Change order is all too common in construction. Learn the basics of construction change order so you can save time, money, and resources in your project.
Change order — it’s a term you know all too well in the construction space. It means more time, money, and resources will go into a project you’ve already planned and possibly even finished. Your company may even foot some of the bill. In fact, 8-14% of the average job’s profits are lost to change order costs.Construction change order processes are never enjoyable. But because they come up so often, we need to have a good grip on how to handle them — and how to reduce the number of times they occur.
In this post, we’ll dive into the basics of construction change orders, so you can avoid them where possible. We’ll look at what these processes are, the steps they’re made up of, and the problems they can cause. We’ll also learn how to run change orders smoothly, implement clear construction communication throughout the work, and reduce their occurrence by catching them ahead of time whenever possible.
To start, let’s define a change order. This is simply a shift from the original scope of work. It can derive from a client request, a supply issue, a mistake make by a subcontractor, and other similar concerns.
The change order process is different from a construction change directive — something you may have encountered in the past if you’ve ever spent time working on large scale projects. Directives are forced after no change order agreements could be made.
The following table shares a few common change orders, as well as their average costs for you to read through.
As you can see, even changes that seem minor when first mentioned can add up to significant amounts of money. Reducing the volume of construction change orders on every project is the best way to keep them from eating into your margins.
These costs make it important to understand the ins and outs of change orders, as well as how to prevent them from coming up in the first place.
The Five Stages of the Construction Change Order Process
To fully understand the construction change order process, it can be helpful to break things down into steps. Yes, it is simply a change being requested and then agreed upon by all parties. But if you go through the following steps every time a change request comes up, you’ll be far less likely to miss details — and lose profit because of it.
The five steps of most change orders include:
- Change requested
- Recording the potential change
- Evaluation and decision making
- Review and approval
This is a short step, but it’s important because it’s the beginning of the entire change order process. It may be a direct request from a client via text, email, phone call, or in-person conversation. It may also come as a discussion when a customer states they aren’t happy with how something in their home turned out.
When changes are required on your end, they could be caught as supplies run out early or when a subcontractor realizes something in their work went wrong.
When these conversations or mistakes take place, try to recognize what’s happening right away. Even if clients aren’t clear in their questions, take the time to clarify their desires. It’s typically easier to implement changes the earlier in the process they’re brought to light.
Also make sure they know that their change may cause a delay in the timeline or increase their overall costs.
Recording the Potential Change
This is another short phase, but it’s important and not always followed through on. As soon as you see a change coming, get it documented. Write it down and have your client sign the page, or have them send you the request in writing. You may even want to have a dedicated form in place for customers to fill out when they decide to stray from their original plans.
It’s not as important how you document this information as it is that you simply get it done. Having proof of every change-related conversation can save you from many troubles later on if your client is unhappy with your work or pricing for any reason.
This stage can also be used to ensure everyone is on the same page. When the words are written and being signed for, clients and subcontractors are more likely to spot any errors before things become official.
Evaluating and Decision Making
Next, it’s time to think about the actual implementation process. Is this change doable? How much will it cost? Do you need to recreate blueprints or designs, or is the detail small enough to simply communicate in writing? Will the work continue to be in line with every local safety code?
Will this change affect any other aspects of the project? For example, will new tiles clash with the walls that have already been painted?
Be sure to look at every detail while evaluating your change. This will save you from troubles down the line, as you’ll be prepared for any less-than-desirable circumstances that could pop up because of the process.
If the requested change will not work, be sure to have an honest talk with your client. Remember — all parties need to agree on change orders. If you think the update is unsafe, too time-consuming, or simply too much for your project participants to handle, you still have every right to say “no."
If it will work, it’s time to make things final and move along to the next step.
Review and Approval
Now it’s time to submit the change order and have it approved by every party. You should be comfortable with what it entails, and your project participants should be ready to take on the task. Above all, the client should be satisfied with the updates they requested and how they’ll be implemented in the new design.
Be sure to use documentation in this step too. Have all parties sign off on the changes taking place, what the end result will be, and how much the work and supplies will cost. When it’s written and signed, there likely won’t be room for disputes in the future.
The implementation stage is simple — it’s where the change takes place. It’s also important to pay attention to, as sometimes changes and new designs can be lost in translation, never making it to the subcontractor in charge of actually completing the work.
When it’s time to bring a change to life, be sure everyone involved knows the latest plans.
By breaking the construction change order process down into the steps above, you can move slowly and ensure everything is done in a safe and agreeable fashion. Remember the following details above everything else:
- Document everything in the construction change order process
- Keep the client happy whenever possible
Even if they’re not ideal, successful change orders will keep clients coming back, bring positive reviews, and make the process simpler overall.
