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Introduction
The construction industry has a complex communication nature because a lot of parties are
involved in the business process. An example of this complex nature is that multiple reports
must be prepared to ensure that information is delivered to all organizations, departments or
staffs using it. This can be a problem if a channel and mechanism of communication is not
adequately designed. This problem can be overcome by establishing an Internet-based
communications channel, which supports information transfer for all remote project team
members is a timely and accurate means so that all teams can obtain the information suited to
their functions.
In the construction industry, a client often decides to issue a change order for authorizing
a variation of work from the original scope of work. A study by Cox et al. (1999) found that in
monetary terms alone, the direct cost of post contract design changes amounts to 5.1 to 7.6% of
the total project cost. In terms of project delays, change orders are considered to be one of the
major causes (Arditi et al., 1985; Ehrenreich-Hansen, 1994; Zafar, 1996; Al-Saggaf, 1998).
A change order is a complex information transfer that has to be managed carefully, otherwise
disputes between a client and a contractor related to cost and time of work might occur. A change
order is complex because it involves all the construction teams, together with a voluminous
amount of information that either has to be sent, checked, corrected, approved, requested,
clari ed, transmitted or submitted, among many other things. Owing to this complexity, a method
to manage change orders is proposed in this research by using Internet technology.
Address for correspondence: B.H.W. Hadikusumo, School of Civil Engineering, Asian Institute of Technology,
PO Box 4, Klong Luang, Pathumthani 12120, Thailand, E-mail: kusumo@ait.ac.th
Bridges (1997) identi ed the potentials of Internet technology for managing construction
projects, stating that this technology will change business methods in managing construction
projects, for example, because data can be retrieved transparently from either a local disk or a
remote website that provides a communication point for client, designer and contractor. The
utilization of this technology has been applied in some actual projects (Scoones, 1999;
Wilkinson, 2000a,b) and academic researches (Deng et al., 2001).
Several commercial applications for managing change orders are available in the market.
The applications vary from a PC-based software, such as Primavera ExpeditionTM, to
business-to-business (B2B) servers, such as CitadonTM; however, we have not identi ed
any change order system that supports standard forms of contract, such as FIDIC and ICE,
which are commonly accepted and used in construction projects; this is the rst of our
research rationales.
The second rationale is to provide a framework for interested construction companies to
develop affordable web-based project management, particularly for the change order manage-
ment system.
Change orders can be de ned as a change, alteration or addition with respect to the original
plans, speci cations or other contract documents, as well as a change in cost, which follow the
creation of legal relationship between client and contractor (Choy and Sidwell, 1991; Wallace,
1994; both cited in Chan and Yeong, 1995; and Hanna et al., 1998). Change order has several
characteristics: a) it is a written document containing authorization of the requested change,
b) the change is brought about through no fault of the contractor, and c) the changed work is
not included in the original contract and therefore it is not included in the contract price.
According to its types, Cox (1997) identi ed three kinds of change orders: 1) a formal
change order, which is an actual document called ‘change order’ issued by a client which
modi es the contract terms, plans or speci cations; 2) a constructive change order, which is
an extra contract work performed pursuant either to oral or implied owner directives, or as a
result for problems for which the owner is responsible; and 3) a cardinal change order, which
may occur whenever there is a substantial amount of work required outside the scope of the
original contract. The latter is out of this research scope.
Formal change orders are those that originate from either the owner or owner’s representa-
tive in the presence of the architect=engineer (A=E). It can be described as a directive issued
by the owner to conduct changes in the scope of work.
Web-based application for managing change orders 199
The constructive change orders originate from either the contractor or subcontractor. The
contractor les a constructive change when the authorized representative gives or fails to give
directions that interfere with the normal contract development and has such an effect as if a
formal change has been issued (Bu-Bshait and Manzanera, 1990).
Ordered variations. The ICE conditions of contract refer to change orders as ordered
variations. It is stated that it is the Engineer who can order variations, which should be in
writing, but can also be in oral form. For the case of oral instructions it was stated that such
instruction should be con rmed in writing as soon as possible. If such writing is not carried
out by the Engineer, the Contractor can make a written account of the said oral instruction
and, if not contradicted by the Engineer, shall be considered as an instruction in writing.
According to the ICE conditions of contract, the variations may include, ‘additions,
omissions, substitutions, alterations, changes in quality, form, character, kind, position,
dimension, level or line and changes in any speci ed sequence or method or timing of
construction required by the contract’. Figure 1 is a graphical representation of a possible
scenario for the conduction of a variation order.
