Quantifying Causes, Schedule, and Cost Impacts of Change Orders: "Is Alternative Contracting Really Effective?"

Abstract

The most professions who are engaged in the highway construction industry would commonly concur with an idea that the project cannot be delivered with no change. Regardless of considering different contract methods or what so ever, contract change orders (CCO) are yet inevitable due to unforeseen utility conflicts, unpredicted geology, and other unanticipated conditions. No matter of the project location and/or condition, the CCO negatively affects the project in aspects of project cost and schedule.

The main purpose of this study is to carefully examine the influences of change orders in infrastructure development projects in the schedule and cost aspects. The aim of this study starts with collecting Florida Department of Transportation’s (FDOT) 9 years of solid data that contains abundant information of CCO in highway projects completed in the state of Florida. In addition to the data, it contains 2,990 infrastructure projects completed between 2002 and 2011, 43,000 change order types, 8 contract methods including conventional (D/B/B), Design-Build (D/B), Incentive/Disincentive (I/D), No Excuse Bonus, Lump Sum, etc., and 7 major types of projects. These detailed and vast data was utilized to evaluate each method's performances affecting projects on cost and schedule aspects by carrying quantitative analysis, such as graphs, box plots, etc. Lastly, the research hypothesis test, which utilized regression analyses, Q-Q plots, scatterplot matrixes, etc., was conducted to verify the data variation, normal distribution, equal variances, correlation, etc.

The research results reveal that the innovative methods perform better than conventional in aspects of saving project cost and time. In addition to the innovative methods, D/B is the most effective method that saves both cost and time of projects. I/D compresses project duration but often causes project cost overrun. And Lump Sum significantly saves the project cost but causes project schedule overrun. This study will help interstate transportation agencies with a proper guideline to choose an ideal delivery or contracting method for a project. By providing the information of each method’s advantages and disadvantages, it is expected to significantly reduce the agencies’ time and expenses required to deliver projects.