CONTRACT CHANGE ORDER / PROJECT VARIANCE - Ventech!
CONTRACT CHANGE ORDER / PROJECT VARIANCE - Ventech!
CONTRACT CHANGE ORDER / PROJECT VARIANCE - Ventech!
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VENTECH ENGINEERS, LLC.<br />
PROCEDURE<br />
1 OBJECTIVE<br />
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Effective Date: Jan 6, 2011<br />
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Approval: Kyle Ray<br />
<strong>CONTRACT</strong> <strong>CHANGE</strong> <strong>ORDER</strong> / <strong>PROJECT</strong> <strong>VARIANCE</strong><br />
This procedure defines the system used to identify, quantify, approve and incorporate<br />
Contract Change Orders and Project Variances into a contract.<br />
2 SCOPE<br />
This procedure applies to all contracts requiring Contract Change Orders or Project<br />
Variances.<br />
3 AUTHORITY<br />
The Project Manager is responsible for implementing and maintaining this procedure.<br />
4 REFERENCES<br />
Procedure 4.3-5: Contract Acceptance<br />
5 PROCEDURE<br />
5.1 DEFINITIONS<br />
5.1.1 <strong>CONTRACT</strong> <strong>CHANGE</strong>: A client approved modification to the current<br />
contract scope which may affect <strong>Ventech</strong>’s project expenditures and / or<br />
schedule.<br />
5.1.2 <strong>PROJECT</strong> <strong>VARIANCE</strong>: A modification to any department's current<br />
scope. A contract change will result in a project variance. A project<br />
variance can be independent of contract changes or caused by a contract<br />
change.<br />
5.1.3 <strong>CONTRACT</strong> <strong>CHANGE</strong> <strong>ORDER</strong>: The written evidence of a contract<br />
change. A client approved contract change becomes a contract change<br />
order.
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5.1.4 <strong>CONTRACT</strong> <strong>CHANGE</strong> <strong>ORDER</strong> / <strong>PROJECT</strong> <strong>VARIANCE</strong> ESTIMATE<br />
FORM: The document used within <strong>Ventech</strong> to identify, quantify and<br />
approve a contract change or a project variance. This document shall<br />
never be submitted to the client. (See form # 4.3-6.1)<br />
5.1.5 <strong>CONTRACT</strong> <strong>CHANGE</strong> NOTICE FORM: The document used to obtain<br />
client instructions on how to proceed with the preparation of the contract<br />
change estimate. (See form # 4.3-6.2)<br />
5.1.6 <strong>CONTRACT</strong> SCOPE <strong>CHANGE</strong> FORM: The document used to<br />
communicate the impact of the contract change to the client and to obtain<br />
client approval or rejection of the contract change. (See form # 4.3-6.3.)<br />
5.1.7 <strong>CONTRACT</strong> <strong>CHANGE</strong> <strong>ORDER</strong> DETAIL FORM: The document used<br />
within <strong>Ventech</strong> to summarize and verify the costs of a contract change or<br />
project variance. This form shall never be submitted to the client. (See<br />
form # 4.3-6.4.)<br />
5.2 IDENTIFY NEED FOR <strong>CHANGE</strong> OR <strong>VARIANCE</strong><br />
5.2.1 Changes shall be requested by the client or suggested to the client by<br />
<strong>Ventech</strong>. The <strong>Ventech</strong> home office or field office may identify possible<br />
changes or variances to save money and / or time or to otherwise<br />
improve the project. The effects of a change or variance shall be<br />
quantified by the appropriate <strong>Ventech</strong> department(s).<br />
5.2.1.1 The home office may determine the need for a change or<br />
variance.<br />
5.2.1.2 The field may determine the need for a change or variance.<br />
<strong>Ventech</strong>'s Field Construction Manager shall document the<br />
change or variance to the project manager for processing.<br />
5.2.1.3 The client may request a change. Client change requests shall<br />
be documented in writing. If the client verbally requests a<br />
change, then the Project Manager shall document the<br />
requested change to the client in writing by completing the<br />
Contract Change Notice Form. (See form # 4.3-6.2.). The<br />
client must acknowledge the change request in writing by
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completing the Contract Change Notice Form and returning the<br />
form to <strong>Ventech</strong>.<br />
5.3 <strong>CONTRACT</strong> <strong>CHANGE</strong> <strong>ORDER</strong> / <strong>PROJECT</strong> <strong>VARIANCE</strong> FORM<br />
5.3.1 The originator of the requested change (the Project Manager in case of a<br />
client requested change) shall obtain a Contract Change Order / Project<br />
Variance Estimate Form from a member of the project team who shall<br />
assign a sequential number to the form.<br />
5.3.2 The originator shall describe the change in as much detail as possible.<br />
This form must be approved prior to any cost or schedule impacts to the<br />
project, such as additional manhour expenditures or additional equipment<br />
or material purchases.<br />
5.4 VENTECH PRE-APPROVAL TEST<br />
5.4.1 The originator shall present the original of the Contract Change<br />
Order/Project Variance Estimate Form to the Project Manager for preapproval<br />
and retain one copy.<br />
5.4.2 The Project Manager shall determine the necessity of the change. If the<br />
Project Manager rejects the change, then the form shall be signed "not<br />
approved" and copied to the originator, scheduler and estimator.<br />
5.5 <strong>CONTRACT</strong> <strong>CHANGE</strong> NOTICE<br />
5.5.1 The Contract Change Notice is used to notify the client that a potential<br />
change to the contract has been identified. After notification, the client<br />
may exercise one of the following options.<br />
5.5.1.1 The client may cancel the change so that the change will not<br />
be incorporated into the contract.<br />
5.5.1.2 The client may request that a Contract Change Order Estimate<br />
be prepared and submitted for approval before work proceeds.
