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Home > About Us > Board Governance > Board Policies > Change Order Policy

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Change Order Policy

Policy Statement

During the course of any capital building project, there will be times when a change is required to the original plans. These changes may arise as a result of environmental conditions not anticipated during the planning process (e.g. sub-surface conditions, changes in regulatory requirements, unforeseeable circumstances, hazardous materials, contaminated soil, new equipment specifications that were unknown prior to tender, omissions in the working drawings, interferences, etc.)

The purpose of the policy is to ensure that change orders are minimized and appropriately controlled during the process of a capital building project. The time for approving the revisions to the Contract must be minimized or the Contractor may claim a delay to the Contract Time or proceed with the original Contract Documents and then the Owner will face additional costs and/or delay costs. Time is of the essence.

Procedure

• In most circumstances the Consultants will issue a Contemplated Change Order for pricing. The contractor will provide a price for approval. The Consultants will review the price and recommend approval. A Change Order is then issued to St. John’s Rehab Hospital to authorize an increase or a decrease to the Contract Price and sometimes for a change in the Contract Time.
• There will be times when a change is required and a decision will be required within 24 hours or less. The Contractor will notify the Consultant of the issue and request direction. If the Contractor is able to provide a price immediately and the Consultant recommends approval of the additional costs, St. John’s will have to make a decision whether or not to authorize a Change Order to proceed with the work.
• There may be times when the Contractor is unable to submit a price immediately and it is prudent to proceed on a time and material basis. In general, time and material work should only be approved once a guaranteed upset price has been agreed. If a guaranteed upset price cannot be agreed to, then upon approval of the Change Order, the Clerk of the Works, (Project Manager, Capital Development, or the Director Environmental Services) or a third party Consultant (eg Soil Consultant) will supervise the additional work to confirm the number of workers and the time spent. Time sheets for additional work must be signed on a daily basis. A Change Directive will be issued by the Consultant and authorized by the Owner for the work to proceed on a Time and Material basis.
• If the additional work cannot be agreed to expeditiously, nor done on a time and material basis, and must proceed, the Consultant has the option of issuing a Change Directive for approval by the Owner. The Contractor must proceed with the additional work and the costs and time get resolved and agreed to at a later date.
• Change Order price levels of approval will be as follows:
  • Up to $10,000 Director, Environmental Services (to a limit of $10,000 per month)
  • $10,001 to $50,000 President (to a limit of $100,000 per month)
  • $50,001 to $250,000 Resources & Audit Committee Approval with President’s Recommendation
  • Above $250,000 Board Approval with Resources & Audit Recommendation
• All Change Orders for the previous month and cumulative will be reported to the Resources & Audit Committee of the Board at each regular meeting. They will also be reported to the Board at each regular meeting.
• The Ministry of Health & Long Term Care (MoHLTC) will be advised of any Change Orders above $50,001, or if cumulative Change Orders exceed $100,000 at any time in the project
• The Ministry of Health and Long Term Care has a policy of not funding any Change Orders unless they are the result of “unforeseeable circumstances” and “changes in regulatory requirements”. All Change Orders meeting these criteria will be submitted to the MoHLTC for consideration.
  

Approval and Reporting Process

A. Contract Adjustments less than $10,000 and cumulatively below $10,000 in any given month:

	BOARD		STAFF		EXTERNAL		MoHLTC
	Board	R&A	Pres	Dir. Env.	Arch.	Contractor
Architect Issues CCO*			M	X	P	A
Contractor's Quote			M	X	R	P
Adjustment	M	M	M	X	A	P
Architect Issues CO*	M	M	M	X	P	A

B. Contract Adjustments between $10,001 and $50,000 and cumulatively below $100,000 in any given month:

	BOARD		STAFF		EXTERNAL		MoHLTC
	Board	R&A	Pres	Dir. Env.	Arch.	Contractor
Architect Issues CCO*			X	X	P	A
Contractor's Quote			X	X	R	P
Adjustment	M	M	X	X	A	P
Architect Issues CO*	M	M	X	X	P	A

C. Contract Adjustments above $50,001 and cumulatively below $250,000 in any given month:

	BOARD		STAFF		EXTERNAL		MoHLTC
	Board	R&A	Pres	Dir. Env.	Arch.	Contractor
Architect Issues CCO*			X	X	P	A	A
Contractor's Quote	M	X	X	X	R	P
Adjustment	M	M	X	X	A	P
Architect Issues CO*	M	M	X	X	P	A

D. Contract Adjustments above $250,001:

	BOARD		STAFF		EXTERNAL		MoHLTC
	Board	R&A	Pres	Dir. Env.	Arch.	Contractor
Architect Issues CCO*			X	X	P	A	A
Contractor's Quote	X	X	X	X	R	P
Adjustment	M	M	X	X	A	P
Architect Issues CO*	M	M	X	X	P	A

 

CCO: Contemplated Change Order CO: Change Order

X Approve P Process R Advise R Recommend M Monthly Report

Last updated: May 5, 2009