🇦🇺Australia

Excessive Administrative Rework from Change Order Re-Pricing

2 verified sources

Definition

Per [3], 'In only two of the projects, change orders were priced an average of once; in one case, the average number of times change orders were priced was three times.' Typical re-pricing tasks include: approval-to-trades notification (30 hrs), schedule revision (13 hrs), drawing cross-checks (16 hrs), specification updates (16 hrs), layout & compliance enforcement (19 hrs), and accounting processing (8 hrs). Multiplied by 2–3 cycles, this becomes 92–276 hours of waste per change order.

Key Findings

  • Financial Impact: AUD 13,800–41,400 per change order (92–276 hours @ AUD 150/hour loaded labor rate). On a 10,000-ton frigate with 150–200 change orders, total waste = AUD 2.07M–8.28M.
  • Frequency: 66–100% of change orders require 2+ pricing cycles on Australian projects (based on [3] data).
  • Root Cause: Disconnected approval workflows; lack of single source of truth (per [2] on shipbuilding PLM gaps); manual spreadsheet/database tracking; no integrated product lifecycle management (PLM) system.

Why This Matters

The Pitch: Australian shipbuilders and naval contractors spend 40–120 hours per significant change order on redundant pricing and coordination work. Automated change order workflow (integrated CAD, BOM management, and approval routing) eliminates 60–70% of re-work.

Affected Stakeholders

Planners, Project Schedulers, Engineers, Accounts Payable, Procurement Coordinators

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Financial Impact

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Current Workarounds

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Methodology & Sources

Data collected via OSINT from regulatory filings, industry audits, and verified case studies.

Evidence Sources:

Related Business Risks

Unbilled Change Order Cancellations Without Compensation

AUD 50,000–250,000 per major shipbuilding project (5–15% of total change order costs), based on typical re-pricing labor (30–80 hours @ AUD 150/hr) and provisional supply commitments.

Contract Dispute and Legal Liability from Poorly Documented Change Orders

Median dispute cost: AUD 200K–500K per project. Large-scale frigate contracts (AUD 2B+) risk AUD 2M–5M+ in dispute remediation, plus 12–24 month schedule delays (carrying costs, financing charges, opportunity cost).

Shipbuilder Price Re-Negotiation Risk and Customer Churn

Indirect loss: AUD 500M–5B in foregone future contracts or competitive disadvantage on next-generation tenders. Direct loss: AUD 50M–500M in disputed change orders, carrying cost on withheld payments, and legal remediation.

Verzögerte Rentabilitätssichtbarkeit in EVM-Berichten

Estimated 40-80 hours/month × AUD 150/hour (Project Controls role[3]) = AUD 6,000–12,000/month per project; multiplied across Defence contract portfolio (estimated 3-5 major programs) = AUD 216,000–720,000 annually

Fehlende Echtzeit-Rentabilitätskontrolle in EVM führt zu Kostenschleichern

Industry benchmark: 2–5% revenue loss from undetected cost creep in shipbuilding[4]. On typical AUD 500M Defence contract: AUD 10M–25M at-risk margin

Unzureichende EVM-Konformität gefährdet Defence-Verträge

Payment holdback: 5–10% of milestone invoices (typical: AUD 10M–50M on major contracts); Remediation cost: AUD 50,000–500,000 per audit finding; Schedule delay: 2–6 weeks per re-baseline = AUD 500K–2M cost of delay

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