🇦🇺Australia

Untracked/Unapproved Scope Creep & Unbilled Change Work

2 verified sources

Definition

When change orders are processed manually, work often begins before formal approval. Some changes never receive a formal change order; labor and materials are absorbed as cost overruns. No centralized log prevents duplicate approvals or conflicting instructions.

Key Findings

  • Financial Impact: AUD 12,000–28,000 per AUD 400,000 residential project (3–7% revenue leakage). Typical unbilled changes: 5–15 changes per project × AUD 800–2,000/change = AUD 4,000–30,000 loss
  • Frequency: Per project (ongoing throughout build)
  • Root Cause: No centralized change order register, verbal approvals not formalized, lack of cost tracking, unclear approval authority for small changes

Why This Matters

The Pitch: Australian residential builders lose 3–7% of contract revenue to unbilled change work (scope creep without invoicing). A AUD 400,000 project loses AUD 12,000–28,000 to hidden costs and unrecovered margin.

Affected Stakeholders

Contractor Project Manager, Estimator, Finance/Accounting, Subcontractors

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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

Variation & Change Order Dispute Resolution Costs

AUD 15,000–50,000 per residential project (5–15% of typical AUD 300k–500k residential build). Typical mediation: AUD 5,000–15,000; adjudication/arbitration: AUD 20,000–100,000+

Project Completion & Payment Delay Due to Unapproved Change Orders

AUD 500–1,500/week per stalled project (based on 12% financing cost of AUD 30k–100k contract value). Average delay: 2–8 weeks per change = AUD 1,000–12,000 working capital cost per change

Poor Change Decision-Making Due to Incomplete Cost/Schedule Data

AUD 5,000–25,000 per residential project in budget overruns & delay costs (typical 10–20% budget drift, 4–12 week delay at AUD 2,000–3,000/week delay cost)

Progress Claim Processing Delays & Cash Flow Drag

AUD 15,000-45,000 per project annually (interest on withheld funds: 6-8% p.a. on average 60-90 day cash conversion cycle); approximately 40-60 hours/month manual processing per project manager

Progress Payment Compliance Violations & Legal Risk

AUD 5,000-50,000 per dispute (legal fees, adjudication costs, work suspension damages); estimated 2-8% of contracts >AUD 100k experience payment disputes annually

Unbilled Work & Progress Payment Undervaluation

AUD 5,000-20,000 per residential project (1-4% of contract value); approximately 8-12 hours/month of finance staff time identifying missing claims

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