When Change Isn’t Good - Minimizing Change Orders


Some companies make change orders their cash cows, but this business strategy is more than a headache for everyone involved.  A good design, a fair contract, and quality, timely work is a much more honorable way to make a profit than snakey contract clauses and constant arguments.  Change orders will be a reality for most projects - unfortunately, the construction industry is still laden with inefficiencies and technological antiquities.


The key to a strong construction team?  Relationships.


When minimizing change orders as a building owner or general contractor, the name of the game is relationships.  The first part of building solid relationships is vetting the design team and contractors.  Make sure to team up with trustworthy partners - contact their references and find out their track records for change orders before securing a contract. Consider paying a little extra to work with the same companies multiple times - sometimes, the devil you know is better than the devil you don’t know.


The key to strong relationships?  Communication.


Don’t neglect the importance of simple rapport, either.  The ability to freely and successfully communicate between parties could mean thousands of dollars.  That’s just how the world works - people are more likely to be reasonable, forgiving, and understanding with others who do the same.  The value of trust in these relationships cannot be understated.


The key to strong communications?  Asking questions.


Be thorough and ask lots of questions.  Ask early, ask often, ask late at night during the inevitable pre-sleep worry period.  Design is a better time to ask questions than mid-project. Cutting corners and taking shortcuts is an invitation for change orders.  How well-coordinated is the design team?  Are there likely to be pieces or steps missed with connections between mechanical, electrical, and plumbing?  Have the estimators done a quality take-off and noticed any missing details?  No plans are perfect, but understand how much more costly these missed details can be the later that they are discovered in the project.


The key to informed questions?  Planning ahead.


Don’t neglect the project planning phase. Don’t skimp, don’t rush, and don’t make assumptions.  Take time to train the team thoroughly.  Prioritize company-wide meetings on the issue of minimizing change orders to identify where the holes in the ship might be - cross-training employees, such as those on the administrative team, to read project plans and specifications can cause the unexpected team member to be the one who identifies a missing piece.


Changes come - but who pays?


Determining who is responsible for bearing the financial burden of a change order is a regular part of doing business in the construction industry.  On a foundation of good relationships, all parties can look out for the well-being of one another during these decisions.  On weak relationships or those laden with mistrust, the process can be a little more difficult.  


Some change orders fall into gray areas, such as those where the intent of the design isn’t perfectly clear.  Longer projects are easier to do some “give and take” in this arena, attempting to keep the relationship between the general contractor and the design team peaceable.  It’s best to avoid being adversarial when at all possible, but rather create a habit of regular meetings where these issues can be hashed through.


There are also instances where change orders simply aren’t worth the cost of the paperwork they will require.  Overhead costs truly add up, and it can be a delicate balance of “absorbing” some of these smaller change orders without demonstrating that the company can be taken advantage of.


Lessons learned.


When a change order comes through and is approved, take the time to inventory the “why” and see if it is something that can be avoided in the future.  Sometimes a simple adjustment to contract language can alleviate future pain with other contractors.  Some more training for project managers or project engineers could help to anticipate these issues before they come up.  In some cases, it might be worthwhile to consider an overhaul to the project planning phase to ensure that future details aren’t missed.


It’s the little things that truly add up.  Develop strong relationships with others on the project team, plan ahead, and train up the team so that overlapping skills and duties cover some of those unexpected holes. It is possible to reduce costly changes, and it’s worth the effort to look for areas of improvement!

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June 2nd, 2021 | ,