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5.5.1.3 The client may request that work on the change proceed<br />
immediately and a contract change order be developed for<br />
approval.<br />
5.5.1.4 The client may execute the change exclusive of the contract.<br />
5.6 QUANTIFY THE <strong>CHANGE</strong><br />
5.6.1 The Project Manager shall determine if the impact of the change to the<br />
project is well defined.<br />
5.6.2 If the impact is not well defined, then the Project Manager shall determine<br />
the appropriate routing for the scope clarification and estimates.<br />
5.6.3 Departments on the routing shall estimate the cost and schedule impact<br />
to their department caused by the change. Departments unable to<br />
estimate cost impacts shall provide relevant quantities so that the<br />
estimating department can estimate the costs.<br />
5.6.4 After the routing is complete, the Project Manager shall review the<br />
estimates for sufficient detail and accuracy.<br />
5.6.5 Project Controls shall determine the "final" impact to the manhours, cost<br />
and schedule.<br />
5.6.6 The form shall be returned to the Project Manager for final review.<br />
5.7 IN-HOUSE APPROVAL<br />
5.7.1 If the request is for a change, then the Project Manager shall add<br />
contingencies and approve the request. The form shall be routed to the<br />
Vice President of Manufacturing for final approval, after the Project<br />
Manager's approval.<br />
5.7.2 The Vice President of Manufacturing shall determine if the request is<br />
acceptable.<br />
5.7.2.1 If the request is not acceptable to the Vice President of<br />
Manufacturing, and if the Vice President of Manufacturing may
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possibly approve the request (with revisions,) then the Project<br />
Manager shall revise the estimates and resubmit to the Vice<br />
President of Manufacturing. This cycle shall be repeated until<br />
the request is approved.<br />
5.7.2.2 If not acceptable and the Vice President of Manufacturing will<br />
not allow the request, then the Vice President of Manufacturing<br />
shall sign the request "not approved" and return it to the<br />
Project Manager. The Project Manager shall ensure that all<br />
effected engineering departments, scheduler, estimator and<br />
originator are given one copy of the rejected request.<br />
5.7.2.3 If acceptable, then<br />
5.8 OBTAIN CLIENT APPROVAL<br />
5.7.2.3.1 the Vice President of Manufacturing shall sign the<br />
request "approved" and return the request to the<br />
Project Manager. The Project Manager shall<br />
ensure that all effected engineering departments,<br />
scheduler, estimator and originator are given one<br />
copy of approved variance requests.<br />
5.7.2.3.2 the Vice President of Manufacturing and the<br />
marketing department shall add fees to the<br />
estimate.<br />
5.8.1 The estimate shall be returned to the Project Manager who shall submit<br />
the contract scope change to the client.<br />
5.8.2 If the client accepts the change, then the Project Manager shall copy the<br />
accepted change order to the Vice President of Manufacturing, originator,<br />
effected engineering departments (who revise their design), estimator<br />
(who revises the project cost projections), scheduler (who revises the<br />
schedule and the EMSR), contract administrator (who revises the<br />
contract) and accounting (who revises the billing).<br />
5.8.3 If the client rejects the change, is unwilling to negotiate, and the change<br />
was requested by the client, then the Project Manager shall copy<br />
notification of the rejected change to the Project Manager of
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Manufacturing, originator, effected engineering departments, estimator<br />
(who revises the project cost projections), scheduler (who revises the<br />
schedule and the EMSR), contract administrator (who revises the<br />
contract) and accounting (who revises the billing). On most contracts, the<br />
costs associated with generating a client requested change order<br />
estimate are chargeable to the client.<br />
5.8.4 If the client rejects the change, is unwilling to negotiate and the change<br />
was initiated by <strong>Ventech</strong>, then the Project Manager shall copy notification<br />
of the rejection to the Vice President of Manufacturing, originator and the<br />
effected engineering departments. The costs associated with generating<br />
a <strong>Ventech</strong> initiated change estimate are not usually chargeable to the<br />
client.<br />
5.8.5 If the client rejects the change and is willing to negotiate, then the Project<br />
Manager and the Vice President of Manufacturing may revise the<br />
estimate and negotiate the change order with the client until a solution is<br />
reached or until the client will no longer negotiate.<br />
5.9 ARCHIVING<br />
5.9.1 The Project Manager's copy of each document relating to change<br />
orders/variances shall be archived in the project file.<br />
ATTACHMENTS<br />
Form 4.3-6.1 Contract Change Order / Variance Estimate<br />
Form 4.3-6.2 Contract Change Notice<br />
Form 4.3-6.3 Contract Scope Change<br />
Form 4.3-6.4 Contract Change Order Detail<br />
6 DOCUMENTATION<br />
Document Location<br />
Contract Change Order / Variance Estimate Project Files<br />
Contract Change Notice Project Files<br />
Contract Scope Change Project Files<br />
Contract Change Order Detail Project Files
VENTECH ENGINEERS, LLC.<br />
PROCEDURE<br />
REVISION:<br />
DESCRIPTION OF REVISION:<br />
DATE REVISED:<br />
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Revision: 2<br />
Approval: Kyle Ray
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