No construction project goes 100 percent according to plan. There could be an unexpected problem at the site, different types of materials now required, a delay due to another subcontractor’s subpar planning, or any number of other issues that come up in the course of a job.
But by expecting change orders and having a plan in place to deal with them efficiently, you can cut down on the headaches they often cause. Here are 4 simple steps to handling change orders with (relative) ease and reduce the time learning on how to negotiate change orders.
1. Prepare a process before work even begins.
Discuss with the owner or GC what your expectations and limitations are and specify in the original contract what your change order process is.
If you know material costs can’t be guaranteed after a certain date or that labor costs will have to increase significantly to cover overtime to prevent you from getting behind on other projects, make that clear. Also be sure you are leaving enough room in scheduling your crews that you will have the manpower available to cover any jobs that run long.
When all parties are in agreement on how the changes will be handled, you save the time and stress of negotiating and can get right down to work under the new conditions.
2. Avoid as many change orders as possible upfront.
Expecting changes doesn’t mean you have to resign yourself to an unreasonable amount of them. In the preconstruction phase, as you’re preparing to bid a job, do your due diligence. Check for ambiguity in plan pages and unclear drawings, and scope out the site in person if at all possible to anticipate anything out of the ordinary.
If you find anything that raises a red flag, bring it to the attention of the owner or GC right away. Especially in the case of ambiguous plans and specs, the lack of clarity is certainly going to cause problems at some point – it might as well be now before you’ve committed to the work.
This way you can get the issues resolved and make your original estimate more accurate from the start. That’s not to say you won’t still encounter changes down the line, but they won’t be the avoidable ones you spotted proactively.
3. Require project managers to prioritize change orders.
It’s understandably easy to just do the work as it comes up so the project doesn’t fall behind and deal with the paperwork later. But, don’t fall into the trap of letting change orders fall through the cracks.
Make sure your team is ready to address changes right away. The project manager should be on top of communication and be prepared to pass any change orders along to the estimator within days – preferably hours – to get the process started. The estimator should have enough lead time to plan for it on their schedule in order to get a proposal out to the GC within two weeks of receipt.
4. Don’t waste time creating a new estimate for approval.
Part of the reason many estimators procrastinate on handling change orders once they are received is the amount of time it takes to come up with a revised estimate.
Without the right tools, it’s often a tedious process of manually comparing two sets of plans, determining what changes were actually made and verifying those specified in the change order, and then completing a new takeoff.
But there is a better way! STACK, a comprehensive preconstruction platform, allows you to view new versions of plans overlaid on the old version, so your team can see exactly what’s changed. Rather than spending hours poring over two sets of plans, your estimator can simply perform a quick takeoff on the updated version, create an estimate, and send off the new proposal for review.
Making Change Orders a Minor Bump in the Road
While no contractor will ever look forward to receiving change orders, following these steps will make the process of handling them much simpler than it’s been in the past. You’ll be able to get approval for the updated estimate more quickly and avoid the hassle of negotiating scope and pricing after the fact.
Does the rest of your preconstruction process need a lift as well? You might be surprised at the difference the right software platform can make in your construction business. Create a free account and take STACK for a spin on your next bid!