One of the central challenges in project management, which I encounter time and again, is the understanding that an original plan almost never remains exactly as it was. Projects, especially those in development and engineering, evolve, change, and must adapt to a dynamic reality. Without proper management, these changes can lead to unplanned costs, delays, and even turn a profitable project into a loss. In this article, I will explain the importance of a structured change management process, its core principles, and the tools required to control the process and ensure the project remains profitable and on track.
The Inevitable Changes: Sources and Terminology
Changes in a project can come from a variety of sources. In most cases, the client is the primary source of changes, resulting from exposure to new technologies, market developments, or new needs discovered throughout the project. However, the supplier can also propose changes to streamline work processes, shorten schedules, or improve the product.
To ensure everyone is speaking the same language, it is important to know the professional terms. In English, the common terms are ECP (Engineering Change Proposal) or CCP (Contractual Change Proposal), which refer to proposed changes in design or the Project contract. Knowing these terms enables effective and unambiguous communication between all parties involved.
The main Principles of Effective Change Management
To prevent changes from turning into a “snowball” of problems, a change management mechanism must be implemented from the earliest stages of the project. Here are the five main principles that I apply to every project:
1. A Regulated and Pre-Defined Mechanism
The contract or SOW must include a defined mechanism for change management, specifying who is authorized to submit a change request, how it will be documented, and the response time. Such a mechanism is critical because certain actions in a project are irreversible (like pouring concrete or cutting a metal part), and a change at a later stage can be expensive or impossible. Without this mechanism, every change request can lead to arguments, unnecessary delays, and ultimately, damage to the project’s profitability.
2. Accurate Pricing of the Change
Every change request must undergo a meticulous pricing process, which includes not only the cost of implementation but also the cost of the initial review and analysis. Often, a client requests a change, but when exposed to the cost and time required for its review, they abandon the idea. Without a pre-agreed pricing for the review process itself, valuable engineering time can be wasted. The pricing must be transparent and address the cost of materials, labor, and the impact on the schedule and resources.
3. A Mutual Offsetting Mechanism
A complex project is not a one-way street. Sometimes a change can lower the cost or streamline the project for the supplier. In such cases, it is crucial to ensure the client receives a financial credit for the items or work that were removed. For example, if the client decides to forgo a certain layer of paint, the supplier must credit them with the cost of the labor and materials saved. A fair offsetting mechanism builds trust and ensures the relationship between the client and supplier remains stable and based on transparency.
4. Full Documentation of Every Change
Every change, without exception, must be documented and assigned a unique serial number. The documentation should include the nature of the change, the reason for the request, and its precise impact on the project. My recommendation is to use a dedicated Change Request Form that details all the relevant information. This documentation is critical for preventing future disputes and provides a “paper trail” that can be reviewed in case of disagreement.
5. Binding Written Approval
Before implementing a change, it is mandatory to get a written approval signed by all relevant parties. This approval must include all the details of the change and its implications on the schedule, budget, and performance. Starting work on a change without a signed approval can lead to a situation where the client changes their mind or cancels the change, and valuable team time is wasted without compensation. This is the final and decisive step that ensures there is no dispute.
The Impact of Changes on the Project Triangle
Proper change management directly addresses the “Iron Triangle” of a project—Scope, Budget, and Schedule. Every change must be carefully examined for its impact on these three components. For example, a client’s request to add a new feature to the product (a change in “Scope”) will almost always affect the Budget and the Schedule. Professional change management allows us to present the full picture to the client before they make a decision, enabling them to understand the true cost of the change.
Example of a Change Management Form
To put these principles into practice, I suggest using a structured change management form. Such a form should include the following sections:
- Change Request Number: A unique number for each request.
- Date: The date the request was submitted.
- Subject and Nature of the Change: A detailed description of the change, including relevant drawings, sketches, or calculations.
- Implications of the Change: A critical section detailing the impact on the project’s schedule, budget, and performance.
- Client Approval: A space for the client’s signature and date, confirming their understanding and acceptance of the change and its implications.
- Notes: A section for additional comments from both the supplier and the client.
Using such a form ensures the entire process is transparent, documented, and protected from disputes.
Summary
Change management is not just a bureaucratic procedure; it is a critical strategy for maintaining a project’s stability, profitability, and success. By implementing a regulated mechanism, accurate pricing, fair offsetting, full documentation, and obtaining written approvals, we can deal with the natural dynamics of complex projects and ensure they reach their destination safely and successfully.
If you are facing challenges in planning and managing projects and need practical tools to ensure their success, I am here to help. Contact me today to discuss your needs and tailor a precise solution.