#001 Show Notes: Seven Keys To Dealing With Change Orders

Seven keys to successfully navigating the often choppy waters of dealing with change orders on construction projects.

Summary:

  1. Be proactive – If there is a significant chance  that your project will involve changes that can be priced in advance, negotiate those prices in advance.
  2. Present Detailed Written Change Orders – Avoid the temptation to rush in on a verbal approval.  Remember:  If it’s not in writing, it never happened.
  3. Be Prepared To Justify Your Price – There is a temptation to “swing for the fence” when a change order opportunity materializes, but if you offer a fair and reasonable price based on reality, your proposal will stand up under some scrutiny and it will build trust with your project owner.
  4. Look For Win-Win Value Engineering Opportunities – The idea of sharing cost saving ideas with the contractor has gained favor in recent years, and can be a way to make a profit even when your contract amount decreases.
  5. Sooner Is Better – Resist the temptation to wait until after the change order work is done to present your case.
  6. Anticipated Cost Report – This is one of my favorite tools to help project owners deploy 100% of their capital, i.e. pay you at least 100% of your contract amount.  Prepare an Anticipated Cost Report that shows original contract amount, approved change order amounts, and anticipated changes which total up to the total anticipated cost of the project.  Use this report to show your client each month how much budget they can anticipated to have available so decisions to upgrade or add scope can be made at the right time in the project.
  7. Unit Prices – Present unit prices at the beginning of the project for potential changes that might be encountered.

Resources:

www.snapfieldreport.com – Mobile friendly software application for reporting and tracking change orders.

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