The Electrical Subcontractors Change Order Guide
A change order is a vital piece of every construction project; every contractor handles change orders differently. How you choose to go about a change order request during a project can affect the satisfaction of the client and the other contractors involved. In the article below is helpful information on how to effectively document change orders in a way that best benefits your business.
What is a change order?
An official change order occurs when the project owner wants a change to be made that strays from the original contracted plan for the construction project. Before construction begins; contractors, architects and project owners work together to document the plan and budget for the development process officially. However, if somewhere down the line the owner is asking for changes or additions to the project, then a change order is necessary to ensure that the owner is held accountable for funding these desired changes.
Change orders must be handled with caution and close detail. It is not always ideal when a project owner changes their mind about the construction agreement they signed onto in the beginning. It puts all parties involved at a disadvantage. Therefore it is important to stick closely to the contract to avoid project owners who may try to take advantage of contractors or pressure you into doing extra work without the extra pay.
This article will help you better understand how to manage change orders when they arise, and the different steps to consulting your team, your client, and making sure you are doing what is best for your business.
Electrical change orders
The most frequently disputed area in the change order process for electrical subcontractors is the cost of requested changes. Cost-related disputes are common in the electrical contracting field of a project. Often, change orders’ impact on the project hurts the progress and budget.
Electrical change orders can be broken down into three cost categories; direct costs, indirect costs, and considerable costs.
Direct costs of a change order include direct labor, material, equipment costs, job costs and any expenses related to processing the change order. Indirect costs include overhead expenses and profit percentage. And significant costs are the impacts of lost labor productivity, project delays, and other added costs. An effective way to summarize these change order costs is to document them in their separate categories and find the subtotal of each category.
Avoiding conflict with change orders
Change orders can cause disputes between contractors, subcontractors and project owners. In hindsight, every party wants the project to go as smoothly as possible, but every party also wants what is best for their team. Here are a few points to use as tactics when a change order comes about to keep disagreements to a minimal.
– Arrange a meeting with owners, contractors, and subcontractors to discuss change orders before they are documented
– Establish a strict policy for your company on how you handle change orders and apply it to every project, so that no one project receives more of an advantage than another on change orders
– Keep reviewing and revising documents during the construction of a project so that every official document is accurate
– Establish accountability for every party involved when creating a contract for the project
– Communicate as clearly as possible and encourage other parties to do so throughout the course of the project
Electrical change orders can sometimes be frustrating, however executing an efficient and correctly documented change order is crucial for the security of your business and the relationship with your client. Stray far from simple change orders without documentation; instead, treat your business with heightened standards of integrity and quality work. With the helpful tips provided above, you and your team should be able to professionally and efficiently execute electrical change orders without the burden of finger-pointing disagreements between clients and contractors.