Evaluation of risk in change orders report for AKDOT construction staff.
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2009-06-01
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Abstract:Work changes are common in construction contracts, especially for large projects. When contract changes must be made, how the owner
(the organization paying for the work) and the contractor (the firm performing the work) agree on a fair and reasonable cost can be as
complex as a good poker game. It is usually in the owner’s best interest to negotiate a lump sum price for changes before the new work
starts (forward-pricing). Forward-pricing passes considerable risk (such as work delays, changing weather, getting new materials to
remote sites, and re-scheduling other projects) to the contractor, who deserves some compensation for assuming it. The owner wants the
best deal possible, and the contractor is the best judge of his (or her) own costs. The stakes can be higher in Alaska, where a short
building season and remote locations can push a project into an additional year, with extra staging costs, staffing, and scheduling
nightmares. This project, led by UAF engineering science management specialist Robert Perkins will produce a guide for AKDOT&PF
managers and engineers that will better prepare them for judging project risk and estimating costs.
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