What is PCO in Construction?

February 17, 2024

In the construction industry, there are many acronyms and terms that may be difficult for newcomers to understand. A term that is commonly used in the project management realm is PCO, or Potential Change Order. While this term has numerous benefits and is a crucial aspect of every construction project, it can be confusing to those who are unfamiliar with the terminology.

A PCO, also known as a Pending Change Order or PCO, is the first step in the change order process. It allows the GC to request pricing from subcontractors for scope of work changes on the project. A PCO typically includes a description of the proposed change, a schedule impact and cost exposure (often referred to as delta or variance), and a unitary cost.

Once the GC receives pricing for the change from each affected subcontractor, the PCO can be converted to a Change Order (CO) and implemented. The CO can either increase or decrease the original estimate for the project, depending on the change and its effects.

While it is possible to skip the PCO process and move straight to a CO, doing so can lead to project delays and increased costs. PCOs provide a streamlined and efficient way to manage changes throughout the duration of the project, helping to ensure that projects meet their objectives and deadlines while staying within budget. They are also an important tool for maintaining transparency and flexibility, allowing contractors to perform additional work or alter the construction sequence as needed.

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