Chapter 31 Quiz — Change Order Management

C. It is a construction change directive. Refusing to perform directed work is a breach under most contracts. Your obligations are specific: proceed promptly, keep daily time-and-material records for the owner's representative's signature, give notice of time impact separately because the CCD almost never grants time, and push it to a bilateral change order before it ages into a claim.

B. (9 CD − 4 CD) × $5,150/CD = $25,750, against $19,050 of unprovable self-perform cost. More than half the documentation gap was time, not work — and that is the counterintuitive part, because every project team in the industry is better at chasing tickets than at sending a separate time notice and running a contemporaneous fragnet. The $22,800 impact claim was withdrawn rather than lost, and the $5,769 was a negotiated concession, not a documentation failure.

D. $18,000 × 1.15 = $20,700 (sub-sub's 15%) × 1.05 = $21,735` (first-tier's 5%) `× 1.05 = $22,822 (Kestrel's 5%) × 1.0135 = $23,130 (bond and insurance). A 28.5% load, every point of it contractually allowed and none of it padding. This is why owners resist second-tier work, why they sometimes ask you to contract directly with a specialty firm, and why you explain the arithmetic before they see the number.

B. $56,000 × 1.15 = $64,400. They computed $56,000 ÷ 0.85 = $65,882, which is a 15% margin — a 17.65% markup. The overage is $1,482, and it will be presented to you sincerely as "fifteen percent." Markup is a percentage of cost; margin is a percentage of price. Check the arithmetic, not the label, and make sure your subcontracts say which one they mean.

B. 9 CD × $5,150/CD = $46,350 of extended general conditions. Option C is nine days of liquidated damages at $5,500/CD, which is a different number for a different purpose; option D adds the two, which is your exposure to slipping, not your extended-GC entitlement. A great many owner's representatives sincerely believe a time extension is a favor they are granting rather than a cost you are absorbing. Your trailer, staff, temporary power, and cleanup crew bill for those nine days whether anything gets built or not.

C. You do not credit what you already built. The framing and board were installed at the owner's direction, under approved documents, and paid for. Deleting the room does not un-build them. Removing them is a demolition cost that goes on the add side of the change order. Only the flooring and casework — the scope not yet performed — generate a credit. Owners conflate these constantly and in good faith, because from a hundred feet away "the room is gone" looks like it should be cheaper.

C. The scrub. On Kestrel's Sightline analysis, 1,332 lost man-hours were taken apart into 84 hours of weather, 148 hours of Sightline's own crew turnover, 190 hours Kestrel itself caused, and 910 hours attributable to the owner's changes. Giving back the piece that is yours is the single most effective thing you can do to make the rest believable. Option B is a comfort, not a proof — tables describe conditions in general and do not measure yours.

C. Aging measures the owner's decision speed, so it runs from submittal of the COR. Identification and notice dates belong in the log — adjacent to each other, so the gap between them is visible at a glance — but they measure your speed, not the owner's. An empty 61-plus row is what a healthy job looks like. When that row starts filling, you do not have a pricing problem; you have a decision-making problem on the owner's side.

A. $2,094,200 × 1.35% = $28,272 — roughly a project engineer's salary for four months. Your payment and performance bond premium is a percentage of contract value; when contract value rises, the premium rises, and that increase is a real cost of the change. The same logic applies to general liability and builder's risk where the policy is rated on contract value. Most contracts allow it as a separate line. Most contractors leave it on the table.

B. Every dollar of directed, performed, unapproved work is a dollar you have already paid out and cannot invoice. You are financing your owner's decision-making speed out of your own working capital at your own borrowing rate. Northgate carried an average pending-change balance of roughly $310,000: `$310,000 × 9.0% × 1.55 years = $43,245` — almost exactly what CO #14 lost outright, and unlike CO #14, nobody ever wrote it down.

False. In most standard forms the executed change order is deemed to include all direct, indirect, and impact costs and any time extension arising from that change — it closes the subject. That is why reservation of rights language exists: if the impact is genuinely not yet knowable, the reservation goes into the change order itself. Whether such a reservation is honored depends on your contract and your jurisdiction, and some owners will refuse to sign it. That refusal is itself information.

False. The label describes the architect's authority, not the facts. A field order is the authority to direct a change that has no cost and no time impact; if the change actually has either, it is not a field order and you must say so in writing the same day. Relocating a door three feet after the partition is framed, firestopped, inspected, and rough-wired is not free, however sincerely it is labeled.

False. Discrete cost tracking is stronger than a measured mile whenever it is available, because there is nothing to model — a crew demobilized and remobilized is a date out, a date back, a crew size, and setup hours. That is an invoice, not an inference. Use discrete tracking first; reserve the measured mile for the productivity losses that cannot be counted directly. Both methods require the same thing: a cost code opened before the impact happens.

