What Is a Change Order Process in Construction & How To Manage One
The best-laid plans of mice and men often go astray.
Or to tweak the famous saying - the best-laid plans of construction workers often go astray.
In the construction industry, change is inevitable. And when changes come around, they often come in the form of a change order.
But a change order doesn’t need to be something to be dreaded. If you have a well-oiled change order process in place then you can manage them as they appear.
But what exactly is a change order? And how do you manage a change order process in construction? Let’s take a closer look.
Here’s What We’ll Cover:
What Is a Change Order?
A change order is a document that is used to alter the original agreement or plan on a construction project.
The order will detail the changes in terms of the work, cost and schedule that is required.
Change orders alter the scope of the project and its schedule. But they can also affect a construction company's liability and even put their payment at risk.
When Will a Change Order Be Issued?
It’s common for the project scope to change once you’re on the job. Sometimes the client will want more or less work done, or you’ll realize that the original agreement won’t cover the cost of the work that’s needed.
Any time something changes to the original scope of work in your contract, you’ll want to request a change order or put one in yourself.
How to Create and Manage a Change Order Process
Here are the 4 steps towards creating an effective change order process:
1. The Contract
It’s important to set proper expectations with your client. During the preconstruction phase, it’s vital that your client understands the purpose of changing orders.
You should never rely on a verbal agreement, so it’s key to have a well-written, detailed contract in place.
Most contractors will have a change order fee built into their construction contract. So it’s important to make sure that both you and your client have read through the original contract carefully. Make sure to pay special attention to the change order clauses.
2. The Scope
In the initial stages of the project, it’s a good idea to make sure the estimate and the scope, or the descriptions of the work, are as detailed as possible.
By keeping things vague you are opening yourself up to scrutiny and changes by the client. If you go ahead without both parties not being 100% sure of what’s about to happen, the situation can become complicated very quickly.
3. Don’t Ignore or Delay
Change orders should be handled as quickly and efficiently as possible. Whether they are coming from the business or the client, ignoring a change order can be disastrous. It can result in a delayed schedule and all of the costs that are associated with late projects.
4. Communicate and Document
Whenever a change order comes in, it’s vital that it is documented and communicated with all the parties involved.
If there is an error or any mishap, you need to be able to point to a detailed set of communications and documentation that can absolve you of any blame.
By communicating with your client, you can make sure that you are both on the same page and help iron out any miscommunications.
When you have a trail of paperwork that shows your every decision and move, it can help any disputes that could otherwise be magnified. So it’s important to get any change order signed off by both parties so that you have a detailed record of everything.
The construction industry can be a stressful place.
However, a huge amount of stress can be taken off of your shoulders when you have the right processes in place.
Change orders are a common and necessary part of the industry. But by having an effective change order process, you can ensure that you and your construction business are able to handle any changes. This will cause less stress and reduce undue extra effort.
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