Valuation of ordered variations. When the variation is of similar character and executed
under similar conditions, the works shall be valued according to the rates and values found in
the BOQ (bill of quantities). When the works to be varied is not similar, the BOQ shall be
used as a basis for valuation.
200 C. Charoenngam, S.T. Coquinco and B.H.W. Hadikusumo
Engineer to x rates. On occasions of any work with related variations, in which the
Engineer or the Contractor nds the rate or price for such varied work on the contract as
unreasonable or inapplicable, the following are carried out:
° The Engineer gives to the Contractor or the Contractor to the Engineer a notice regarding
the inapplicability of the price. This is done before the commencement of the varied work
or soon thereafter as applicable.
° In circumstances in which the rate or price is to be varied, the Engineer shall x such rate
or price as in the circumstances the Engineer shall think reasonable and proper.
Notice of claims. A notice of claims procedure is conducted when the Contractor intends to
claim a higher rate or price than that stipulated by the Engineer. Its ow can be stated as
procedures for sending the notice of claims and procedures for the submission of interim
accounts and updates (Figure 2). Sending the notice of claims must be conducted following
several conditions: 1) the Contractor is to send a noti cation of intent to claim within 28 days
of the happening of such an event that provoked the intention to le the claim; 2) the intention
to le must be done in writing; and 3) the Contractor must keep contemporary records as may
be necessary to substantiate the Contractor’s claim. In addition, the procedures for submitting
the interim accounts and updates are as follows a) The Contractor must send the rst interim
account, after noti cation of claim. The rst account must give full details of the amount
claimed to date and the grounds of the claim. b) After this, the Engineer reserves the right to
Web-based application for managing change orders 201
Figure 2. Notice of claims and interim accounts and updates of ICE and FIDIC
ask the Contractor to send to the Engineer up-to-date accounts of the claim, giving the
accumulated amount for the claim and additional grounds for which the claim is based.
Variations. The FIDIC conditions of contract refer to change orders as variations. Similar to
ICE, the Engineer is given the right to order variations to the Contractor. The Engineer’s
authority consists of instructing the Contractor to do the following:
° increase or decrease the quantity of work included in the contract;
° omit such work except when the work is to be carried out by the Employer or another
contractor;
° change the character or quality or the kind of any such work;
° change the levels, lines, positions and dimensions of any part of the works;
° execute additional work of any kind necessary for the completion of the works;
° change any speci ed sequence or timing of the construction of any part of the works.
202 C. Charoenngam, S.T. Coquinco and B.H.W. Hadikusumo
Power of the Engineer to x rates. On instances where the varied works cannot be valued
appropriately by the existing rates and prices on the contract, the Engineer, in consultation
with the Employer and Contractor, shall determine a suitable rate or price, which should be
agreed upon by the Engineer and Contractor. In case of disagreements the Engineer shall x
such rates or prices as in his opinion is appropriate and shall notify the Contractor
accordingly, with a copy to the Employer.
FIDIC, in contrast to ICE, adds a provision in terms of time for noti cation for the
Engineer or the Contractor in cases where they may wish to change a rate or price. A notice
must be given within 14 days of the date of instruction (change order) by:
° the Contractor to the Engineer of the Contractor’s intention to claim extra payment or a
varied rate or price;
° the Engineer to the Contractor of the Engineer’s intention to vary a rate or price.
Procedure for claims. There are three important elements in the claims procedure:
° Notice of claims. The Contractor is to give notice of his intention to claim to the Engineer,
plus a copy to the Employer, within 28 days of the point when the event giving rise to the
claim has rst arisen.
° Contemporary records. The Contractor is to keep records in order to support the claim he
wishes to make.
° Substantiation of claims. After 28 days of giving the notice, the Contractor is to give the
Engineer an account giving detailed particulars of the amount claimed and the grounds for
which the claim is based. When the event is continuous, the Contractor is to give interim
accounts giving accumulated amounts and any further grounds upon which the claim is
based.
Figure 2 shows graphically the process for lling notice of claims and sending interim
accounts. It must be noted that the difference in FIDIC’s process is that it did not specify
that the notice should be in writing, unlike that of ICE. In FIDIC, the Contractor is to send
a nal account to the Engineer upon occurrence of the end of the effects resulting from
the event giving rise to the claim. The FIDIC states the process for submitting the nal
account.
