Controlling change order costs

File photo: School board member Allison Campbell speaks during a meeting at the Marion County Public School Board in Ocala, Fla. on Tuesday, Sept. 7, 2021. [Bruce Ackerman/Ocala Gazette] 2021.

The Marion County School Board has voted to maintain the superintendent’s authority to approve construction change orders at a maximum of $25,000, rejecting a proposed policy update that would have increased the limit to $50,000. The proposed change to policy was introduced by district staff as a measure to improve efficiency during construction projects.

Several board members opposed the increase, emphasizing the board’s role in strict financial oversight. Board Member Allison Campbell led the discussion against the proposal, stating, “The responsibility of this board is budget and even facilities budget.”

To highlight the need for tight controls, Campbell pointed to a recent financial update regarding the construction of two new elementary schools, Ross Prairie and Winding Oaks. Both projects officially came in under budget: Ross Prairie saw an anticipated deductive change order for unused funds of $3.2 million, while Winding Oaks had an owner direct purchase deduction of $6.5 million.

Campbell expressed concern over the baseline cost differences of approximately $20 per square foot difference between the two structures. The two elementary schools share identical designs, yet the Ross Prairie project, built by A.D. Morgan Corporation, came in approximately $2 million less expensive than Winding Oaks, which was built by Ausley Construction Company, LLC.

“One of them cost more than $2 million more than the other and they are identical,” she noted. “I think it’s imperative that we as a board take very seriously anything to do with additive or deductive change orders.”

Following the discussion, the School Board opted to reject the proposed $50,000 increase, keeping the superintendent’s independent approval cap strictly at $25,000.

City and County Change Order Policies

The $25,000 limit establishes a much lower threshold compared to the procurement policies utilized by the city of Ocala and Marion County for their capital projects.

According to the Marion County Procurement Policies and Procedures Manual, change orders that cause a purchase order to meet or exceed $25,000 require approval from the assistant county administrator. Change orders that cause a purchase order to meet or exceed $50,000 must receive approval from the Board of County Commissioners.

To accommodate unforeseen project costs, the county allows a contingency to be added to the purchase order for up to 10% of the construction cost, and up to 20% for road projects with commission approval.

Ocala operates with a baseline $50,000 threshold. Under City Resolution 2020-22, the city manager or their designees are authorized to execute contracts, amendments, and change orders valued at $50,000 or less. Furthermore, according to Public Information Officer Gregory Davis, when construction change orders are anticipated, the Ocala City Council often approves an upfront “contingency cap.” This practice grants the city engineer the authority to issue ongoing change orders—covering unforeseen conditions and conflicts that arise during construction—up to that established cap without needing to return to the council for each individual change.