False in most contracts. Float is generally a shared, consumable project asset, and the contract assigns it. A change adding 9 CD of duration to a path carrying 6 CD of float pushes 3 CD onto the longest path, and 3 is what you request. Claiming 9 destroys your credibility on every other line of the change order — and you say so explicitly in the narrative: "nine calendar days of added duration; six absorbed by available float; three days of critical-path impact requested."

False. Annotate it "presented to [name] at [time], signature declined," sign it yourself, and transmit it by email the same day. An unsigned ticket transmitted contemporaneously is dramatically stronger than a signed ticket produced eight weeks later, because the transmittal itself is the contemporaneous record. Then escalate in writing that day, factually: "We are performing directed work and are unable to obtain daily verification. Please designate a representative who can verify daily records." Now the failure to verify is on the record and it is theirs.

Kestrel's cost notice went out on day 14 — just inside the clock — and it preserved the entire $121,000 cost claim. The separate time notice was never sent at all. That omission, plus the absence of a contemporaneous time impact analysis (Wei Chen ran the fragnet in week 30 instead of week 25), is precisely why five of the nine claimed days were denied: $25,750.

The transferable point is that cost and time usually run on different clocks, and the time clock is usually the shorter one. Send the time notice on its own schedule even when it says nothing but "impact not yet determinable."

Kestrel earned its full contract markup — 15% on substantiated self-perform, 5% on subcontracted work, plus bond and insurance — on every dollar it could prove, which came to $12,741 on $121,000 of substantiated cost. Against that, it absorbed $19,050 of self-perform cost it could not substantiate and $25,750 of extended general conditions it burned and was not paid for. CO #14 did not make a small profit; it made no profit and ate $43,650 of hard cost — on a change everyone in the room agreed the owner owned.

The cost of a change is rarely the cost of the work. Impact, disruption, resequencing, remobilization, and lost productivity routinely exceed the direct cost. A contractor who prices only the visible work has donated the rest. And the mirror image is equally true: an owner billed for unsubstantiated "impact" has been overcharged.

The discipline that serves both is the same one: proving it. A measured mile with a disclosed scrub, or discrete tracking against a segregated cost code opened before the impact happened. Not a belief, not a percentage, not a table.

A negotiation is two parties who agree on entitlement arguing about a number. A claim is two parties arguing about whether anything is owed at all. Ninety percent of your changes should never become claims.

The practical rule is speed. Time destroys change orders — memories fade, field crews move on, the owner's rep is reassigned, records get boxed. Kestrel's internal standard on Northgate is same-day identification and notice, COR within 14 days, owner response within the contractual 21, executed within 14 more: under 50 days end to end. A change order still open at 90 days is not a change order. It is a claim that has not admitted what it is yet.

On the time. Run the fragnet anyway — always run it, even when you expect zero. Four days of added duration against four days of float consumes the float exactly and moves nothing. Then state it affirmatively on the change order: "No adjustment of Contract Time is requested for this change." That sentence costs you nothing today and buys real credibility on the next change order, where you will be asking for days.

On the credit. The standard assemblies were not ordered, so they are a genuine credit at direct cost + 10%. Had they been delivered, the credit would shrink to a restocking calculation and a surplus-material line — and you would show both on the same page rather than netting them quietly.

(a) The problem is not pricing — it is decision-making on the owner's side. Six items past 61 days on a 21-day contractual response period is a process failure, and the fix is a conversation about the owner's approval routine (who reviews, who signs, what the board or committee calendar is, what triggers an outside consultant), not another revised proposal. A secondary possibility you must rule out first: some of those six may be sitting on your side awaiting backup you never sent.

(b) $412,900 × 9.0% × (8 ÷ 12) = $24,774 of financing cost — money spent, never billed, borrowed at your rate to fund somebody else's calendar. That is real and nobody writes it down.

(c) First three actions. (1) Audit your own side before you complain about theirs — for each of the six, find the date it went to the owner and whether the required backup went with it, and fix anything that is yours. (2) Get the $739,300 into the cost report, the cost-to-complete forecast, and the cash-flow projection as a distinct pending-change line, so the phantom overrun stops and the exposure is visible. (3) Escalate in writing, politely and factually, naming each item, the date submitted, the contractual response date, and the total exposure — and ask for a single meeting to disposition all six.

(d) What you would not do. You would not bundle a contested item with clean ones to force a package decision — that turns two-day approvals into two-month approvals and delays your payment on both. You would not slow-walk your subcontractors' money using the owner's slowness as cover. And you would not stop performing directed work as leverage; that is a legal position, not a management solution, and on most contracts it is a breach.