Change order impact estimating.

[unionwirenut]

Question, in pricing change orders, what factors do you usually include in your price?

We are pricing a COD which changes 98 lines of a 272 line cable schedule and also adds 29 line items. The basement area is literally stuffed with duct work, our conduits were run on the ceiling 19 feet off the floor. There is massive congestion of equipment and multiple trades now and we have to start changing out our conduits for the changes.

The project is a hospital here on island and we usually use 125% of bid labor for our local labor factor. I use McCormick software. We are thinking we need to go to NECA 2 or 3 for the changes in the basement. The other changes span the whole building but aren't as extensive as the basement level. I think I need to up my PM and site supervision for these changes. I know there are other factors which I need to consider for Negative impact on the base contract, lower productivity aggravation etc, but how would you normally transfer that to a bid formula?

The typical change is actually going to have to be 4 parts (extensions).

1) Credit for the entire Cable Schedule allowance, the original bid was done strictly by the cables schedule lengths as directed during tender. Now since no wire has been pulled,we are crediting the entire bid back.
2) Charges for the work already in place, at bid labor and material factors.
3) Charges for removal of work in place ( @ what labor factor?) since we know it doesn't take as long to remove as install, but it is going to be trying at the least to get back to the work in place.
4) Since work in place has measure string in most of it, I now know approximately the distance of the work to be installed. So pricing will be based on the actual lengths implementing the changed schedule, but @ what labor factor to caption all the impacts with the compaction. Oh and by the way, the job is officially on time and under budget, with no change to the scheduled completion date. (MY *#s)

This job was design build and when it came out for tender, the Cable Schedule was the only real reference we had for equipment etc. Our portion of the hospital only is the distribution system, generators, buss risers,with lighting and small power in the basement. We are actually sub contracted to the M&E sub to the General Contractor.

So I guess my question is, what would you do, but with justification. I've done a ton of research, I can find the impacts, but I'm trying to figure out how to factor it into my pricing. Thanks.

 

[petersonra]

Personally, I would think that the PM assigned to such a project would have the relevant experience to answer this kind of question for the rest of us.

I can tell you what we do. Every extra nickle it costs us gets put into the CO. That includes the time for me to figure out what it cost, restock fees, handling costs, freight, and whatever labor and materials there is. there is shop labor for the shipping clerk to check in the new parts and return the old ones. there is engineering time to revise drawings and issue the revised ones to the shop.

I don't know how it is done in the Bahamas, but most largish projects here have something in the contract that tells you how to deal with changes. Often, cost plus 15%. 15% sounds like a lot but it isn't.

 

[mstrlucky74]

Personally, I would think that the PM assigned to such a project would have the relevant experience to answer this kind of question for the rest of us.

I can tell you what we do. Every extra nickle it costs us gets put into the CO. That includes the time for me to figure out what it cost, restock fees, handling costs, freight, and whatever labor and materials there is. there is shop labor for the shipping clerk to check in the new parts and return the old ones. there is engineering time to revise drawings and issue the revised ones to the shop.

I don't know how it is done in the Bahamas, but most largish projects here have something in the contract that tells you how to deal with changes. Often, cost plus 15%. 15% sounds like a lot but it isn't.

Many of those "extra" charges that you reference are in overhead according to many contracts and not allowed to be billed for separatley

 

[petersonra]

Many of those "extra" charges that you reference are in overhead according to many contracts and not allowed to be billed for separatley

yep. that is why he needs to look at what the contract says about how changes are to be handled, as I suggested in my post.

if i were the EC on a job like this and my PM was asking "Question, in pricing change orders, what factors do you usually include in your price?" about the project, I would be really nervous about said PM.

 

[unionwirenut]

Thanks

Thanks

I understand as in overhead etc, I do know there are additional impacts to production etc for change orders, am trying to get someones feel how they capture it I.E. do you use NECA 2 or 3? On the 15% P&O, high? Man we wouldn't touch a job here under 18% & 14%, competitive is 20% & 18%. If pricing a job and not worried about competition 25% & 20% is the norm.
On the PM should know, about the impacts, I am the PM, also the Outside Superintendent, and Estimator. In my spare time I source HR, and do all the procurement. Little company lots of hats.

 

[unionwirenut]

yep. that is why he needs to look at what the contract says about how changes are to be handled, as I suggested in my post.

if i were the EC on a job like this and my PM was asking "Question, in pricing change orders, what factors do you usually include in your price?" about the project, I would be really nervous about said PM.

A little self righteous don't you think? We are asking how you normally capture the impacts. Or how we go about it, what have you found to be acceptable, I.E. NECA 2 or 3 or upping your labor factor. We are dealing with entities from Canada, and the UK, normally on island we price a change order how we see it and that's how it is, this job we are looking for industry standards. As for being really nervous about the PM, not so much, we were looking for advice, but you seem to be a critical individual so I'll take your attitude with a pinch of salt.
To everyone else, Thanks for your input. But the changes were not spelled out in our contract. We are being required to supply itemized breakdowns with our change orders. I know I can't use our normal bid labor factors. But have you ever recieved push back trying to use NECA labor factors on change orders?

 

[petersonra]

A little self righteous don't you think? We are asking how you normally capture the impacts. Or how we go about it, what have you found to be acceptable, I.E. NECA 2 or 3 or upping your labor factor. We are dealing with entities from Canada, and the UK, normally on island we price a change order how we see it and that's how it is, this job we are looking for industry standards. As for being really nervous about the PM, not so much, we were looking for advice, but you seem to be a critical individual so I'll take your attitude with a pinch of salt.
To everyone else, Thanks for your input. But the changes were not spelled out in our contract. We are being required to supply itemized breakdowns with our change orders. I know I can't use our normal bid labor factors. But have you ever recieved push back trying to use NECA labor factors on change orders?

self righteous? nope. critical - perhaps. but perhaps the observations I made are also legit.

it seems very odd that this kind of thing was not spelled out in the contract, and if not in the contract was not covered by your employer's terms and conditions.

the industry standard here is that it is covered contractually in some way.

if it is not covered contractually, I don't think it matters much what method you choose to estimate the cost as long as you can document where the numbers came from. being able to claim the numbers are somehow related to a recognizable method may help in getting it accepted.