I have been thinking about change orders lately. I think that it is interesting is that change orders are handled different depending on which project manager you deal with and which company you deal with. Some places will (and this is traditional practice) give you a low bid, and then the change orders generate profit. While I understand that this came to be because of fierce competition to get the job in the first place, I prefer to only do change orders only when necessary and due to expanding client needs and desires.
I read an article in an old edition of Remodeling (Jan 2002) called “Be Ready for Change Orders” that discussed these issues a little. He talks a little of the problems: difficulties in getting sign offs and time that it takes to create the change order, and order materials. Also, change orders may not benefit from bulk pricing that the original job may get. I thought two things the author, Walt Stoeppelwerth, mentioned was to not just say as necessary – Include an amount, and don’t just sat match existing – qualify the match, for instance: “match existing as closely as possible from existing local sources of supply”.
I think communication is the biggest part of the process – certain problems and conditions cannot be predicted from the beginning and can be charged via change orders. Also upgrades and options can be offered. Sometimes these can also be allowances – so that an actual amount can be billed at the end, or an adjusted amount can be quantified later in the process once more detailed information is available.