Construction change management: How to handle change at the project and organizational level

The construction industry is in a state of change. In the past few years, construction companies have dealt with many challenges. Record buyer demand, material and supply shortages and labor difficulties have continued.

Home buyers are looking to undertake projects in more budget-friendly ways. Meanwhile, construction leaders are seeing a need to scale and improve the way they work to keep up with fast-changing markets.

To go against these obstacles, there needs to be an understanding of change management within a construction business. That means being able to adapt and thrive while facing change both at the project level and from a level of company leadership.

Putting both pieces together is an important step in securing long-term success for your construction company.

What is construction change management?

Construction change management is the process of anticipating, reacting to and managing alterations of a construction strategy.  

What is construction project change management?

The most common form of change management happens during project. At the project level, this means being able to identify, document, evaluate and resolve changes based on a project’s scope, schedule, budget and homeowner requirements. This is often a result of unforeseen conditions and delays, change to project scope or failure to incorporate best practices into project management planning.

What is construction company change management?

Change management can also be needed on a larger scale across a construction company’s operations. From a leadership point of view, construction company change management involves ensuring construction projects are completed on time, within budget and to the satisfaction of everyone involved. Construction company change management often requires a flexible and adaptable approach, including a growth mindset.  

Why construction change management helps improve project outcomes

Change management is an essential part of the success of a construction project. It provides a structured, consistent approach to addressing anticipated and unanticipated changes to a construction project plan. This can have a positive effect on project outcomes, including financial performance, the quality of the final product and the ability to close out within an agreed timeline.

Reduces the risk of delays and cost overruns

Change orders can drastically alter a project’s estimated budget. With a firm plan in place, you can use change management to avoid overruns and lengthy project delays.

The key is to have a plan in place to identify changes as early as possible. By documenting, approving and sharing change orders quickly, you can evaluate the impact of changes on the project schedule and budget. That way, if corrective action is needed to absorb cost overruns or lengthen the timeline of scheduled work, you can take that corrective action immediately.

“These days, all my project managers utilize iPads in the field, and when we run into issues, they photo-document it through the Buildertrend home builder app. Then, we can do a change order right on the spot for the client to digitally sign. Buildertrend construction project management software even shows how this change order affects the schedule and adjusts it once approved.” – Matt Risinger, Risinger Build

Improves project transparency for all parties

One area where change management can significantly improve project outcomes is by enhancing communication for all parties involved in a project.

By involving your project team, subcontractors and homeowners in the process – as well as sharing documentation in a central space – everyone is kept updated on project progress. When changes are needed, everyone can provide input and feedback, ensuring changes are implemented without pushback or disputes later on. This helps foster a growth mindset with your internal teams and your clients, which can contribute to customer satisfaction.

“If we aren’t willing to actually try to use the different areas of software, how can we expect our clients to? That’s an area where I really encouraged our team here at Better Choice Homes. … In changing our own mindset about how we do our work, we’re enabling our clients to change their mindset about how they approach a project, too.” – Megan Montoya, Better Choice Homes

Minimizes the impact of changes on project quality

Sometimes change orders enter a project with little warning. Design changes, changes in building codes or regulations and scope creep – where a project’s must-have list expands over time – can derail even the best-laid plans of a project manager.

When costly changes are impacting both project budget and timeline, rushed work can happen. Materials on hand may be subbed in for preferred ones, and long-term project quality can suffer. An effective change management process can help allow for contingencies in this area. That way, the quality of your construction work – and your reputation as a builder or remodeler – won’t suffer just because you were trying to stick to an original deadline.

Enhances project control, monitoring and evaluation

A change management plan helps to standardize processes around project monitoring and evaluation. By having a clear and consistent process for evaluating changes, project managers can ensure all proposals are considered based on how they are affecting schedule, budget, subcontractor availability and overall project goals.

By improving project control, you can also help ensure that every person involved in a project understands the ripple effect any given change may have on project scope. For example, a new construction project may originally have planned for quartz kitchen countertops. As the construction phase gets underway, the homeowner may request a change order for a substitute material, like granite. Given supply chain disruptions, a granite source and delivery may delay backsplash, sink and faucet installation, plus electrical, plumbing and finishing work.

A change management plan can help educate all parties on how this request can alter the overall project long-term.

Mitigates risks and disputes

Construction projects always carry some risk. Unforeseen conditions, such as existing structural issues in a remodeling project or environmental factors in a new build, can quickly alter a project’s scope, budget and timeline. When these risks come up mid-project, there’s a possibility of dispute, especially if the original bid for construction work didn’t include an accurate contingency estimate.

