Change Management

Chapter 25
CHANGE MANAGEMENT
PRACTICAL GUIDE
Chicago Management Training Institute LLC. Email: [email protected] www.chicagomti.com. © 2007 All rights reserved
Learning Objectives
 Understand basic change management concepts.
 Identify steps in the change management process.
 Conduct a change management review process.
 Implement practical steps in the change management process.
 Understand change management implementation and its impact on the budget and
schedule.
Change management: The TCM definition
The processes Include the
Defined as
The process of managing any change used to •Identification
approve or disapprove to
•Definition
•The scope of work and/or any deviation
•Categorization
•Performance trend, or
•Recording
•Change to an approved or
•Tracking
•Baseline project control plan.
•Analyzing
•Disposition
•Reporting of deviations, trends, and

changes
Generally Accepted Best Practice
 Every Contract requires to implement detailed project change management procedure
within a specific time frame
 Typically 30 days from notice to proceed.
 On larger EPC projects, this may take the form of a job bulletin, or coordination procedure
or be detailed in the Project Execution Plan that is reviewed and approved by both parties.
( Contractor & Client)
 Should be accomplished as quickly as possible on all projects.
 The contractor needs to follow a practical guide to managing both client and internal
change.
Initiating a Change (Project Variance)
• Anyone, Either the contractor or an authorized representative, the client, may initiate a change.
• Without formal contractor project manager and client approval, Neither the contractor nor the
client’s change requests are to be implemented
• Each proposed project variance is to be assigned a Project Variance Notice (PVN) number
• Project variance is logged by the
• Project Controls Manager (PCM) or
• Change Control Manager (CCM).
Project Variance Notice (PVN)
 Are initiated by the contractor are forwarded to the functional manager
 They do preliminary screening and the identification of all affected disciplines.
 Impact analysis may be done to see the impact on other project constraints
 A complete PVN, including all impacts, can be provided to the contractor project
manager.
 The functional managers are
 Project engineer / Procurement manager,/ Construction manager
Project Variance Notice (PVN)/Change Request
 When a team member identifies a potential variance or is requested to make a
change by the client
 So The team member prepares the PVN Change Request/Change Order form
and
 Submits it to project controls for numbering and input into the PVN register
 The PVN is passed to the functional manager who identifies all affected
disciplines and routes it accordingly.
 The form is a summary-level document and
 Should be supplemented with any additional information needed to understand

and justify the variance.
Project Variance Notice (PVN)/Change Request
As a minimum, the form needs to include
Section 1
Title: Use a concise title to reflect the nature of change.
Section 2
Change Information
The PCM/CCM
Section 3
Approvals
Section 4
Distribution
PVN Review Meeting
 The contractor project manager will conduct periodic PVN review meetings
 The purpose of the meeting is to keep the project team fully informed of the
status of each new and pending variance.
 Types of meetings are
 Periodic Internal Review
 Special Internal Review
 Client Review
PVN Review Meeting: Periodic Internal Review
 Usually weekly meeting
 Will be coordinated and scheduled by the PCM/CCM or project controls

person.
 The Attendees are the
 Contractor project manager,
 Functional managers
 PCM, and
 Other selected project team members.
PVN Review Meeting: Periodic Internal Review
 The purposes of these meetings are to
 Decide the disposition of new variances
 Ensure all affected members of the team are fully informed of the impact of
each variance, and
 To review the status of pending variances.
 The PCM/CCM or project controls person is to prepare an agenda listing the

subject variances.
 Each review team member is to be provided a copy of each new PVN and a
variance log prior to the meeting.
PVN Review Meeting: Special Internal Review
 The contractor project manager will schedule a special review,
 Having the same format as the periodic meeting
 For any variance having a significant impact that cannot wait for the periodic
meeting.
PVN Review Meeting: Client Review
 When required to support the schedule, the contractor project manager will
meet with the client as soon as possible to discuss specific changes.
 Usually weekly,
 Is to be coordinated and scheduled by the contractor project manager.
 The attendees are the contractor project manager, project engineer, PCM,
CCM/project controls person, and selected client personnel.
PVN Review Meeting: Client Review
 Its purpose is to present new change requests and review the status of pending
changes.
 The PCM will prepare an agenda listing the subject variances and
 Each review team member will be provided a copy of each new change request
and a variance log prior to the meeting.
CHANGE CONTROL
PROCEDURE
Client Change Procedure
The following procedure is recommended for managing client change in the
absence of a contractual provision to the contrary:
•Change Request
•Change Proposal
Change Request
 Any variance proposed by the client, and any contractor initiated
 The contractor project manager believes should be a change order, is to be