There are three major steps in developing an application: system analysis, design and
implementation. System analysis studies the need to develop the application by identifying
its requirements. The system design stage studies how to represent the system analysed in the
computer format; and system implementation covers the programming part in order to
transfer the system analysis and design into a computer application software. The approaches
used to analyse the system are a) to understand the business objectives, and b) to model the
system. The system analysis part is discussed in detail in the third section, but the other two
stages are not presented in detail in this article. However, the results of the system design,
Web-based application for managing change orders 203
which are the business objects and its data requirements, are represented in Appendix A.
System implementation is presented brie y in Section 3 in order to provide a better idea of the
COMS developed.
Business objectives
The rst step to develop COMS is to analyse the system requirements. The results of this
analysis form the four main objectives of COMS:
1. Owner
° Can correspond only through the architect=engineer. Uses correspondence to ask for
any intended change of works.
° The major function of the owner is to decide whether a change order request and its
attached work evaluation will be approved, returned for renegotiation or rejected. It
must be noted that a change order request, before it is brought up to the owner for nal
approval must be evaluated rst by the architect=engineer for its merits and cost
proposal made by the contractor.
204 C. Charoenngam, S.T. Coquinco and B.H.W. Hadikusumo
° The owner will always receive copies of correspondence, request for information,
change order request, change order: cost proposal, change order for approval and
interim reports made by the contractor sent to the architect=engineer.
2. Architect=Engineer
° Corresponds directly to the contractor and on occasion to the owner.
° Between the owner and the architect=engineer, the latter reserves the right to issue
formal change order requests and approved change orders. The architect=engineer
functions as the direct representatives of the owner to the contractor.
° Receives correspondence from owner and contractor.
° Evaluates change order cost proposals (change order for approval).
° Can ask for cost and schedule interim reports.
3. Contractor
° Corresponds directly with the architect=engineer but sends copies to owner’s account.
° Acts as the representative for the subcontractor. Receives and sends correspondence
from subcontractors regarding clari cations on work items or for facilitation of
subcontractor initiated change of work request.
° Reserves the right to send change order request, change order cost proposals and
interim reports.
° Receives approved change order with notice to proceed and change order requests
subject to work valuation from the architect=engineer.
4. Subcontractor
° For items of work that require valuation, the subcontractor corresponds the values to the
contractor. In this system, only the contractor can send a formal work valuation
document in the form of the change order: the cost proposal.
° If the subcontractor in doing his works nds a need to bring about a change order
request, he shall do so through the contractor by sending a correspondence.
5. Supplier (not included in this study)
° Supplier information can be added to the system in order to cost the changed work in
terms of added materials and equipment.
Web-based application for managing change orders 205
Object-oriented modeling
In this study, object-oriented methodology is used to conduct a detailed study of system
analysis. A speci c method, ‘use cases’, is used. This method can be used to identify objects,
attributes, behaviour and relationships between objects in the systems.
Object-oriented modeling in this method involves three main stages: 1) nding ‘actors’ and
‘use cases’ based on the system’s context diagram, 2) constructing the ‘Use Cases’ model,
and 3) identifying business objects and its de nitions.
Finding ‘actors’ and ‘use cases’ based on the context diagram . The ‘actors’ and ‘use cases’
found are listed in Table 1.
Modeling the ‘use case’. By using the previous analysis, the ‘use case’ of COMS can
be modeled (Figure 4). The model consists of three subsystems: 1) the change order
facilitation management subsystem, 2) the request for information subsystem, and 3) the
documentation management subsystem.
Change order facilitation management subsystem. This subsystem enables the participants
to make change order requests, correspondence and clari cations, and change order couples
with notice to proceed. There are two scenarios applied in this subsystem: formal change
order and constructive change order. In the rst scenario, the owner makes a change order
request document. The contractor is then asked to produce a valuation in terms of cost and
schedule with regard to the change works. The contractor either makes a valuation or if the
changed work is subcontracted, asks the subcontractor to make the valuation. The contractor
may also opt to send a correspondence for clari cation if the valuation is vague. After
clari cation, the contractor then sends the valuation of the change works as a change order
cost proposal, which is subject to owner approval. The A=E checks the change order cost
proposal and performs one of two functions: 1) The A=E may send a correspondence to
clarify items on the cost proposal, or 2) if the A=E is satis ed, the A=E may recommend the
proposal to the owner for approval and eventual signing. The A=E then facilitates the sending
of the approved change order to the contractor coupled with a notice to proceed document.
