Claim Reduction is a monthly series by the ASCE Committee on Claims Reduction and Management designed to help engineers learn from problems that others have encountered.
A consulting project begins with the execution of an agreement between an engineer and a client that constitutes an understanding of the work. A detailed scope of services can be incorporated into the agreement or in a separate scoping document.
When the engineer determines there is a change to the scope, schedule, and/or fee, then an amendment is required to the agreement to implement the change. When the scoping document is separate from the agreement, changes to the scope of services should be in accordance with procedures set forth in the agreement.
The engineer must determine if the change requires a revision to the agreement or if it will be handled as a change to the existing scoping and fee document. If the agreement does not include a procedure for changing the scope, schedule, and fee before work begins, it is recommended that the engineer and client put in writing how changes will be addressed. A recommended practice is to include a changes clause in the agreement.
As the project evolves, technical changes often arise in the scope of services, prevailing conditions, and/or project schedule. When changes occur, the consultant must take appropriate action, including clarifying the nature and implications of each change with the client and the design team, then documenting it with an amendment that modifies the scope of work, schedule, and/or fee.
This article addresses modifications to the scope, schedule, and/or fee within the existing agreement.
Managing these changes is an important aspect of mitigating the project risks. There are two aspects to handling the changes: 1) having clarity with the client and others on the project team as to the specifics of the change, and 2) executing the change in accordance with the agreement. Engineers, in general, are problem-solvers, so they often embark on the change without taking both of these aspects into consideration.
Consultants must seek an amendment when a change in the scope of work has been identified, a change in schedule has been requested or is required, or unforeseen conditions arise.
Scope of services change
As the design evolves, it is common for a client to request a change to a design document or report. This is often referred to as “scope creep” and could range from being a minor revision to a significant redesign.
The project manager’s first inclination is to figure out how to implement the change within the current budget. While the budget review is important, it is not the main reason to request a scope-related amendment. A change in scope often accompanies a change in risk; not requesting a formal amendment may place the consultant in the position of assuming risk by performing work they are not contracted to perform. This could come back years later in the form of a claim for a segment of work performed but never contracted to perform. It also potentially means the limitation of liability may not apply, or professional liability insurance may not be applicable.
While the consultant may have sufficient budget to perform the work at the time the change is requested, the overall budget to handle the change may not be available by the end of the project. Waiting to identify a scope change later in the project can make it difficult to request a budget amendment. It is recommended practice to request the change order at the time of the request. Many agreements have specific procedures for change requests. The written amendment officially modifies the project scope. Any fee estimate for the change is incorporated before the end of the project and before the additional work is performed. Amendments to the scope of work should always be executed, even if there is no change to the overall fee or project schedule.
Know your agreement
Most agreements have specific language that govern change, and, since the agreement is the ultimate authority on the procedures for implementing changes, it is important to know what your specific agreement includes, specifically regarding changes. It is not uncommon to have a specific procedure laid out for requesting and implementing the change. Some agreements state that the consultant may not begin work on the change until a written modification has been submitted and approved in accordance with the agreement. Remember that approval may not come from the client representative who is requesting the change. Making sure you follow the specified procedure for getting a change approved is an important aspect of managing risk, maintaining your relationship with the client, and being paid for the change.
Change in schedule
A change may be initiated by the client, a contractor, or another party on a project outside the consultant’s control. It is important to remember that this could also include a change to delivering a project sooner than originally agreed, not just a schedule delay or overrun.
Any time there is a schedule change outside of the planned or contracted schedule, an amendment should be requested, even if there is no change in fee. The consultant may be able to complete the work within the original budget, but it is important to understand any key dates within the agreement. If a consultant agrees to deliver a service or hit a specific milestone by a specified date, they need the dates to be changed contractually. This keeps expectations clear.
If the request is to deliver the project sooner than originally planned, there may be inefficiencies not accounted for; you may need additional resources to ensure delivery (more staff or longer hours than planned for the team). If the project is extended or delayed, you may incur additional costs due to planned team members no longer being available, the need to bring new team members up to speed, or a possible increase in labor costs, which may require a fee adjustment to perform the work. It’s a familiar scenario. Everyone has had a project delay where, a year later, the client still expects the cost to be the same.
The regulatory environment could also change, necessitating scope adjustments or additional resources. Asking for an amendment when the change is identified is critical to maintaining expectations and ensuring you are in position to meet the agreed project schedule.
Unforeseen conditions
When unforeseen conditions arise, they are likely to require a change in the scope of work, the planned schedule, and/or the fee.
Examples include:
- In situ materials taking longer to drill than planned
- Soil conditions being significantly different than anticipated
- More surveying needed than anticipated
- Encountering an underground hazard that wasn’t identifiable
- Encountering a condition on site that requires additional health and safety measures to perform the work safely (a need for two people instead of one, or additional unanticipated equipment)
- An updated permit or regulation changes that affect the design
- Changes to a nearby or adjacent project that affect the original planned project criteria
It is critical that such changes be brought to the client’s attention as soon as they are identified. Alerting the client that conditions have changed and that a modification to the agreement is needed is essential to maintaining your relationship with the client, managing client expectations, and reducing the risk of potential claims. Often, but not always, a change in conditions will result in a change in the fee. It is always preferable to identify that potential and negotiate that change as soon as possible.
Changes to your role and responsibilities
The professional service agreement typically defines your role and responsibilities. It is important that the agreement’s definition of your role and responsibilities match your client’s expectations and your own. Often, when dealing with repeat clients, the agreement’s definition may not match previous assignments. If your role or responsibilities in the project change between execution of the agreement and completion of construction, a new agreement may be required.
In closing
Changes serve an important function, and not every amendment will include a request for an additional fee. Remember to manage your client’s expectations, document what is happening on the project, and ensure that if a change in fee, scope, or schedule is needed, that you as a PM are on the same page as your client.
Some recommended practices for change management:
- Have a discussion with the client at the kickoff meeting or project initiation to establish protocols and lines of communication for addressing changes. Because changes are inevitable, don’t wait until you have a change to figure it out.
- Make sure your project team understands the scope of work and delivery schedule, and that they understand the importance of bringing up any concerns with the scope or schedule. The staff working on the assignment will often be the first to identify a change.
- Request amendments early, even if you are on a time-and-materials (T&M) agreement. Do not wait for the end of the project. People’s memories of events will change over time. Better to have too much budget because you were able to execute for the original fee than to end the project overbudget and needing to request a fee increase at the end of the job.
- When any change is identified, have a conversation with the client as soon as possible. Verbally alert the client that whatever the cause, there is a change and that you will need to assess the change and provide an amendment. Document the conversation in writing.
- If there is a change that needs to be submitted, particularly for scope changes, do not perform the work until the client has agreed to the change through an amendment. This is a liability issue as well as potentially a cash-flow issue.
- If an amendment is required, prepare and send it immediately to avoid any delay in delivery and/or payment from the client.
- If the change introduces additional risk, assess whether further mitigation measures are necessary.
- Do not assume project meeting minutes are sufficient to document a change. The agreement may have very specific requirements that need to be followed, such as identifying who is authorized to approve amendments.
- Remember, if it wasn’t written down, it did not happen.
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Read more helpful insights from the committee’s Claim Reduction series on the Civil Engineering Source.
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