1 Identify change events

The first step to manage changes to a construction contract with cost plus pricing is to identify the events that trigger a change in the scope, schedule, or quality of the work. These can be internal or external factors, such as design errors, client requests, site conditions, regulatory requirements, or unforeseen circumstances. You should have a clear and consistent process for documenting and reporting these events, and establish the roles and responsibilities of each party involved. You should also have a mechanism for evaluating the impact of each change event on the cost and time of the project, and for obtaining the necessary approvals and authorizations.

2 Negotiate change orders

The second step to manage changes to a construction contract with cost plus pricing is to negotiate the terms and conditions of each change order. A change order is a formal document that modifies the original contract and specifies the scope, cost, and schedule of the change. You should have a transparent and collaborative approach for negotiating change orders, and ensure that both parties agree on the basis and method of pricing, the allocation of risks and liabilities, and the dispute resolution procedures. You should also keep track of the cumulative effect of all change orders on the overall budget and timeline of the project, and adjust them accordingly.

3 Implement change control

The third step to manage changes to a construction contract with cost plus pricing is to implement effective change control measures. Change control is the process of ensuring that all changes are properly executed, monitored, and verified, and that they comply with the quality standards and specifications of the project. You should have a robust system for managing and communicating the change orders, and for coordinating the work of all subcontractors and suppliers involved. You should also have a regular and accurate method for measuring and reporting the actual costs and progress of the project, and for comparing them with the estimated and planned values.

4 Manage claims and disputes

The fourth step to manage changes to a construction contract with cost plus pricing is to manage any claims and disputes that may arise from the changes. Claims are requests for additional compensation or time extension due to unforeseen or unavoidable events that affect the performance of the contract. Disputes are disagreements or conflicts that occur when one party rejects or challenges a claim or a change order. You should have a proactive and constructive strategy for resolving claims and disputes, and avoid escalating them to litigation or arbitration. You should also document and preserve all the evidence and records related to the changes, and seek legal advice when necessary.

6 Benefits and drawbacks

The sixth step to manage changes to a construction contract with cost plus pricing is to understand the benefits and drawbacks of this type of contract. On the positive side, it can allow for more flexibility and innovation, and reduce the risk of underestimating or overestimating the costs of the project. It can also foster a cooperative and trusting relationship between the contractor and the client, and encourage value engineering and quality improvement. On the negative side, it can increase the administrative and managerial burden, and create uncertainty and ambiguity about the final cost and duration of the project. It can also create incentives for inefficiency and waste, and increase the potential for disputes and claims. Therefore, you should weigh the pros and cons of this type of contract, and choose it wisely and carefully.