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The Land Advisor
The Land Advisor, Experienced Land Investor
Category: Finance
Satisfied Customers: 1387
Experience:  Retired successful "land baron", financier and investor.
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What is the current USA average change order percent versus ...

Customer Question

What is the current USA average change order percent versus building construction cost?
Submitted: 9 years ago.
Category: Finance
Expert:  The Land Advisor replied 9 years ago.
The answer to this question depends to a large degree on the type of project one is considering: a house? An office building? An electrical distributing station? A dam? A coal-fired generating station?

It also depends on the design stage of the project - there is a far lower cost to change orders once the detailed construction drawings have been approved compared to when only conceptual engineering has been completed.

But speaking as a now-retired cost, budget and schedule manager for a large utility, what i CAN do is tell you what our practice was for contingency allowance during various stages of project planning. The contingency allowance, properly used, is a measure of the uncertainty of the cost estimate - in essence, an allowance for future change orders.

Best practice looks something like this - for a large generation project. For something smaller use about half as much contingency:

Conceptual engineering 40-50%

Preliminary engineering 25-35%

Detailed engineering 15-25%

Construction work packages complete 10-15%

Use the low end of the range if your project is being managed with a large critical-path network, small "bite-sized" activities in the network, at least monthly reporting of progress against the schedule, and with ALL payments to contractors tied to specific scheduled activities.

Use the high end of the range if not.
Customer: replied 9 years ago.
Reply to The Land Advisor's Post: Thanks for trying but my question remains unanswered. The question that I asked stated "building construction" cost. The answer was about contingencies, which was not the subject of my question. I have read in some internet documents that the percentage is 8 percent for new construction and 12 percent for renovations/remodeling. If there is a source for a factual answer, that is what I would appreciate.
Expert:  The Land Advisor replied 9 years ago.
Perhaps another Expert can respond. I will Opt Out.