JLL Change Order process
- 1. Jones Lang LaSalle | Real Value in a Changing World 1 JLL REAL VALUE METHOD: CHANGE ORDERS JLL’S VALUE PROPOSITION FOR CHANGE ORDERS Given the increasing technical and management complexities of building development projects, it has become clear that delivering consistent expertise in a manner that is transparent and measurable is a major challenge. The JLL Real Value Method brings an updated value proposition to the change order management process which reflects forward thinking and approaches that have become more common in product delivery in high-skilled, knowledge-based industries including aerospace (at NASA), healthcare, and real estate project management. These methods—especially those outlined by Atul Gawande, a Harvard Medical School surgeon and MacArthur Foundation “genius prize” recipient, in his acclaimed text Checklist Manifesto—have been adapted to the best practices, experience and knowledge of JLL to produce a guide for project managers on development projects with high change order volume. The JLL method promises the following value proposition: Offer demonstrable value (quantified value and/or tangible value) Present audit-style review, explanations, and clarity that stand on their own Understand source of change order and apply knowledge to minimize future changes Calculate and confirm rates, hours, and material billings Give client confidence in the change order review process and JLL interpretation of changes Expedite change order review with use of checklists and automated calculation templates STEP 1: VENDOR CONTRACT KNOWLEDGE Before reviewing change orders for a vendor it is important to familiarize yourself with the key terms in the contract documentation, particularly those terms that relate to changes, schedule, and scope. The traditional review process involves simply becoming knowledgeable of the terms in this documentation. The problem with the traditional method is that after review tens of change orders over several months, the recall of specific detailed language often becomes hazy. Even frequent reference of the contract documentation leaves a high potential for missing key language that could be useful in responding to change orders. The JLL Real Value method, however, follows a check-list routine whereby the project managers prepare a checklist of the most important contractual terms for a vendor typically involved in change order processing. This check-list is categorized by terms relating to (1) changes, (2) schedule, and (3) scope. The likely contract documents to source terms from include: the CM agreement, the 3A pages, Form 36 pages, specifications, and closing notes. Noting the source and article number/letter of the term in the checklist is necessary. This checklist typically should not be more than 3 pages total. Once a project manager has put together a summary check-list of terms for a vendor, that sheet should be used to review each change order. Any pertinent terms informing the decision on a change order should be cited in a sheet attached to the final reviewed change order with Key References. Terms can quickly be copied and pasted from the checklist to this final review sheet.
- 2. Jones Lang LaSalle | Real Value in a Changing World 2 BENEFITS Less likelihood of project manager over-looking or forgetting relevant contract knowledge when reviewing a change order. The client has tangible documentation that demonstrates that project managers have in fact carefully reviewed and considered specific contract terms. Final change order decisions appear less arbitrary It is much easier for project managers to negotiate change orders when they can immediately cite the contract language that informed their decision-making process. Figure 1: Example of COR review checklist STEP 2: COMPLETE THE CHANGE ORDER REVIEW SHEET Every change order should have a change order review sheet with audit-style findings, a short description and explanation of the rationale behind the decision. The Change Order Review Sheet (1 page max) should have the following sections: Change Order proposed cost vs. JLL recommended cost after review Notes:
- 3. Jones Lang LaSalle | Real Value in a Changing World 3 o A one-sentence opinion on JLL recommended value for the change order; o A one-sentence description of the change order request; o 2-4 sentence description of the rationale behind the decision-making process, citing the guiding contractual sources or highlighting any discrepancies. o A one-sentence note on whether the rates and calculations are correct (and citing any errors if they exist). Key References—Copy and pasted abridged terms from the contract terms checklist OR the actual contract documents if the guiding contract source was atypical and not listed in the checklist. Sign-off—signature of project manager approving the change order review Figure 2: Example of Change Order Review Sheet
- 4. Jones Lang LaSalle | Real Value in a Changing World 4 STEP 3: CREATE AN AUTOMATED RATES AND CALCULATION SPREADSHEET FOR A VENDOR To further expedite the review process and reduce potential calculation errors, prepare a spreadsheet with correct rates which can be used to quickly check calculations for change orders. Attach this document to the Change Order Review Sheet to back up findings. Additionally, daily construction reports or other project documents used to review the number of labor hours and the change proposal request should be attached as back-up documentation to the change proposal. Figure 3: Change Proposal Calculation Template In the end, the Change Order Review Sheet, the Calculation Template, and other supporting documentation are attached to the change order document as tangible back-up documentation and support for the decision.