processed into a PVN and change request,
 If agreed to by the client project manager within three (3) working days of
receipt by the contractor project manager.
 The contractor will prepare an order-of-magnitude analysis of the scope of the

change and its effect on cost and schedule.
 The cost to prepare a change proposal is included, should the client request
one.
Client Change Procedure: Change Request
 Should the contractor be unable for any reason to complete the change request
within three days, the contractor project manager will advise the client, and
reach an agreement with the client on a revised submission date.
 The client will have a reasonable period to approve or reject any change
request.
 The specific amount of time will be dependent on the criticality of the impact to
the schedule and/or the contractual requirements.
Client Change Procedure: Change Request
The client may respond as follows:
Reject the proposed change request―The contractor will process the rejected
change in accordance with the internal change procedure.
Approve the proposed change request immediately as a change order.
Direct that a more detailed analysis of the change is made and that it be resubmitted
as a change proposal.
Change Proposal
• Request by the client,
• The contractor will prepare a change proposal, including any detailed analysis of the
scope, price, schedule impact, or other information of the change that the client may
direct.
 The client shall bear the cost of preparing any change proposal, regardless of the
disposition of the change.
 The client shall have a reasonable period of time, consistent with the criticality of the
schedule, to approve or reject any change proposal.
Client Change Procedure: Change Proposal
The client may respond as follows:
Reject the change proposal.
Approve the change proposal as a change order.
Change Order
• The client approves the change request or a change proposal as a change
order
• The PCM/CCM or project controls person will complete the necessary forms
• He obtains contractor and client authorization signatures as specified in the

contract or in the project-specific change management procedure
• If the client provides verbal approval, or if there is any question regarding the
approval authority of the client representative providing approval, the
contractor project manager is to prepare an acknowledgment in writing to the
client’s “official” representative with copies to the PCM/CCM or project controls
person.
CONTRACTOR INTERNAL
CHANGE PROCEDURE
Contractor Internal Change Procedure
 Any change to the project execution plan, scope, cost, work hours, or schedule
during the execution
 The contractor project manager views it as not being a change order to be sent to
the client.
 This procedure is not dependent upon contract type and should be followed for all
projects
 The procedures are
 Project Manager’s Evaluation
 Reject the PVN
 Approve the PVN

Project Manager’s Evaluation
 The contractor project manager may determine that a PVN is not a candidate
for a change order to the client.
 The contractor project manager may either approve or reject the PVN or
indicate that it is an internal change.
Reject the PVN
If the contractor project manager determines that the change in scope should not
be implemented, the contractor project manager will reject the PVN accordingly.
The contractor project manager will resolve the issue that generated the variance
with the variance originator, and
The PCM/CCM or project controls person will indicate that it has been rejected.
Approve the PVN
If the contractor project manager gives the approval to implement the variance,
he/she will mark the PVN as an approved internal change and distribute copies to
the project team.
This resolution is an authorization for the project team to proceed with the work
and/or include any costs, or schedule impacts in the forecast.
It does not increase the total budget of the project.
If the contractor project manager can provide funding from a management
reserve, other project provision or contingency, or via a budget shift, the budget for
the variance can be increased
DISPUTED CHANGE
Disputed Change
 The client generally reserves the right to make any change to the project.
 However, the client may disagree with the contractor on
 What constitutes a change, or
 Equitable compensation for time or
 Cost to make the change
Disputed Change
In this case, the contractor project manager must perform the following:
Consult with the contract and legal departments to ensure the project follows the
proper course of action.
Explicitly follow the contractual change procedure and associated change

management protocols.
Dispute the change in writing.
Receive written instruction from the client defining the course of action.
Maintain separate and complete records of the time spent; work hours expended,
costs incurred, and any schedule impacts for each disputed change.
Disputed Change
In this case, the contractor project manager must perform the following:
This is particularly important if the expectation is that the disputed change could
result in significant effort, or
If the business may be exposed to risk as a result of contract requirements by

