Change order 101
Every time a person wants to work with someone on a construction project, there should be a contract in place. That contract confirms that both parties agree on the scope of work that is being completed, as well as the timeframe that it all needs to be done within.
While in a perfect world, that contract would be everything that is needed, not everything always goes as planned when it comes to construction. There are many variables, and those variables can cause changes that each party needs to sign off on and agree to. Some people might think that word of mouth or verbal agreements would be enough for the changes, but that is never the case. The reason for this is that not everyone remembers all the smaller details and some people may decide that they shouldn’t have agreed to the changes, after they already have, and all of a sudden, they fake not remembering the approval.
It then becomes an issue of “he said, they said”, in which no one really wins.
A change order can make it possible to avoid all those issues, because everything is in writing with signatures, dates, and who was involved in making the changes. The changes can include everything from additional work, work that is no longer needed, or changes that need to be completed due to local laws changing.
The template of a change order for a construction project should be the same for everyone that is using them. That means that the owner, architect, contractor, or other workers have the same change order form that they can input information into and send to where it needs to go. This will keep the confusion down and ensures that everyone knows exactly what they are filling out and reading. In fact, a blank copy of this change order should be included in the regular contract paperwork, so that changes can be made to it prior to the start date to make sure that everyone has what they need on it.
While almost anyone can fill out a change order, it is recommended that only certain people have the authority to approve them. A contractor might not want to give their workers the authority to approve a change order, because a worker might not know all the same details that the contractor knows. This ensures that the contractor will not be liable for mistakes that their workers make. Plus, when people know the few people that can make the approvals for the change orders, they will be delivered in a timely manner to just those people. This means that change orders will not get lost in the shuffle, because no one knew who was supposed to be receiving them.
Change orders are never easy, which is one of the reasons why contractors despise them so much. Contractors do not like saying no to change orders, because it can mean loss of future business. However, since it is not always easy to find a fast solution to the requested changes, many contractors choose to have systems in place to eliminate the additional costs for creating all the change orders and the necessary approvals. This ensures that they can quickly make necessary decisions that are best for them and the project that they are working on.
The most common reasons why change orders are completed for construction projects include the cost of the work was incorrectly estimated, obstacles are discovered that create issues that need to be solved immediately, the original budget or timeframe is no longer possible and changes need to be made, and additional features or details are wanted.
Find also: Purchase orders in construction
The items that should always be included in a change order are the description of the change, how the change compares to what was in the original contract, itemization of any costs, the total costs of the change, and how the change will affect the completion date of the project. The more information that is included in the change order will make the process easier, for not only approval, but possible solutions to issues that have arisen.
Anytime information is left off a change order, there is a chance that the change order approval process will be delayed. After all, no one is going to approve something that they do not have all the details for, as they would be liable if the changes didn’t work like they should, or the end product wasn’t what was wanted.
Change orders have become increasingly more popular over the years, especially since more and more changes are needed on construction sites due to unforeseen issues. Plus, with the rush to get bids out and projects started, many of the smaller details are missed, and many of those details can only be added in with a change order request.