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    Make-or-break during production: shedding light on change-orders, rework and contractors margin in construction

    74596.pdf (1.008Mb)
    Access Status
    Open access
    Authors
    Love, Peter
    Ika, L.
    Ahiaga-Dagbui, D.
    Locatelli, G.
    Sing, M.
    Date
    2018
    Type
    Journal Article
    
    Metadata
    Show full item record
    Citation
    Love, P. and Ika, L. and Ahiaga-Dagbui, D. and Locatelli, G. and Sing, M. 2018. Make-or-break during production: shedding light on change-orders, rework and contractors margin in construction. Production Planning & Control. 30 (4): pp. 285-298.
    Source Title
    Production Planning & Control
    DOI
    10.1080/09537287.2018.1535675
    ISSN
    0953-7287
    School
    School of Civil and Mechanical Engineering (CME)
    Funding and Sponsorship
    http://purl.org/au-research/grants/arc/DP160102882
    URI
    http://hdl.handle.net/20.500.11937/74311
    Collection
    • Curtin Research Publications
    Abstract

    A considerable amount of research has examined the cost performance of construction projects, yet there has been a paucity of studies that have examined the impact that client initiated change-orders and rework have on contractors. This paper seeks to add further clarity to this issue by replicating previous empirically-based research to establish the validity and reliability of the key issues influencing a contractor's cost performance. A total of 98 projects were used to examine the value of rework and change-orders and their influence on a contractor's margin. Only 65% of projects experienced a cost increase, though a mean rework cost of 0.39% of the contracted value was incurred. The difference between approved client change-orders and those by the contractor for subcontractors was 0.5% of the total costs incurred, which adversely impacted the organisation's profit. Margin losses may well have been higher as rework is seldom formally documented and reported.

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