Discovering the Impact of Late Change Orders and Rework on Labor Productivity: A Water Treatment Case Study Analysis Using System Dynamics Modeling

Abstract

Most complex projects can expect some level of rework and minor changes that can be conceptually predicted and estimated during the bidding process. However, existing literature and practitioners' experience indicate that the true impact of late change orders and rework on labor productivity behavior is often greater than expected, and the unintended side effects are very difficult to measure. This lack of knowledge and understanding leads to inaccurate calculations of the true impact of project changes and creates an incorrect ground for future decisions. Therefore, this research aims to develop a system dynamics model to understand and analyze the fluctuations in the field labor productivity rate and behavior in response to changes in the scope of the project. The other objective of this study is to formulate and discuss management policies that limit these undesirable side effects and their implications. Based on a large-scale design-bid-build water treatment project, this research conducts a case study to monitor the behavior of changes in productivity rate due to different scale change orders. The simulation results show that if a project falls behind schedule due to a change and the project deadline remains fixed, schedule pressure leads to an initial increase in productivity up to a certain level, but eventually may lead to major employee frustration. This frustration has the potential of increasing the project duration further and makes a bad situation even worse. Schedule pressure further exacerbates the problem by typically increasing the rework fraction or the errors on the built work packages. The outcome of this study helps practitioners to utilize the developed model to monitor and track labor productivity rate changes in each individual construction project and manage institutional overtime policies accordingly. ITRODUCTIONChange orders in construction projects result from a change in scope of work from the originally agreed upon work between the Owner and the Contractor. A change order is "a written order to the contractor signed by the owner and architect, issued after execution of the contract, authorizing a change in the work or an adjustment in the contract sum or the contract Time" (American Institute of Architects, 1977). Change orders may result from a number of reasons such as a discrepancy in the design documents, change order directives given by the owner, and unforeseen/differential site conditions. Change orders have a significant impact on project performance in terms of delay in project schedule, increase in cost through rework and decrease in labor productivity.

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