Out on the jobsite, your customer says to you: "Hey, would you mind extending this wall four feet and adding a door?" You say: "No problem, we'll get started right away and work out the costs later." You know the contract requires you to get change orders approved in writing, but you don't want to put pressure on your good customer, so you hope and pray you'll get the extra work approved and paid for later.

A contractor who deals with change orders like this is Winging it, Insecure, Misguided, and Procrastinating. In other words, a WIMP! Wimps don't get signatures, wimps beg after the fact, and wimps aren't tough. Wimps are afraid to stand up and demand what's right. Customers treat these wimpy contractors without respect, walk all over them, pay them slow, and don't approve their change order requests in full. Use your contract and project management procedures to train your customers. If you are firm but fair, right from the start, you will get what you want from them.

In your pre-job customer meeting held at the beginning of every job, explain how change orders will be handled. If they want extra additional work that's not in the contract or on the plans, tell them you will require them to put it in writing. No exceptions! Requested changes and constructive changes require different approaches. Requested changes are additional items or work the customer wants not in the original scope of work. Have them submit their requests in writing to your project manager and then you'llget them a prompt proposal for the additionalwork requested. Constructive changes occur inthe field as unforeseen conflicts or omissions.By contract, you must submit your claim for thisrequired extra work within a specified numberof days after the problem becomes apparent.Check your contract. Improper or late noticecan result in no payment for additional workperformed without prior approval. In otherwords, late notice or requests means never!

Thefollowing are change order tips:

1. Change orders are not "extras."They are additions, changes, or deletions tothe contract scope of work. The contract,plans, or specifications were not accurate orwere changed by someone other than thecontractor. Someone has to pay for this!

2. Never give it away. You are onlyresponsible for what's included in yourcontract. If the plans are incomplete or thespecifications don't match what your customerwanted, it's not your fault. Your customermust take responsibility for what they signedand agreed to. Giving away additional work tocustomers avoids confrontations and conflicts.

3. Charge the right price the first time.Too often subcontractors present change orderrequests that are significantly overpriced. Whenthis occurs, customers lose trust and faith intheir contractors. This causes re-pricing, delays,unnecessary arguments, and eventually thesecontractors lose repeat customers. Be fair!

4. Charge the right markup. To avoid future conflicts, always agree to your change ordermarkup with customers before you start theproject. Put the approved markup percentageand terms in your contract. This eliminatesarguments later when negotiating final prices.5. Never do additional work withoutknowing. Is the work extra? How will it becharged? Who pays for it and when? Is theremoney available to pay for the work? Who isauthorized to approve the work?6. Always include additional timerequired.

Most customers don't want toapprove a time extension until the end of thejob, even though they asked for extra work.Additional work requires additional time. Alwaysinclude on your change order request howmany days this will extend the project.

To request and track changes during aproject, submit timely field memos documentingeach item of extra work before you do the workor within 24 hours after discovering the problem.Outline the additional work, time required, andthe terms (lump sum, detailed estimate, or costplus) to be submitted to your customer per thecontract requirements.

Then, make sure youget it signed before it's too late to benefit yourbottom-line. Don't be a WIMP â€" get it in writing, or forever hold your peace! George Hedley is the best-selling author of "GetYour Business to Work!" and is an entrepreneur,popular speaker, and business coach. He may becontacted at gh@hardhatpresentations.com.

LinkedIn Facebook rss

Industry News