executing the disputed scope.
The project controls person will assist in establishing the best method to capture
the costs and schedule impacts for each disputed change.
Disputed Change
• In this case, the contractor project manager must perform the following:
• When separate cost codes can be established, they must be recorded on every
record of expenditure, including
• Time sheets
 Purchase orders, or
 Subcontract change notices
CHANGE REGISTER
Change Register
The contractor will maintain a change register containing
All PVNs,
Change requests;
Change proposals,
Pending change orders,
Change orders,
Disputed changes, and
Cancelled changes.
Change Register
 Logs will include the
 PVN number,
 The change request
 Change proposal or change order number (if applicable)
 The proposed or approved value, and
 Remarks describing the current status of the change, the date approved or
rejected, and the impact on the scheduled completion date.
 The contractor will issue the change register to the client as specified in the
contract.
PENDING CHANGE ORDER
Pending Change Order
 Each pending change order is to be maintained in a change log.
 Pending Change order is the client directs work to proceed in advance of

written change order approval,
 The cost of the pending change must be considered in the forecast, but not in
the current budget nor in the approved revenue.
 If the detailed cost distribution for the change is known, it should be tracked
separately, in order to facilitate trending and forecasting.
 When approved by the client, the current budget and revenue is to be updated.
CHANGE ORDER
IDENTIFICATION
Change Order Identification
 Identify each change order consecutively, using a three-character numeric
block.
 Note that more than one variance may be included in a single change order.
 If there is a client change order numbering convention, it should be cross-

referenced to the contractor character number system.
Change Order Identification : Configuration Management
• Publishing the latest version details of scope, schedule, cost, and other project
management components
• Version control system for the product of the project
• Focuses on the specifications of both the deliverables and the processes.
• Focused on identifying, documenting, and controlling changes to the project

and the project baselines.
Change Order Identification: Configuration Management
It Defines the
•Naming convention
•Version Control System
•Document Storage & Retrieval System
•How the changes to the documentation managed
•Organizational tool used
Change Order Identification : Configuration Management
Change Order Identification: Configuration Management
Activities are
•Configuration identification
•Configuration Status Accounting
•Configuration verification
•Configuration Audit

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Chapter 25

 Identify steps in the change management process.

 Conduct a change management review process.

 Implement practical steps in the change management process.

•Reporting of deviations, trends, and

 Typically 30 days from notice to proceed.

 Should be accomplished as quickly as possible on all projects.

• Project variance is logged by the

• Project Controls Manager (PCM) or

• Change Control Manager (CCM).

 They do preliminary screening and the identification of all affected disciplines.

 The functional managers are

 Project engineer / Procurement manager,/ Construction manager

 The form is a summary-level document and

 Should be supplemented with any additional information needed to understand

Title: Use a concise title to reflect the nature of change.

 Types of meetings are

 Periodic Internal Review

 Special Internal Review

 Will be coordinated and scheduled by the PCM/CCM or project controls

 The Attendees are the

 Contractor project manager,

 Other selected project team members.

 Decide the disposition of new variances

 To review the status of pending variances.

 The PCM/CCM or project controls person is to prepare an agenda listing the

 Having the same format as the periodic meeting

 Is to be coordinated and scheduled by the contractor project manager.

 The contractor project manager believes should be a change order, is to be

 The contractor will prepare an order-of-magnitude analysis of the scope of the

Approve the proposed change request immediately as a change order.

Reject the change proposal.

Approve the change proposal as a change order.

• He obtains contractor and client authorization signatures as specified in the

 The procedures are

 Project Manager’s Evaluation

 Reject the PVN

 Approve the PVN

It does not increase the total budget of the project.

 However, the client may disagree with the contractor on

 What constitutes a change, or

 Equitable compensation for time or

 Cost to make the change

Explicitly follow the contractual change procedure and associated change

Dispute the change in writing.

If the business may be exposed to risk as a result of contract requirements by

 Subcontract change notices

Pending change orders,

Disputed changes, and

 The change request

 Change proposal or change order number (if applicable)

 The proposed or approved value, and

 Pending Change order is the client directs work to proceed in advance of

 If there is a client change order numbering convention, it should be cross-

• Version control system for the product of the project

• Focuses on the specifications of both the deliverables and the processes.

• Focused on identifying, documenting, and controlling changes to the project

•Version Control System

•Document Storage & Retrieval System

•How the changes to the documentation managed