Construction Change Order Best Practices

The contract is the foundation of any construction project. It is the document that outlines the expectations and responsibilities of both parties. Both parties should sign the contract before any work begins.

You cannot enter a construction project without the expectation of changes, but that’s why change orders are used to help legally alter a construction contract. Most contracts will include a change order clause from the beginning.

The change order provision is a contract provision used to define the circumstances under which a change order can be issued.

A change order is an amendment to a contract that has been made after the contract has been signed. It is usually done when something in the original agreement needs to be changed, or additional work needs to be done.

The contract should include a change order process, which will outline how changes to the project will be handled. This includes who can make changes, how they are communicated, and what happens if there is a disagreement.

7 Best Practices for Construction Change Orders

Whether you’re an independent contractor, or you own a construction company, improving your current system is the key to success. 

Luckily, we’ve narrowed our recommendations. Here are seven best practices for change orders:

Use a Change Order Template

There are many reasons why you might need to issue a change order. 

For example, you may need one if your customer requests changes in the scope of work, after the initial deal is made and the contract is signed. A change order may also be appropriate if they want to make changes in the timeline or budget. 

Changes are almost a guarantee in the construction industry, and it’s crucial to be prepared. 

You can create a change order template to save time and to efficiently replicate the process for subcontractors.

A change order template is a document that has the standard information needed to request changes to a project. The template should include the following:

– Project name and number

– Client name

– Date of request

– Requested change

– Reason for change

– Cost estimate (if applicable)

– Approved by (name)

Using a change order template is a game-changer for your business. Save yourself time and create one immediately. You can use our free excel template or better yet, start your free trial of Trak Changes today to simplify your change order process.

Project Manager Review Before Signing

When working with legal documents and changes, you should have more than one person review them before signing. 

The person responsible for negotiating a change order should understand the change order provision in your contract before they are faced with one.

If you have a project manager or another contractor you work with, have them review the change order before it is sent to the client for signing. Two sets of eyes are better than one.

Any changes can become a significant cost, even with change fees. They can be time-consuming, directly impacting a contractor’s schedule with other projects. 

Taking extra time with a change order reduces the time delay or possible mistakes.

Use Appropriate Language

The change order is a document that is used to communicate the changes that are made to the original contract. It is essential to pay attention to the language of this document because it can have an impact on how the changes are interpreted.

The change order should be written to clarify what has changed and what has not changed. This will help avoid any confusion or misunderstandings about what was agreed upon in the original contract

Include Change Order Fees

The change order fee is the fee that a company charges for any changes to an order. It is usually a percentage of the original order price or a flat fee established in the original contract.

Companies can increase their prices or have a fixed rate for the change order fees, but it is essential to make sure that this does not discourage customers from ordering in the first place. However, you still need to protect your revenue stream.

The change order fee is a fee that is charged to the customer when they request changes to the original project. The change order fee should be set at a reasonable price, and it should be more than the cost of the changes requested.

There are two ways to charge for change orders:

1) Fixed rate: The customer pays a set amount for each change requested.

2) Percentage increase: The customer pays an additional percentage of the original project price for each change requested.

As a contractor, you need to protect your compensation. Incorporate a fee and make it clear to your client before starting.

Clear Communication 

The first thing to do is to have clear communication. This will help you stay on the same page with your client and ensure that you are both on the same page.

The next thing you should do is to make sure that you are being transparent with your client. You should be open and honest about what changes need to be made, how much they will cost, and when they will be completed.

It is essential to have clear communication with your client when it comes to changing the order of the content. You should be able to explain why you are making the change and what you are trying to accomplish.

Lastly, it is essential to have a good relationship with your client. You want them to trust you and feel comfortable in their decision-making process.

Trak Changes address all of these concerns by sending change orders and proposals directly to your customer. They have the ability to view all the change order details and then instantly sign the proposal, getting the project back on track.

Writing Over Verbal Agreement 

The best practice for change orders is to have them in writing, not just verbally agreed upon. This way, there is a clear record of the changes that have been made and what has been agreed upon.

It can be tempting to agree on changes for a quick alteration verbally, but it could lead to problems later. Without putting agreements in writing, you can compromise the project, and it might lead to a dispute.

When a client asks for a change order, it’s essential to get all the details and specifics about what they want to change. This will help you better understand their needs and provide a more accurate estimate of the cost of the changes.

The best practice for change orders is always to make them in writing. This way, there is no room for miscommunication or confusion.

Software to Simplify 

Change order software is a simple and efficient way to streamline the process of change orders. It can be used for any project and can handle multiple change orders.

The software significantly reduces errors. It also saves time and money by providing a centralized system for managing all changes.