8.4.2.1 Determination of Change Order Costs:
When the contractor's quotation for a change in the work is received, it is evaluated by the consultant (or in-house design team) and approved by the PM. If the anticipated change is significant or complicated, the services of a cost consultant may also be required to establish the appropriate cost for the anticipated change. If the quotation is considered fair and reasonable, a change order should be approved and issued promptly by the PM as per the established change order approval authorities and limitations established between the client, RPC and RPB. In cases where the quotation is not reasonable, negotiations are initiated between the PM and contractor.
The General Conditions clause (GC 6.4.1) of the standard construction contract stipulate the methodology to be utilized for additions or changes for both unit price contracts and lump sum contracts. In situations where the determination of a lump sum cost is negotiated prior to undertaking the work, the price of the change is the aggregate costs of all labour, plant and material that is required for the change plus a mark-up for all supervision, coordination, administration, overhead, margin and risk of undertaking the work within the stipulated amount. The mark-up is 20% of the aggregate costs for that portion of the work done by the contractor's own forces and 15% of the aggregate costs for that portion of work undertaken by subcontract.
Links: http://www.tpsgc-pwgsc.gc.ca/biens-property/sngp-npms/bi-rp/conn-know/approv-procure/manuelga-pmmanual-8-eng.html
