Definition: A formal document outlining modifications to the original scope, terms, or conditions of a contract.
Key Components:
- Description of Change: Detailed explanation of the modification.
- Impact Assessment: Analysis of effects on cost, schedule, and resources.
- Approval Process: Authorization from relevant stakeholders.
Use Cases/Industries:
- Construction Projects: Adjusting building designs based on new requirements.
- Energy Sector: Modifying equipment specifications due to technological advancements.
Advantages:
- Flexibility: Allows projects to adapt to evolving needs.
- Documentation: Provides a clear record of agreed changes.
Challenges:
- Potential Delays: Implementing changes can extend project timelines.
- Cost Implications: Modifications may lead to budget increases.
Related Terms: Contract Modification, Variation Management
Example: During the construction of a natural gas processing plant, a change order is issued to upgrade the control system software, resulting in additional costs and an extended completion date.
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Synonyms:
Variation Order, Contract Amendment
