DOI

10.5703/1288284317747

Abstract

This study analyzed the historical trends in change orders (COs) associated with the Indiana Department of Transportation (INDOT) highway contracts. It also investigated correlations between COs and base factors (district, project type, contract type, award amount, geographical area (rural vs. urban)), and sought to understand the effect of the root causes but not to predict CO based on root causes. Unlike the base factors, the root causes are unknown prior to construction. The study developed models that forecasted CO characteristics—CO likelihood, CO frequency (count), and CO severity (magnitude) and CO impacts (cost overrun and schedule delay). To address these research questions, the study used INDOT’s 2010–2020 highway contract data involving approximately 5,000 contracts worth just over $10B. The CO trends and patterns (including root causes) were analyzed for five project types at the six highway administrative districts in Indiana. The study identified the base factors that generally have higher propensity to experience more frequent and severe COs and analyzed CO impacts on cost and schedule overruns.

The results indicated that 65% of the contracts had at least 1 CO; 30% had at least 5 COs; 10% had at least 12 COs; and 4% had over 20 COs. The study also analyzed the CO impacts by the dominant root causes: changed conditions (9,544 COs, $266M); errors and omissions (6,507 COs, $139M); scope changes (2,371 COs, $109M), and final quantity adjustments (cost adjustment) ($193M). The top five root causes of the COs in each district were identified and good practices and guidelines to help mitigate the incidence and severity of change orders were developed.

The study’s diagnostic analysis and prediction models are useful in project planning and management because they (a) help identify the factors that impact CO likelihood, count, and monetary severity, and (b) can enable more reliable forecasting of project cost and schedule. Overall, the study results can help INDOT achieve its strategic goal of “on-time and on-budget project delivery.” The effective management of change orders aligns with specific provisions that recur across previous and current federal legislation (the Infrastructure Investment and Jobs Act), which emphasize efficient project management and adherence to budgets and timelines in infrastructure development.

Report Number

FHWA/IN/JTRP-2024/14

Keywords

change orders, cost overruns, root cause, time delay

SPR Number

4710

Performing Organization

Joint Transportation Research Program

Publisher Place

West Lafayette, Indiana

Date of this Version

2024

Additional Files
SPR-4710 Technical Summary.pdf (559 kB)
Technical Summary
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