Question

When managing change orders, why is it necessary to evaluate the impact on the &#x27;critical path&#x27; rather than just the construction budget?

Accepted Answer

The critical path is the sequence of project tasks that determines the shortest possible time to complete a project. If any task on this path is delayed, the entire project completion date is pushed back. When a change order—a formal document outlining a modification to the original scope of work—is introduced, focusing solely on the construction budget ignores time-related costs. A change order that adds even a small task to a critical path activity will cause an equal delay to the final delivery of the building. This delay triggers liquidated damages, which are pre-determined financial penalties for failing to finish on time, and increases general conditions costs, such as the daily expense of renting equipment, paying for site supervision, and maintaining temporary utilities. For example, if a change order adds a week of work to the foundation phase, which is on the critical path, the contractor cannot begin the framing phase for an extra week. Even if the actual work costs zero additional dollars, the project still loses a week of time, resulting in higher overhead expenses for the entire project team. By evaluating the impact on the critical path, project managers prevent hidden costs and ensure that scheduling adjustments are accounted for in the contract price, maintaining both the project timeline and the total financial health of the venture.

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When managing change orders, why is it necessary to evaluate the impact on the 'critical path' rather than just the construction budget?