5 Tips for Managing Change Orders

Managing change orders in construction projects can be a headache. But mismanaging those change orders only leads to bigger headaches.

So, the best thing for your business is to have a process in place for managing change order requests.

Below are five tips to help you create that process.

Don’t Fall Into the Agreeability Trap

Ross Feinberg, a longtime construction mediator, tells Billd that one of the biggest mistakes he sees subcontractors make is to try to be overly agreeable to GCs and owners.

Most trade contractors will recognize the behavior, or at least the impulse:

• You let the GC slide when their instructions aren’t sufficiently specific. After all, your team can figure it out.
• You let people make change requests over the phone or in a text — not in a formal, legally binding change order agreement.
• You accept change orders without the signatures of everyone who signed the original contract. Because there’s work to do and you don’t have time to chase someone down for a signature.

Those are all dimensions of the same problem: wanting to be agreeable. And it’s a behavior that hurts trade contracting businesses.

“You want to seem agreeable to the GC, but if you’re so agreeable that you waive your own rights, you’re not protecting your best interest as a sub,” Billd’s Jesse Weissburg writes.

Train Your Customers

Ridding yourself of that need to be agreeable is Step 1. 

Step 2 is training the people you work for — GCs, customers, everyone — to expect proper documentation whenever an agreement needs to be amended. 

Everyone knows that they need to submit a proper change order request. Everyone knows that all the original signatories need to sign the new request. But everyone likes to let paperwork slide when they’re busy. 

Standing up for your business means not letting paperwork slide because that can leave you on the hook for free work, extra labor and material costs, and disputes over the finished work because you didn’t bother to get it in writing.

Be Proactive About Communicating and Getting Approval

When a change must get made, it’s always best to be the person who acts first. 

Don’t procrastinate with change orders because doing so can create a backlog of work. When those backlogs get too large, they start to derail projects.

So, what does being proactive mean in this case? ConstructConnect Editor in Chief Kendall Jones outlines this nicely:

• Get approval for change orders in writing.
• Reach out to other stakeholders — e.g. designers, the GC, other subs — to let them know about what changes are planned in case it impacts their work.
• Advise clients of whether changes will create work stoppages or changes to timelines.
• Don’t agree to new work without having a change order that’s been signed off by all the relevant stakeholders.

Make Sure Field Teams Can Document Their Work Easily

Once new work has begun, make it easy for your field teams to document that work.

In the past, trade contractors documented this work in their daily reports. Today, though, it’s easier for everyone on site to take and share photos in real time.

This is what makes cloud-based construction project documentation so helpful. If your team has software for submitting photos and a central, cloud-based hub to store documentation, you have the tools you need to document additional work in real time.

Create Processes in Advance to Make Work Go Smoothly

A little advance preparation can make handling change orders much more efficient.

As the team at Perlo Construction in Oregon notes, you can start by pre-negotiating fees for changes orders when the original construction contract gets written up. That way, you don’t have to have hurried negotiations while work is happening.

Also, have a process for collecting payments that can accommodate change orders, writes the team at US Assure: “Your contractor clients likely have a process in place for collecting payment outlined in the original contract, but change orders can complicate that process. Without formalizing steps and being persistent about collecting payment, contractors find themselves frustrated by unpaid change orders.”

A tool like eSUB Cloud can help trade contractors establish these processes. Our platform lets subs prepare their own change orders, accurately estimate additional costs based on their own construction project documentation, and set reminders for themselves to follow up on pending change order requests.

To learn more, schedule a demo today. 

Images used under license from Shutterstock.com.