Change Order Horrors and Improvements

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CHANGE ORDERS Podcast

Introduction: the one constant in construction is that the projects will change! Accepting this reality will help us build better experiences with each project. 

Change orders help us keep projects on track and that projects are completed successfully. The value of a change order is that all stakeholders have a say in the cost, scope, and time that will be adjusted. It allows all parties associated with being on board with the changes. 

Story: 

Customer X. and his 170k dollar change order that we have fought for six months to get approved and finalized. Details were not clear or documented in the systemThe customer remembered things differently from the trades, which put the builder and trade in a battle. The customer wanted to negotiate each line item 6-12 months after the work was completed, which resulted in concessions by trades, builders, and customers. Base contract and selectionsCreate your baseline contractBuild out your specifications for each portion of the buildEstimate and price out each option as accurately as possibleChanges to your scope of work (scope, cost, time, etc.)First, work will only be completed with a written and signed change request. Changes can come from site conditions, material shortages, a change in design, the client finding something on Pinterest, etc. When you agree to the change, consider all impacts on the project. Procurement? Labor? Time? Ensure the customer is made aware of each point when they agree to sign the change requestChange orders must be managed to ensure successEnsure we have a change order process or playbookDo all internal and external parties understand the playbook?Has the change order process been communicated to the customer? I would go as far as to create a specification or addendum to your contract to specify a change order process. The lack of a change order process WILL create animosity, confusion, and a spoiled reputation for all involved, and it is all avoidable. 

Conclusion:

Change Orders are essential to all projects. 

Communicate the change order process up front and reiterate it to each trade you bring on and each internal team member. 

#homebuilder #construction #coaching #changeorders #documentation #contracts #process #personaldevelopment

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