The Importance of Change
Orders
With the start of every new project come the inevitable changes.
The experienced contractor knows that it is not long before the
customer is asking you to make some modifications to the original
scope of the work by way of changes.
Be sure that each of these changes are put in writing
immediately, priced accordingly and signed by both parties to
avoid later disputes.
Contractors who do not document every change are setting
themselves up for a losing battle in the event of a dispute. In
addition, such contractors may be reducing their profit margin by
not taking into account the additional cost (and markup) of each
change.
What may appear to be a minor change can cost you time and money.
A little bit here and a little bit there can soon add up. For
example, the customer may only want to change the color of a
toilet. This small change may involve a price change for a color
not in stock. It could take extra time to obtain. It could
involve the hassle of exchanging a toilet already purchased. A
delay could idle workers and extend the due date for completion
of the contract. By the time the project is completed, the
customer (and you) may have forgotten about that change. Or, the
customer may dispute that this was a change at all. When the
customer requests a change, they would be very willing to make
sure you don’t forget that change by signing a Change
Order. Now, later on, you have a legal document that shows they
approved the change (the document also indicates there may be an
additional charge and it may extend the completion date).
Some changes may require another application having to be made
for a building permit or the need to modify an existing permit. A
variance may be required so the property owner can get a
certificate of completion or a certificate of occupancy when the
work is done.
There is no excuse for a contractor to avoid using formal Change
Orders. To use informal notes or to ignore documenting changes
will cost thecontractor money in both his time and effort to
execute the changes and in time and legal fees in case of
dispute.
Successful contractors know that Change Orders provide a healthy
financial profit for the overall project if properly
executed.
A good Change Order should be dated and signed by both the
contractor and the customer. It should note the additional
charges to be added and how it will be paid. It should indicate
how many extra days, if any, will be added to the original
completion date. And, it should stipulate that the change becomes
a part of the original contract.
The customer should be pleased with the professionalism of any
contractor who dutifully pays so much attention to detail by
documenting all changes. The contractor should be pleased with
the financial rewards and the profound reduction in
disputes.
You can purchase any of our forms or agreements at the Catalog page.
