DEPARTMENT OF PUBLIC WORKS: CHANGE ORDER MANAGEMENT

11-E
DEPARTMENT OF PUBLIC WORKS: CHANGE ORDER MANAGEMENT
Problem Identification:
All change orders for design and construction in excess of $10,000 go through a multiple review process that takes excessive time and increases costs to the City. The review for a change order includes a review by the user staff, a review by the Department of Audits, and a review by the Change Order Review Committee, Board of Estimates approval, and amount signatures by four layers of City staff. The threshold has not been increased in at least 20 years.

Recommended Action:
Reconsider the appropriate financial threshold for change order reviews.

Classification:
Cost Savings, Organizational

Functional/Operational Area:
All Departmental Operations, Department of Audits

Estimated Annual Impact:
Cannot be Estimated

Estimated Implementation Costs:
None

Barriers to Implementation:
Existing City policies regarding change order review.

Projected Implementation:
60 days

Next Steps:
Request that the Law Department determine if this is a policy or procedural change or if new legislation is needed.

Analysis:
Change orders are the result of changed or unknown field conditions, user issues changing, shortcomings in the design documents and/or shortcomings in the construction sequencing.

Increasing the change order review threshold would decrease the administrative work time spent reviewing and processing change orders and potentially increase the City’s pool of bidders and companies that now choose not to propose or bid due to the onerous change order process will propose or bid giving the City more competitive proposals and bids.