Change Order Analysis

Evaluating the total percentage of project change orders in comparison to the original contract value is a useful exercise. It is helpful in generating revenue projections, forecasting, and reviewing project manager performance.

For example, if you consistently average 10% in change orders over the course of several years, and you have $10 million in open contracts, you can estimate with reasonable confidence that your revenue will be closer to $11 million upon completion.

Second example. If your firm has four project managers and three of them average 12% in change orders on projects they manage. Suppose the fourth project manager averages 5% change orders. This could be a sign that your company is missing potential revenue and you may want to consider training, coaching or mentoring of the fourth project manager.

For change order analysis I use a spreadsheet similar to the example below. You can add columns for project manager and year of completion so you can sort and filter by year and by project manager.

All figures listed are fictional and shown for example purposes only.

Job #

Contract Value

Change Orders

CO %

18-01 $100,000 $16,000 16%
18-02 $105,000 $9,000 9%
18-03 $700,000 $210,000 30%
18-04 $600,000 $55,000 9%
18-05 $175,000 $10,000 6%
18-06 $425,000 $24,000 6%
18-07 $30,000 $5,000 17%
18-08 $25,000 $40,000 160%
18-09 $145,000 $45,000 31%
18-10 $54,000 $2,500 5%
18-11 $130,000 $15,000 12%
18-12 $10,000 $3,400 34%
18-13 $150,000 $25,000 17%
18-14 $70,000 $12,000 17%
18-15 $35,000 $5,000 14%
18-16 $490,000 $30,000 6%
18-17 $315,000 $11,000 3%
18-18 $1,975,000 $65,000 3%
18-19 $135,000 $10,000 7%
18-20 $115,000 $10,000 9%
18-21 $40,000 $21,000 53%
18-22 $350,000 $40,000 11%
18-23 $170,000 $10,000 6%
18-24 $140,000 $9,000 6%

TOTALS

 $6,484,000

 $682,900

11%

See my notes on the Change Order Request Process for further reading on change orders.

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