Big contracting companies have full-time staff and expensive project management software to help with processing change orders. Historically, smaller contractors haven’t had many options for modern and affordable project management software to help improve the profitability of their projects. No pun intended, but Track Changes is the change contractors have been waiting for to level the playing field.
Even with software solutions to handle change orders, some may still find the process of getting change orders approved difficult, time-consuming, or hard to collect. Following these five steps along with utilizing simple and modern software will save you time and money.
Steps to Follow to Streamline your Change Order Approval Process
- Gather Input: Often referred to as a Request for Information (RFI), the first step in streamlining your change order approval process is getting the information you need so that you can ask your client, “How shall we proceed?”
- Get Client Buy-In: The client has to understand the need for the potential change order and why you’re asking for it. The way it stands right now, you recognize that a change is required. However, your client might be thinking, “Hey, I hired you as the expert. You should have allowed for this.” In this example, assume that the issue is you found mold in the area where you are to do your work. You would not have expected that, nor would you have seen that with a typical jobsite inspection before bid. If your architect or engineer did not find it, then it is an issue belonging to the client. At the end, your client should be asking you, “Okay, how much is this going to cost? Send me a quote.” This is the point at which your client ‘buys in’.
- Create your estimate and send it. In the example below, it is a small amount, but it is still $370.00. Do that a few times and you’ve got $1,000.00. Can you see how Trak Changes makes it much easier for you to get paid for extra work which is out of your scope?
- 1 carpenter 8 hrs @ $35.00 = $280.00
- 1 sheet CDX ply (del’d) @ $42.00
- Sub-total $322.00
- OH & P 15% $48.30
- Total change order request $370.30
- Create an official change order to be signed by your client. You need their signed approval before you can continue the job, otherwise, you could be on the hook for the costs.
- Getting Approval. With the change order in their hands, your client can now sign and approve of the changes to the contract and construction can continue.
In summary, these five steps are all that are necessary in a streamlined change order process, particularly in a small job. Change orders no longer have to be a source of frustration. Trak Changes, your digital solution for making change orders, easily handles the change order approval process. Start your free trial today
Pro Tips on the Change Order Approval Process
Tip 1: The most critical part of the change order process is the RFI. If there’s a change/changed condition, you have to get the client to recognize and agree to this.
Tip 2: If your client does not immediately agree with you that there is some kind of a change, then send a follow-up RFI, re-stating the change, in a slightly different language, and ask again, “How shall we proceed?” About half the time, when your client realizes that you are serious about the issue, they’ll relent, ask what’s involved in fixing it, and you can proceed with their COR!
Tip 3: Make sure your RFI / COR discussion is with people authorized by your contract to review your RFI and direct you to do the work. In other words, if your contract says, for instance, that “Only the Owner can authorize changes” then make certain you are not taking the word of your client’s foreman on the jobsite.
Tip 4: When you price out your COR, keep it simple. Show direct costs for labor, equipment, and materials, and show the contract-approved markups for overhead and profit. Resist the temptation of requests for ‘losses due to crew inefficiency because of the issue’, and so forth. They are generally hard to prove and difficult to collect, particularly if you want to streamline this process!
Tip 5: Anytime you implement a change not included in your contract or not shown on the plans, and you don’t do it via a formal change order, you expose yourself to unnecessary danger—even if you did it for free because the client or GC asked you to, or because you wanted to ‘keep the job going’. Instead, be the person who says something like, “Hey, I’d like to help, but the contract says that I can’t do it that way!” In other words, if it’s important enough to your client, your client will put it in writing.
Tip 6: If you make a streamlined change order request process a part of your company SOP (standard operating procedure), utilizing software like Trak Changes will make the process of getting approved change orders simpler than ignoring them, keep you in contract compliance, and improve your cash flow. Again, by doing this digitally, right inside your software, it’s your security, knowing that all of the pieces and parts of your COR are contained in your Trak Changes package, where you can always find them, as can your client.
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