Mastering Change Orders in Construction Projects: Boost Profitability and Control Costs with NB Projects

In the fast-paced world of construction, even small alterations can have significant cost implications. One of the most overlooked yet critical aspects of construction project management is change orders in construction projects. Similar to the “tail-enders” in a cricket match, players who rarely make headlines but can influence the outcome, change orders are often underestimated in terms of their impact on project budgets and timelines.

In the construction industry, implementing an ERP for construction projects to efficiently track and manage change orders can mean the difference between a profitable project and one that erodes resources.

What Are Change Orders in Construction Projects?

A change order is an official amendment to the original construction contract. It reflects any changes in scope, materials, design, schedule, or resources that were not part of the original plan. While they may seem minor individually, collectively, change orders can account for 5-15% of the total project cost. Common types of change orders include:

• Alterations in Bill of Quantities (BoQ): Adjustments to the quantity or type of materials required.
• Design or Scope Changes: Modifications requested by clients or stakeholders.
• Resource Reallocation: Changes in labor assignments or subcontractor responsibilities.
• Rework and Corrections: Fixing issues discovered during construction, often due to unforeseen conditions.

Failing to manage these change orders proactively can result in budget overruns, schedule delays, and strained vendor relationships.

Why Managing Change Orders Is Crucial

Construction projects involve multiple moving parts like design teams, procurement, contractors, and clients. Change orders, if left unmanaged, can create a domino effect that impacts:

• Project Costs: Untracked changes inflate budgets unexpectedly.
• Project Schedule: Delays from last-minute changes affect delivery timelines.
• Vendor Coordination: Without proper tracking, vendors may charge more or fail to meet revised requirements.
• Profitability: Small cumulative costs from multiple change orders can erode your margins.

Effectively managing change orders ensures you maintain control over both finances and timelines, safeguarding your project’s profitability.

Common Challenges with Change Orders

Even experienced construction project managers face hurdles when dealing with change orders:

1. Lack of Visibility: Many organizations rely on manual tracking, spreadsheets, or fragmented systems, making it difficult to get a complete view of all changes.
2. Delayed Approvals: Slow decision-making can cause project bottlenecks.
3. Inconsistent Vendor Quotes: Without proper comparison, you may overpay for materials or services affected by change orders.
4. Limited Integration: Change orders often exist in isolation, disconnected from project budgets or ERP systems, leading to inaccurate financial forecasts.

This is where a construction-ready ERP solution like NB Projects (formerly NAVBUILD) becomes indispensable.

How Construction ERP Software Helps Manage Change Orders

For modern construction companies, integrating ERP software is no longer optional, it’s essential. A specialized solution like NB Projects, designed as an construction add-on for Microsoft Dynamics 365 Business Central, offers end-to-end management of change orders and related processes.

1. Identify and Track Change Orders

NB Projects allows you to capture all change orders in construction projects in a structured format. Whether it’s modifications in BoQ, labor allocation, or materials, every change is logged and categorized for easy access.

2. Evaluate Necessity and Impact

With real-time data at your fingertips, you can assess whether a change adds value to the project. NB Projects helps you determine:

• Is the change billable or non-billable?
• What is its impact on the overall project cost and schedule?
• Can the change be deferred or eliminated?

This proactive evaluation prevents unnecessary adjustments from inflating costs.

3. Streamline Vendor Comparisons

The software allows you to release RFQs for changes and compare quotes from multiple vendors. This ensures that you select suppliers who can meet revised requirements at competitive rates, saving both time and money.

4. Collaborate Across Teams

Effective change order management requires cross-functional collaboration. NB Projects enables your procurement, operations, and project teams to work seamlessly together, ensuring that all changes are implemented efficiently and with minimal disruption.

5. Maintain Budget Control

By integrating change order tracking directly into your ERP system, NB Projects provides real-time visibility into budget impacts. You can monitor expenditures, detect cost overruns early, and adjust project plans proactively, preserving profitability.

Best Practices for Handling Change Orders in Construction Projects

Managing change orders isn’t just about technology, it also requires disciplined processes:

1. Document Everything: Every change order must be documented with approval workflows, cost estimates, and justification.
2. Use Standardized Templates: Consistency reduces errors and speeds up approval.
3. Monitor Cumulative Costs: Regularly analyze how change orders affect total project budgets.
4. Engage Stakeholders Early: Keep clients, vendors, and internal teams in the loop to avoid misunderstandings.
5. Leverage Analytics: Use ERP reports to predict potential overruns and make informed decisions.

Implementing these practices alongside a robust ERP solution like NB Projects, add on for Microsoft Dynamics 365 Business Central ensures that change orders are managed strategically, rather than reactively.

The Role of Change Order Management in Profitability

Change orders, when ignored, are the silent culprits of budget overruns. Proper management can:

• Reduce unnecessary expenses by identifying redundant changes.
• Optimize vendor selection to get competitive pricing.
• Improve project timelines by preventing last-minute disruptions.
• Enhance client satisfaction by delivering projects within agreed parameters.

With NB Projects, construction companies gain actionable insights, allowing them to turn change order management into a profitability tool, rather than a cost liability.

Why NB Projects Is the Ideal Solution for Managing Change Orders in Construction Projects

Managing change orders in construction projects can be complex, with multiple vendors, shifting timelines, and budget impacts. NB Projects, built as an ERP for construction projects on Microsoft Dynamics 365 Business Central, is designed to simplify this process and help construction businesses stay on track and profitable.

Key benefits of using NB Projects for change order management include:

• Comprehensive Change Order Tracking: Capture and monitor all change orders throughout the project lifecycle, including alterations in scope, materials, labor, and rework.
• Efficient Vendor and Procurement Management: Release RFQs for changes, compare quotes, and select vendors who can meet revised requirements at competitive rates.
• Real-Time Budget Control and Reporting: Track costs associated with each change order, identify potential overruns early, and maintain accurate project budgets.
• Enhanced Cross-Team Collaboration: Facilitate smooth communication between project managers, procurement teams, and operations staff, ensuring changes are implemented efficiently.
• Data-Driven Decision Making: Gain actionable insights into the impact of each change order, enabling informed decisions that protect profitability.

Whether managing multiple small projects or large-scale construction operations, NB Projects as a construction ERP solution equips businesses to manage change orders effectively, minimize delays, and maximize project profitability.

Take Control of Change Orders in Construction Projects

Change orders in construction projects don’t have to be the “tail-enders” that quietly sabotage your budgets. By adopting structured processes and leveraging construction ERP software like NB Projects, you can:

• Identify, evaluate, and manage changes proactively.
• Streamline vendor interactions and RFQs.
• Maintain real-time control over project budgets.
• Protect your project’s profitability and timelines.

At Cetas, we help construction businesses implement NB Projects on Microsoft Dynamics 365 Business Central to ensure every change order is tracked, approved, and managed efficiently. Don’t let untracked changes drain your resources, take control now and turn change orders into an opportunity for better project outcomes.

Reach out to us today to see how our construction ERP solutions can transform the way you manage change orders and deliver profitable, on-time projects.