader and the manager of the project. The PM must have the correct information and the right attitude to face senior management and the client for a change order. Most importantly, the PM must deliver this change order so as to meet the project objectives. 

I am open to discussion at any time on these blogs or anything else related to project management you would like to explore. If you would like to comment about this blog, please do so by posting on this blog or by responding in an email at Benny A. Recine. You may inspire a blog article. I look forward to your comments.

1 comment:

  1. Excellent points, Benny, as always. Thoughtful and well written. But change orders due to scope change are not always a failure to scope at the outset. Requirements can legitimately change during the course of a project. For example regulatory requirements migh tbe introduced during the development of software, or unanticipated needs or obstacles can arise (and often do) in construction projects. Such scope changes are driven by external and uncontrollable factors and will give rise to a change order. Regardless, of course, as you point out, the change should be written and approved before any work is done.