Tips to Make Each Stage Run Smoothly
Even though the steps of the change order process seem simple, it’s important to completely ace them every single time. How can you do that? Start by implementing the strategies below to build an effective change management process.
Change orders can be frustrating, but they’re easier when every project participant works together. Consider utilizing multiple project participants to speed up the work if at all possible.
You can bring up the importance of teamwork by not singling out project participants when a mistake needs to be fixed, too. You’re all in this together — make it known to everyone who works for you.
Track Every Step of the Change Order Process
Like we mentioned in the segment above, every step of the construction change order process is important. They are pretty small, however, so it’s easy to skip through them and just get the work completed as quickly as possible.
When you implement a tracking system to ensure you are stopping to analyze every step, you’ll be far less likely to miss important information throughout the process. For example, you’ll have a checkpoint for gathering client signatures. This means you won’t have to argue agreements after the work is completed — their agreement will be forever on a document to protect your extra effort.
Assign Change Order Authority Roles
Assigning one or two project participants to change order authority roles can also be helpful. These individuals would be responsible for ensuring every step is covered every time. The assigned roles make calling each other out a bit less awkward, and they ensure important information is gathered for every change that comes your way.
Implement Client Feedback As Much As Possible
Lastly, try to gather and utilize client feedback on the construction change order process as often as possible. After all, customers are most affected by the outcome. They’re concerned about the look and/or function of their living space, and the way you handle the fix will affect the feedback they leave for your company.
Challenges That Could Arise Along the Way
Next, let’s dive into some more challenging circumstances change orders can bring, so you’re not caught off guard when they happen to you in real life.
The main concerns you need to keep in mind include:
- Customers being surprised at the end result
- The “blame game” being played
- Documentation errors and omissions
- Changes not being communicated to subcontractor teams
Customers being surprised at the end result
Oftentimes, the changes that clients request are small. If they request many different tasks, however, those little costs will create a large bill. Try to make sure your customers are not surprised at the end of the project by clearly communicating cost rises and time delays, so they will not be upset by the numbers they hear when everything is said and done.
The “blame game” being played
Sometimes, it’s difficult to decide who should eat the cost. Is the lack of supplies the supplier’s fault or the subcontractor team who placed the order? Try to communicate well through all steps of the change and keep good documentation as mentioned above to avoid this issue.
Documentation errors and omissions
If documentation has mistakes or has small costs left out, it will not reflect the completed project. Again, small costs add up, and you don’t want your math to be off at the end of your work because three small changes added up to a large sum. Simply focus on documenting every detail, no matter how small it is, to avoid this concern.
Changes not being communicated to subcontractor teams
This is one of the most detrimental challenges, as it can lead to completed change orders not being implemented. If the subcontractor who installs tile is never informed of the color switch, they will install what they have in their records, not what you agreed to with the client. Make sure project participants are involved through most if not every step of the construction change order process to avoid this.
Improving Your Construction Change Order Process for Good
With all of the information above in mind, how can you update your change order process for the better?
First, try to keep change orders minimal. Spend some extra time in the pre-bid time frame, making sure that your estimates are correct. Be sure to have clear communication with your client to cover all their wants and needs.
Then, focus on tools that can help you when pesky change orders sneak through the cracks.
For example, construction communication software may be beneficial for your business. These types of software can support your efforts in:
- Clear client communication
If you’re looking for a construction communication software to try, we can help you here at Rivet. Our tools work on your project participants’ smartphones, so everyone can access its tools at all times.
It integrates text messages to track and store client conversations as well, supporting your efforts to store communications as often as possible. It’s easy to implement as well, so you can spend more time working on those pesky changes, and less time learning how to use the software that tracks their tasks along the way.
Our construction communication app also offers the ability to:
- Create, fill out, and store documents, so every member of the team can access necessary notes and agreements from the office or the job site.
- Make flexible forms, which could easily serve as the change order paperwork you provide to every client who requests a scope of work update.
- Translate between Spanish and English, eliminating language barriers that could potentially lead to higher levels of change orders being requested.
- Make scheduling at the construction site a breeze so that the actual change work is as organized as possible.
- Form shared directories, so client communication can happen even among project participants who haven’t been directly given the phone number they need to access an important detail of their day’s work.
At Rivet, we strive to make your days simpler — and construction change order processes are included in that goal. Feel free to download the app or contact us today with any questions you may have. We’d be more than happy to get your team on its way to well-organized, clear communicating success.