AEC definitions
A potential change order, or PCO, is a tracked item that might change the contract sum or time and has not yet been approved. It can start from an RFI, a bulletin, a field condition, or a proposal request. Until a change order is signed, it is not a change. It still belongs in the forecast.
Definition
The log records the description, the rough order of magnitude, the status, and the owner of the next action. Hiding PCOs until they are signed makes the cost report look calm and then jump. Putting them in the report as if they were approved spends money the owner has not agreed. The honest report shows the contract sum, the approved changes, and the pending items separately. A PCO is internal management. It does not authorize the field to proceed unless a directive was also issued.
In depth
An RFI that might add steel is a PCO the day you see it, with a rough number, not the day the quote arrives. Early numbers can be marked as allowances inside the log. They beat a zero.
The superintendent and the PM both need a way to open one. Field conditions do not wait for the monthly report.
Approved contract sum, pending PCOs, and contingency. Owners who see only the first will be surprised. Contractors who put pending items inside contingency twice will think they have more reserve than they do.
A probability can be stated. A PCO that is unlikely should not be carried at full value without a note.
Promote it to a proposal and then a change order, or withdraw it with a reason. A log of year-old PCOs is not a forecast. Review it at the OAC meeting so the owner sees the pending list.
If a directive authorized the work, the PCO should say so. The cost is then a matter of determining the amount, not of whether the work was allowed.
Each PCO points at an RFI, a photo, a T&M ticket, or a bulletin.
When it becomes a change order, that backup is already assembled. Starting the file at negotiation time is how facts get lost.
Examples
RFI 40 may add a beam. The PM opens a PCO with a rough allowance and a status of waiting on design. The monthly report shows it as pending.
The owner rejects the work. The PCO is withdrawn. It never enters the contract sum.
A signed change order closes the PCO. The forecast moves the amount from pending to approved.
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