Minimize Design Change Order Expenses

Design changes can be significant issues in your design process. They can lead to a substantial increase in both overall costs and time, which obviously is not particularly helpful to your bottom line at the end of the day.

Designers should try to keep their plans fairly flexible due to these. You don’t want to go back to the drawing board anytime the client has some sort of flight of fancy during construction. You should always think about how your design choices will affect the production process and how much it will cost to change them later.

Research published in the Journal of Engineering Design states: “The redesign costs are from 2.1% to 21.5% and on average 8.5% of the construction change cost, equivalent to the fee of a new design project.”

That’s a high percentage. 

Owners will often change their minds as a project develops. Having an idea in their head or on paper is very different than seeing it in real life.

Depending on the contract, changes in design will be allowed. The change clause in your contract should tell you how the process will be governed, and how compensation will work.

However, when the changes crop up due to design-related issues, especially if you’re following your own plans, you may end up having to eat the costs.

How Common are Design Changes?

This is an area of immense research in the construction field. As a way to increase business productivity, figuring out how often and why design changes occur is a pretty important statistic to know. The exact numbers are a bit murky, but design changes are basically just a fact of life in the field as things currently stand.

Quality.org states design error is the cause of “…40 to 60 percent of all construction error and difficult to identify until the element is built or installed on the project.”

Design changes are very common. In fact, a study by the Islamic University of Gaza along withthe Berlin School of Technology takes it a step further and says: “almost 80% of costs of deviations were related to design, and 17% were construction related.”

It’s not an exaggeration to say that design changes are one of the largest time and money sinks in the business.

How is Profit Lost During Design Changes?

There are a few compounding factors that end up adding up to the fairly large costs we were mentioning earlier on. 

Most of these aren’t necessarily major expenses on their own, but when added on top of each other again and again it really impacts your potential profit margin.

Time

Needing a deadline extended without getting additional payment is a complete nightmare. All your overhead and any labor needed are coming straight out of your profit percentage, especially if it requires a particularly lengthy change.

If you have a T&M contract, you might be able to negotiate out of this with an extension to the budget cap and timeline, but generally, you really don’t want to be in a situation where a design change is going too far over your expected timeline.

Materials

If the design change requires additional or alternative materials that weren’t planned on, it can be a big damper to your expected payday.

If you have to swap out materials that you’ve already purchased, you may be able to recoup a bit of the cost at your supplier by doing a return, but otherwise, you’re getting into fairly dangerous territory when prices are significantly different.

Productivity and Morale

As a project drags on past you’re expected timeline, things can get a bit miserable. This feedbacks onto the work and can make things take even longer, simple mistakes become more commonplace, thus turning the whole mess into more of a slog than a productive environment.

A study on the importance of morale in construction performance at the Harrisburg University of Science and Technology found a positive correlation between morale and project performance, with the schedule of the project being one of the biggest factors affecting morale.

How to Avoid Costly Design Changes?

Design changes are likely to occur no matter how thorough you are with your planning. It’s a fact of life.

However, there are many ways of taking them in stride.

Plan thoroughly

A common cause of design changes is actually on the construction end. Wherein an agreed-upon blueprint is found to not fully meet safety standards or is otherwise structurally unsound when brought into reality.

Don’t be lazy during this process. You can reflect the additional time spent planning in your total price.

Use high-quality materials

It might be tempting to find a deal on off-cuts of lumber or take an offer from a new supplier. Sometimes this can be lucrative, but thoroughly inspect any and all materials you’re going to be using.

Don’t give your team a batch of bad materials and tell them to go at it, chances are they’ll build with those parts and the resulting product may end up being sub-par.

Communication and Documentation

Poor communication is probably the number one cause of design change with otherwise competent projects. While contractors not properly documenting everything at the job site is a regular cause of not being compensated for these changes.

You, your client, and the rest of your team need to be on the same page at all times to make sure that things are going as needed. Make sure to document design changes in a written change order, confirm it with the client, and get them to sign off.

 Don’t just go with verbal agreements, a client might not fully understand terminologies you’re very versed in. This alone can cause an error in the plans as you two are not on the same page.

Make plans clear every step of the way.

Using Software to Keep Things on Track

The right software to organize your projects can make a huge difference in how much a burden these types of changes can be on your bottom line.

We previously mentioned keeping things clear with you, your team, and the client, and there are few better solutions out there for this than a product like Trak Changes.

Trak Changes informs everyone involved of exactly what is going on at the job site, in an easy-to-parse interface, with the option for the client to sign off on plans and design changes as they occur. This also means you’ll be able to easily be compensated for changes that are out of your control.

No miscommunications anymore. Trak Changes streamlines this messy process into something that can work for you and your company.