“Ch-ch-ch-ch-changes…turn and face the strange…” Change orders are a way of life in construction. While there is nothing strange about them, they do elicit a sense of fear among subcontractors. In order to conquer the fear of change orders, subcontractors must establish an automated and standardized change order process to conquer the fear.
Managing change orders through manual methods and spreadsheets are cumbersome. Even worse yet, change orders can slip through the cracks. What frequently happens is that the general contractor gets antsy and directs your foreman and crew to proceed to keep the project on schedule. Well, when your team goes ahead and bills for that work, your changes of receiving payment are zero. The General Contractor gets a sudden case of amnesia and your team has no documentation on the change order.
Turn and face the strange facts. Improve your ch-ch-ch-change order process with the following tips:
Read the Contract
The construction contract is a legally binding agreement that details the project scope, budget and timelines. Change orders are any changes to the scope of work or amendments to the original contract. Subcontractors must ensure that they read the contract carefully for how to proceed with change orders and stipulate that any changes will only proceed under written approval. Any verbal directives or extra work requests will be followed up with appropriate documentation.
Preconstruction Due Diligence
One of the sources for change orders includes any design errors or alterations or omissions. Subcontractors should perform their due diligence and review plans and specs carefully before work begins. Catching any errors in pre-construction will reduce the need and amount of change orders during the construction phase.
Create a Template
Most of the fear of creating change orders is that people fear paperwork. However, when you make something so easy, you remove the fear and traditional barriers for use. Creating a standardized template with appropriate legal language will make creating change orders, quick, easy and painless for your team. It also speeds up approvals with the busy general contractor because he/she can quickly decipher what’s being performed.
More Details the Better
The template should make creating a change order quick and easy, but it’s important that there are details are explicitly documented. Change orders should outline the proposed cost along with any impact to schedule and/or quality. It’s important to communicate this to ensure that everyone’s expectations are aligned.
Ensure that every change order includes photos, plans with appropriate markups and annotations, documentation, updated specifications to serve as supportive evidence for the change order request.
Timely Follow Up
General Contractors manage change orders from several different vendors on a given project. To make sure your change order does not end up into the black hole of email, set up reminders. Change orders by themselves can impact a schedule, so a delayed change order can be disastrous.
Written Approval is a Must
Instruct your field team that they should not do anything (including order materials) until we receive the approved change order – in writing. It is so important for subcontractors to realize that there are significant challenges in receiving payment for undocumented work. You don’t get paid for the work you do, you get paid for the work you document!
To keep everyone on the same page, it’s important communicate internally and externally any approved change orders. Internally, change orders might affect project labor and equipment. Schedulers might need to adjust and re-allocate resources from other projects. And externally, other subcontractors must be notified as they may need to adjust their schedules and resources accordingly as well.
Invest in Construction Project Management Software
One of the key features in construction project management software is to automate and standardize the process and workflows of change orders. When change orders come fast and furious on a project, construction management software serves as the central repository for all project documentation and communication including change orders. This creates complete transparency and visibility. Everyone knows exactly where to find the change order and its status. No more fighting with cumbersome spreadsheets or suffer the effects of lost documents.
These best practices will help you establish a change order process that is manageable to ensure prompt payment. Any and all changes – regardless of how big or small – should be thoroughly documented and communicated clearly. It may seem like extra work to follow a process and provide supporting documentation. However, construction management software automates the change order process to make it easy and embraced by your team. Preparing the documentation up front ensures that you will get payment in the end.