Having a change management plan in place can help lessen the impact of these unforeseen conditions. For example, if asbestos is found during a remodeling project, a change management plan can help ensure steps are taken to identify changes to cost and timeline, while also factoring for construction worker and homeowner safety during the removal process.

How to improve change management for your construction projects

The process of change rarely goes smoothly. That’s why it’s important to have a clear process outlined for tackling change management as it’s needed. Here are some practical tips to keep in mind when defining your own methods of handling change.

Establish clear channels of communication with clients and subcontractors

If a project’s direction changes, the last thing a builder wants is to play telephone tag while communicating changes to every subcontractor or client contact. It’s all too easy for details to get lost, mixed up or miscommunicated that way.

Instead, store files in a single, sharable place within your construction documentation software, clearly noting latest versions to keep everyone on the same page even as project scope changes. Using construction management software for communication, you can centralize messaging as well – including all emails, job-specific comments, Daily Logs and phone notifications.

Ensure you have tools in place to handle change orders

A clear change order process should outline the steps for submitting, evaluating and approving change requests. Many change orders are proposed with little warning, and they can have lasting ripple effects on the timeline – and budget – of a project.

Minimize these risks by using change order management software. By automating workflows, you can reduce the risk of errors and delays related to miscommunication or poorly documented change requests. With integrated scheduling features, you easily make adjustments based on these changes, allowing you to maintain timelines.

Create templates to help quickly manage change

Construction change order software can also be used to adapt to change faster. Using pre-built change order templates, you can standardize the format for documenting change requests.

Templates can include the information that matters most to your unique construction business. Generally, they include a description of the change, the reason behind it, any cost and timeline implications, and a recommendation for putting the change into action. This template formatting is a best practice to reduce errors, create a digital paper trail of the decision-making process and incorporate changes faster as they come up.

Evaluate consistently and often

It’s important to evaluate your change management process consistently and often to ensure its effectiveness. This can help you identify potential risks or issues that tend to come up often in your projects, enabling you to take a more proactive approach to avoid repeat requests in the future.

Construction company software can be used to evaluate a construction company’s approach to managing change by providing data and analytics on project performance. This can include metrics like the number of change order requests received, the time it took to approve requests and the overall costs to make them.

The benefits of change management for construction companies

Change is rarely met without pushback. It’s often viewed as complicated, unnecessary and disruptive. With the growing list of challenges facing the construction industry, it’s easy to shy away from rocking the boat. But change is worth the work.

The truth is, almost every construction business has an opportunity to improve how their business functions. With a change management mindset, your company is better prepared when presented with a new challenge.

Successful change management helps construction companies:

Adapt to new challenges and market conditions

Construction project managers can use an established change management process to manage expectations throughout a construction process. For example, if requests are made for materials that are hard to source based on market supply chain disruptions, project managers can relay the implications of project delays or added cost for rush deliveries with both subcontractors and homeowners. 

Reduce financial risk associated with challenges

Project managers accurately estimate and track project costs by integrating change order best practices into construction budgeting software. This helps lower financial risk of a project running overbudget or of raising disputes as the scope changes.

Outperform competitors and secure new business

Homeowners want to contract with companies that can deliver projects on time, within budget and at a high quality of work. The ability for a project manager to accept, process and take action on change orders has a direct impact on whether your construction company is able to deliver on these client demands.

Maintain profits

A change order system can provide project managers with valuable data and insights into the cost and time effects of change. Even if change orders don’t impact these areas, it helps you create a strong referral record when looking back at how a project changed from start to finish. When combined with job costing features in construction software, this can be a helpful tool for evaluating overall profitability on projects.

“Recently, I was asked by a young contractor about my biggest failure when I was new to the industry. Without hesitation, I answered ‘change orders.’ I lost about $40,000 on a project trying to avoid change orders, which was eight months’ pay for me at the time. Now, we talk about change orders at the contract signing and we use them even if it doesn’t affect the budget or schedule.” – Matt Risinger, Risinger Build

How to drive organizational change

A framework for an organizational change plan includes four key components.

1. Research

All change must be purposeful. Especially in a tight labor market, you don’t want to start changing any processes without first knowing the reason why it’s necessary. The consequences could lead to even higher employee turnover.

Start by doing your research.

• Comb through your financial statements
• Talk to your employees, suppliers, subcontractors and clients
• Examine industry trends
• Take note of any gaps you find, then dig into them deeper
• When possible, tie these gaps to tangible numbers

If a job is over budget, zero in on the added expense. If a job is less profitable than expected, make note of the difference in lost revenue.

