Change Management: Establishing Your Firm’s Policies

By Diane P. Mika, Vice President, Director of Risk Management Education and Andrew D. Mendelson, FAIA, Senior Vice President and Chief Risk Management Officer of Berkley Design Professional

July 28, 2022

Let’s face it: change happens. There’s no such thing as a perfect project plan, and the difference between success and failure is planning for the inevitable. You have to expect that changes will occur during a project and be prepared to address them.

Unmanaged changes can lead to scope creep: the expansion of services provided without a corresponding increase in your fees.

On the financial side, scope creep can compromise the project plan and result in a loss of profit for your firm. It can lead to accounts receivable issues, particularly when you’re trying to bill a client for an additional service that they weren’t expecting and did not provide prior authorization for. This can lead to fee disputes, which are never a good thing for design professionals as they frequently result in counter-claims for negligence, errors, or omissions.

For your clients, scope creep can lead to surprises. It’s not a good practice for clients to learn the fee for an additional service only when they get the invoice. This can be a frustrating experience for the client and can put a strain on your relationship. Clients should be informed—well in advance—of any financial consequences for services that are outside your agreed-upon scope.

One of the best tools to manage change and lessen the likelihood of scope creep and its consequences is to establish a change management policy.

Elements of a Change Management Policy

There are four elements in a proactive change management policy:

1.  Identify

2.  Notify

3.  Authorize

4.  Document

Identifying Change

The foundation of change readiness is awareness. Your project team leaders and members need to be acutely aware of the project’s agreed upon scope of services and pertinent contract clauses. When team members are aware of these details, they are in a better position to identify deviations—changes that need to be addressed.

Change can also arise from the discovery of unforeseen or unanticipated conditions, client modification of prior decisions, or issues with contractor performance.

Anything that impacts the scope, schedule, work effort, or budget of a project is a meaningful change. Those that are not caused by your negligent performance of services should be contractually justifiable additional services.

Issuing Internal and Client Notifications

Once a potential change or problem has surfaced, the next step is to notify the right people. First, your project team members need to know whom to notify at your firm—usually the project manager or project principal—when they become aware of an issue. You should establish a clear internal communication process and make sure your staff understands and follows it.

Next, you’ll need to notify your client of the change situation. Typically, this notification includes your assessment of the change and an array of options on how to address it. In your professional services agreement, there is almost always a requirement that the client be notified prior to providing additional services, obligating the client to review and approve—or deny—the additional services.

Attaining Approval (Authorization) from the Client

For additional services, it doesn’t matter whether it’s an association agreement (such as AIA or EJCDC) or a client-generated contract, you need to obtain approval to proceed—that is, if you hope to get paid for them.

Look at the situation from the client’s perspective. They have responsibility to manage the budget and schedule of design services, and they have the right to make informed decisions.

It’s critical to understand your client’s decision-making authority structure. That way, you can present the change, the potential solutions, the related costs, and any schedule implications so that the authorized client representative can make a timely decision on how to proceed.

Documenting Change

Finally, and most importantly in the case of a claim against you, you need to properly document changes in your project files. This may take the form of email or letter (with an affirmative response), a contract modification form/amendment, or a formal change order. The project record should document:

  •  The source and impact of the change
  • The cost and schedule impact of potential solutions
  • The client’s decision on how to proceed and authorization of the related cost

Special Note on Documenting Change:

We recognize that working with large or bureaucratic clients, such as federal or state agencies, can be challenging. With such organizations, a contract officer may only be available every three months to officially sign off on contract modifications for additional services. Therefore, you need to have effective documentation that your day-to-day authorized client representative has authorized the change to proceed, not to mention the confidence that when the paperwork goes in front of the contracting officer, that they will, in fact, authorize it.

Diane P. Mika, is Vice President, Director of Risk Management Education and Andrew D. Mendelson, FAIA, is Senior Vice President and Chief Risk Management Officer of Berkley Design Professional,  a division of Berkley Alliance Managers which is a member company of W. R. Berkley Corporation that provides professional liability insurance to design and construction professionals.

Risk management resources for design professionals can be found here. Andrew may be contacted at  

Information provided by Berkley Design Professional is for general interest and risk management purposes only and should not be construed as legal advice nor confirmation of insurance coverage. As laws regarding the use and enforceability of the information contained herein will vary depending upon jurisdiction, the user of the information should consult with an attorney experienced in the laws and regulations of the appropriate jurisdiction for the full legal implications of the information. 

Practice management recommendations should be carefully reviewed and adapted for the particular project requirements, firm standards and protocols established by the design professional.

Products and services are provided by one or more insurance company subsidiaries of W. R. Berkley Corporation. Not all products and services are available in every jurisdiction, and the precise coverage afforded by any insurer is subject to the actual terms and conditions of the policies as issued.