In the second scenario, the contractor sends a change order with a valuation (change order
cost proposal) to the A=E for approval, or the contractor just sends a notice of an occurrence
of a change event rst, in the form of a change order request, and then sends the change order
cost proposal thereafter. Similar to scenario 1, the A=E checks the change order cost proposal
and so on.
Request for information subsystem. This subsystem enables the participants to send request
for information forms. The system scenarios are: 1) the contractor or subcontractor asks for
design clari cation from the A=E, or they may send shop drawings for approval, and 2) the
A=E is given a set time according to the contract to review the queries and respond.
Business objects. The use case model is analysed to produce the business objects and
objects’ association. There are eight business objects found in this study, as can be seen in
Figure 5, which illustrates the association between business objects. The eight business
objects are:
Web-based application for managing change orders 207
System development
The COMS is developed under MicrosoftTM environment by Microsoft AccessTM for data-
base development, Active Server Pages (ASP) Visual InterdevTM as a server programming,
208 C. Charoenngam, S.T. Coquinco and B.H.W. Hadikusumo
and Structure Query Language (SQL) for manipulating the data in the Microsoft Access
database.
An example of the application interface for checking the status of the change order is
illustrated in Figure 6. The data in this gure shows that several change orders are sent to the
contractor. By clicking the ‘view’ button, detailed information of the change order can be
obtained (Figure 7).
This section discusses the advantages of COMS compared to the conventional method of
change order management by using a simulation of a typical change event. For this purpose, a
case study, modi ed from the Primavera ExpeditionTM, is used. The project consists of a
single-storey, masonry structure with brick siding, housing an automobile and light truck
servising centre construction. The service centre has below grade pits ranging from 0.5 to 0.8 m
below the furnished oor. This structure involves reinforced concrete, structural steel, masonry
walls and brick siding. The exterior work includes site drainage, paving and landscaping.
A variation issue occurred in this project. During the excavation activity of the trenches, an
estimated 10 cubic metres of extra rock was found that was not part of the agreed upon scope
of work. For this, the contractor initiated the process for a possible constructive change order.
Figure 8 shows the ow diagram to be followed in conduction of the change order.
° usage of a standard set of forms for each activity in the facilitation process;
° prompt delivery of the documents to the addressed construction participant;
° means to know if the other party has read your sent document;
° record keeping is through a common centralized database, therefore all parties have the
same documents and no con icts arise regarding loss of particular forms;
° mismanagement of documents is avoided.
210 C. Charoenngam, S.T. Coquinco and B.H.W. Hadikusumo
1 2 3 4 5 6 7 8 9 10 11 12
Contractor sends a change 5 5
order request
Architect=engineer acknowledges 5 5
COR and requests for a COCP
Contractor prepares a change 5 5
order: cost proposal
Architect=engineer assesses 5 5
COCP, determines an
agreeable price and time
Owner assesses COAA, af xes 5 5
signature for approval
Contractor creates a COIR for 5 5
change order work assessment
Total time consumed 12 days
Table 3 Total duration to complete the change order process: the COMS method
1 2 3 4 5 6
Contractor sends a change order request 5
Architect=engineer acknowledges COR and requests for a COCP 5
Contractor prepares a change order cost proposal 5
Architect=engineer assesses COCP: determines an agreeable 5
price and time
Owner assesses COAA, af xes signature for approval 5
Contractor creates a COIR for change order work assessment 5
Total time consumed 6 days
Assuming the use of the COMS system and taking into account the speed at which a docu-
ment can be sent through the Internet, it is assumed that the 12 days it took to facilitate the
change order using the traditional means can be cut to six days (Table 3). This is done by
eliminating the usual extra day required for each activity for delivery of the documents to the
addressed construction participant.
Conclusion
The potential advantage of Internet technology to deliver information in a timely, remote and
accurate manner for a complex organization can be utilized to manage the change order process
in construction projects. The advantages of adopting this technology in the change order
management process are; 1) usage of a standard set of forms for each activity in the facilitation
process, 2) prompt delivery of the documents to the addressed construction participant, 3) the
means to know if the other party has read the sent document, 4) record keeping is through a
common centralized database, therefore all parties have the same documents and no con icts
arise regarding loss of particular forms, and 5) mismanagement of documents is avoided.
212 C. Charoenngam, S.T. Coquinco and B.H.W. Hadikusumo
Appendix
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