While money isn’t the only reason to launch organizational change, it’s a factor to consider. It can be easier to get buy-in from stakeholders across your company if you have a number you can point back to as the reason driving the need for change.

2. Action

Effective change takes planning. Regardless of what changes you’re hoping to make, involve as many stakeholders as you can from across your construction company.

Consider including:

• Executives
• Project managers
• Finance staff
• Safety managers
• Construction workers
• Procurement specialists
• Estimators

Different points of view can help generate more problem-solving ideas. With a variety of roles and responsibilities involved, you can identify ripple effects any change might create.

During this step, assign responsibilities and timelines. Even if milestones are flexible, it’s important to set expectations and next points to keep change as an action, not an idea.

When you include your team as a part of the action planning process, you’re supporting a growth mindset. This is a strong foundation for positive company culture. Plus, any future changes may be met with less opposition.

3. Communicate

Often, the real resistance to change can be chalked up to fear.

It’s not uncommon for employees to react to news of change with fear of layoffs or reductions in resources. This is especially true if the proposed change involves a major process improvement initiative.

Acknowledge those fears, but head them off if you can. Lay out the reason for the change and have a measurable, realistic goal already identified. Be vocal about how improvements will benefit your workforce. Welcome questions from your team and address them quickly. This helps create an environment of trust, eliminates confusion and prevents any rumors from slowing your progress.

This is not a one-and-done step. Make a plan to communicate often with your staff. Keep them updated on the status of your goal, roadblocks you’ve met and what’s next.

Don’t forget to celebrate wins when you have them – building morale throughout the process will help show your team members that their efforts are contributing to the goal you’ve set.

4. Adjust

The only constant is change. As you make changes throughout your business, you may discover your plan needs adjustments along the way.

What’s important to remember is that it’s OK to pivot. The time and energy you’ve put into steps 1-3 should not mean you put a plan into place if it isn’t working.

Continue to collect the data points you’ve identified during your research. If you’re not seeing an improvement, try something else. Think of it as another change order for your business – sometimes a pain to work through in the moment but worth it in the end.

Take control of change with Buildertrend’s construction management software

One of the quickest ways to improve workflows is through an industry-specific software solution. Construction software is designed to meet needs like reducing overhead expenses and improving the way tasks are completed. Getting started with the tools takes time, and the work doesn’t stop after software implementation.

To get the most out of your investment, make sure you’re understanding what features are available to you. Many companies, knowingly or not, only use a small portion of the tools available to them. This could mean you’re missing out on more opportunities to streamline and improve operations. Some key features that can specifically help you build a strong change management process include change order management, communication, customer management portals and integrated budgeting tools.

Buildertrend is dedicated to continually adding value to our software. That means there’s always something new to learn. Use any number of our ongoing education efforts and keep an eye out for opportunities you can take back to your own operations.

1. Buildertrend Learning Academy: These free online courses offer our customers an easy way to onboard our software solutions. Each course includes different tips on what you’ll want to tackle first and quick-win features to implement. Plus, it’s self-guided, meaning you can complete sessions as they fit in your schedule.

2. Webinars and trainings: Since we’re enhancing our platform all the time, we know it’s important to talk through features and processes on an ongoing basis. That’s why we offer a continuous training and webinar calendar, where our experts dive deep into specific topics and improvements. Be sure to join webinars specific to templates, advanced project management and communication to improve your change management processes.

3. Onsite Consulting: Every business is different, and every business is busy. That’s why we’ve developed an expert consulting team that can come to you when and where you need us. With this customized approach, we work with your team to tailor your software use to your unique business needs.

4. Buildertrend University: Sometimes, it works better to learn alongside your peers. Buildertrend University is a two-day conference for our customers at our headquarters in Omaha, Nebraska. With conference dates throughout the year, we offer an opportunity for you to learn and network with companies experiencing the same challenges as you. Combine these learnings with one-on-one coaching sessions, and you’ll be a super user of our software in no time.

Is your construction business ready for change?

As you look for opportunities to strengthen your business and adapt to new challenges in the industry, keep this information in mind. Even after you’ve put change management plans into action, don’t forget to continue learning and pushing for improvements.

If you’re ready to start making your own plans for change, but you’re not sure where to begin, start with Buildertrend. Our solutions are built to drive powerful results for construction companies like yours. Schedule a demo today to learn more.

Construction change management FAQs

Here are some answers to common question about construction change management.