Change Orders - A Contractors Guide

By: MauiNick

If your company is not using change orders, you could be missing out on making more money, as well as missing out on an opportunity to increase your credibility. Here’s why.

Your customer wants to add something to his project. You follow their wishes, and then invoice them. They did not anticipate the increase of cost, resulting in both parties being unhappy. They gripe, “I wouldn’t have done it if I knew how much it would have cost.”

So, a change order protects you, and perhaps at the time the customer thinks the extra paperwork is a hassle- however, in the long run you look very professional. If someone wants to make a change to the project, the first step you need to do is gather the existing specifications and estimates. This will show the client that the current price reflects the current specifications. Sounds simple and obvious, but it needs to be shown.

Then, the next step is to gather the new specifications, and then develop a change order immediately. Once you send the change order to your customer, it is very important not to do any work until your client signs it, or the scenario listed above might happen. No matter how much you trust your customer, do not act when they say, “I don’t care about a change order,
just go ahead!”

If your customer is wary of signing off on a change order, discuss the need for it. Let them know how this will modify the price- materials and labor. They will have a copy of the change order to add to their contract, and they will be able to see the reason of the cost increase. If you simply invoice them for more, even though they know the additional work
was done, the change order says it in black and white.

Perhaps a change order does not result in a price increase for some reason. Even still, one should be made and signed off on. It is still a change and/or extension of the contract.

On a final note, change orders are not just good for the client, but also for you. If you find that you are making quite a few change orders on every project you are doing, chances are there are some things being missed during the design stage. You can take this as an opportunity to better finalize contracts before beginning. Perhaps there are too many uncertainties between customer and contractor before the work begins.

Ironing out the details completely beforehand will make for a better chance of being able to follow the initial job specifications through completion of the project..

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Nick Hurd is the developer of LiteningFast Estimating The contractors solution for construction estimating software

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