Construction Change: Likelihood, Severity, and Impact on Productivity

Abstract

Change on construction projects is a regular occurrence and impedes project success for both the owner and the contractor. Many papers have been written about change, but few document its prevalence, severity, and impact on labor productivity in a reliable, quantitative way. The purpose of this paper is to help project owners, contractors, and other parties understand and benchmark their projects against a large set of construction projects. Data from two independent research studies are analyzed to quantify the impact of change on project cost, schedule, and productivity. The result is a set of curves and reference points that contrast the amount and likelihood of change with the amount and nature of its impact. One major finding of this study is that the ratio of final project costs to estimated project costs is substantially higher than conventionally thought. Previous reports hold that two-thirds of all projects should have fewer than 15% change. The equivalent number found in this study was 19%. Approximately 40% of all projects in this study experienced more than 10% change. Many industry observers believe that cumulative impact is a rare condition and is likely to occur when change exceeds 10%. On the basis of these findings, cumulative impact occurs more frequently than generally thought. Two other findings concern the quantitative rates at which productivity and the predictability of productivity deteriorate with increasing amounts of change. Productivity exceeded planned rates on 60% of the projects when change was limited to 5%, but it never reached planned rates once change exceeded 20%. Minimizing change is thus important for realizing good productivity performance. Change averaged 8% on these projects. Findings presented in this paper can be used to forecast prospectively the impacts that change has on cost, schedule, and productivity. They can also help the parties retroactively assess the impact of change when looking for guidance to settle disputes.