Change orders are an inevitable part of working in the construction industry. Whether you are a general contractors or a subcontractors, you’ve had to deal with them at some point on a project and will continue to have to deal with them on future projects. Being able to effectively manage change orders doesn’t have to be difficult. All it takes is a little preparation, understanding and lots of communication with all parties involved with the project.
Your first step before signing a contract and beginning any work is to review the plans and specifications with all parties involved with the project. Get clarification from your client, architect and engineers regarding any questions you have regarding the scope of the project. Any aspect of the project that is vague or unclear on what is expected should be resolved. This is also a good time to address any errors or omissions identified in the plans and specifications. Make sure any subcontractors you have doing work are also clear on the work they’ve been contracted to complete.
The next step is to review the contract. Make sure there is a clause written into the contract that addresses exactly how change orders will be processed. This includes procedures for issuing any modifications to the original scope of work that will result in new or different work to be completed.
The contract should outline how the cost of work from change orders will be calculated including equipment costs, overhead and materials. How change orders will impact schedule changes and delays should also be covered in the contract. Make sure a written change order form is included in the contract. Make it clear that no new or additional work will be done without a written change order or a written notice to proceed that has been signed off on by all parties involved.
Change orders are issued for a number of reasons. The client can change their mind about what they want done, unexpected or changes to the site conditions can require additional work and omissions and errors to the plans are all common reasons for change orders. It’s important to communicate and have an open dialogue with the client, designers and any affected subcontractors when a change order is coming. Advise your client of any work that needs to be stopped as a result of the changes and discuss any delays or schedule changes that need to be made. Make sure that all labor, material and equipment needs are accounted for in the change order whether the new work being required will negatively impact any work already completed.
Change orders are a part of doing business in, but they can be easily managed by requesting written documentation and being open and honest with your client about the time and money it will cost to make those changes.