What’s the Difference Between a Change Order, Change Forecast and Budget Transfer?
Changes are inevitable on projects. No project manager in their right mind moves forward with a project not expecting changes to happen - fluctuations in scope, cost, schedule and activity can happen almost daily. In this article, I want to tackle a segment of change management that I often come across in conversations. Which is: the different types & states of Change Events that can be registered on a project; and some of the nuances of each. The three main project change events are: Change Order. Used to register a change in project scope Change Forecast. Used to identify any project trends Budget Transfer. Use to move funds & resources within the project without modifying the budget It’s important to understand the difference so as to know in which cases you’d use each type of change event. Change Order There can be many reasons to initiate a Change Order, but they typically represent an underlying change in scope or unanticipated cost that has occurred on the project. As a result, change orders will always result in a modification to the project budget. They can be initiated by an outside request – such as an RFI from a customer or other stakeholder - or they can originate from an internal source, supplemental information, design change, or just be a result of a mistake. In any case, something’s happened that’s going to require a change in budget (usually additional funds are requested), and potentially a change in schedule. If it’s an increase in budget, the initiator of the change needs to specify a funding source. The funding source could be a supplemental AFE, Purchase Order, etc.; or it could come from the Contingency Reserve (if there is