Why Do Change Orders Cost So Much?
If you have ever hired a building contractor to complete a building or remodeling project for you, you have likely heard the term “change order”. If you have lived through a contract which had one or more “change orders”, then you are probably already aware of where I’m going with this topic.
As a contractor who’s been in the residential remodeling business for more than 30 years, I have declared to hundreds if not thousands of customers, “Change Orders are not your friend!”. Although our company strives to provide a detailed and thorough pre-construction service process, change orders can still occur on a somewhat regular basis in the remodeling arena.
When a change order is required, it is very typical for the customer to ask, “Why so much?”. Our answer to that question never changes, “Because change orders stop nearly everything and everyone from what they were doing or going to do and come running to the beckon call of the “CHANGE ORDER.””. To say that change orders are disruptive is just scratching the surface.
Let’s just briefly walk through a typical change order. Let’s say that while your project is underway, something changes (an unexpected rogue wire is found in the wall that was opened up and it is illegal and a fire hazard), and here we go. The crew working on your project stops their current progress in order to find out where the rogue wire is going. It is found that the wall can’t be further removed until the electricians are able to get over to your project and relocate the wiring in a proper manner. Meanwhile, there are now people behind the scenes working on various activities related to the change order “emergency”, such as:
- Contacting the electrician to find out when they are available to respond to the change order need.
- Additional material and labor may be required to deal with the previously unknown conditions.
- Project Coordinator needs to immediately re-assign our workers to other project(s) and will need to gather materials for the unexpected change.
- Project Coordinator will need to re-work/adjust schedule (asap) for our workers and other trade partners who are already scheduled and expecting to be working on your project in the upcoming days.
- Production Manager will be required immediately to figure out what your change order will cost.
- Production Manager will be required to create the written change order and get your acceptance and payment.
- General Manager will be required to change the accounting of your project so that billing is accurate.
Sometimes there are tasks even beyond these that can be needed. It is not uncommon that changes require additional face to face on site meetings, additional design work, additional selections, inspections etc.
So, the long and short of this discussion is that even though the electrician was only at your home for 2- hours for this change order, there were likely an additional 10-12 hours of work going on behind the scenes. Additionally, there are often opportunity costs associated with change orders that are incurred that really can’t be accurately calculated. Change orders are not only not your friend, they are not ours either.
At Odd Fellows Contracting, we try to discover any unknowns during our Design phase. The goal of the up-front work is to reduce the possibility of running into the unknown during production. If a change in scope is required, we will work with you on your options to reduce the burden of change as much as possible.