- How to Improve Your Construction Change Order Process
- Here’s what we’ll cover:
- The construction change order process
- Benefits of automating your construction change order process
- Highly rated construction management systems
- 1. eSUB
- 2. CoConstruct
- Next steps
- Change order в строительстве
- What is a Change Order? – Managing Your Construction Business
- Scope of Work and Contracts
- What is a Change Order? – Implementing a Change Order Process
- Making Change Orders Work for You
- A Final Word on Your Construction Change Order Process
How to Improve Your Construction Change Order Process
By: Pritam Tamang on March 3, 2020
Using spreadsheets or pen and paper to stay on top of the changes that inevitably occur during a construction project is extremely difficult (to say the least). Unfortunately, some construction businesses still use manual methods, or non-specialized tools at best, to manage their change processes.
We analyzed conversations between our advisor team and 500 businesses that reached out to us last year for technology consultation. As many as 60% of these businesses admitted to using manual methods, and 27% reportedly relied on non-specialized tools for capturing and tracking construction change orders.
Organizations that lack tools dedicated to handling change orders are likely to have their employees scramble over mounting paperwork, fail to effectively track change orders, and make “unaccounted for” charges to clients that invariably land the business in trouble.
In this article, we’ll dig into how construction management software can help improve change order workflows and outline a few highly rated systems on Software Advice FrontRunners.
Here’s what we’ll cover:
The construction change order process
A change order is an amendment to a construction project contract, signed and mutually agreed upon by each relevant party, e.g., the project owner, contractor, and architect. The contract outlines a project’s scope, budget, and timeline and the change order acts as a directive altering one or more of these criteria.
Prior to execution, the typical change order process looks something like this:
Change Order Process
Contract is signed: Scope, budget, timeline for construction project are outlined and agreed upon.
Issue is raised: The primary causes of changes to construction projects include:
- Design errors, alterations, or omissions
- Change in field conditions and/or materials
- Procurement issues
- Regulatory changes
- Owner-initiated changes
Change is proposed: A solution designed to manage or counter the issue is proposed and sent out to relevant parties. At this stage, a request for an estimate is sent to subcontractors to outline the change impact on price, budget, or timeline for the relevant work. The owner, contractor, and architect either agree, counter, or void proposed change due to estimate.
Change is agreed upon: All relevant parties agree on the proposed change and documents are drafted to amend the original contract.
Contract is amended: The change order is signed and contract amended. The contractor and subcontractors are responsible for alerting all workers to the finalized changes to the contract.
Benefits of automating your construction change order process
Project changes are common and nearly inevitable. By standardizing your process and workflows for managing issues, and communicating change orders to your staff, you can save money and time.
Construction management software can help streamline this process in many ways, including:
The following examples demonstrate how automating your construction change order process and standardizing these workflows can benefit your business.
Issue: Request for information (RFI) from contractor to architect reveals a design error.
Without construction management software: It’s possible the error isn’t noticed until the build is in progress. At this point, the material costs stemming from the design error (either from materials ordered in excess or the additional material required to fix the issue) may exceed the approved budget.
Although the customer is ultimately responsible for the full cost of the build—including issues resulting from design—errors that are not caught early can lead to tense relations and negative customer reviews.
With construction management software: Architects and design teams can improve the accuracy of plans by using estimating and takeoff software. These digital measurements often pull costs for labor and materials from a centralized database. This information can then be imported into the construction management tool.
When costs near or exceed the planned budget, all parties are alerted and appropriate change orders can be issued. Additionally, architects, and contractors that use software can provide customers with quotes based on past projects and can provide real examples of issues that arose in similar jobs. These real-life examples can be a useful jumping off point when building a contingency budget.
If the first scenario isn’t helpful to your specific situation, here’s another potential use case:
Issue: Kitchen remodel was designed with granite, but during an on-site walk-through prior to installation, the customer has changed their mind and wants quartz countertops instead. The customer says they are fine with the difference in cost and the contractor orders the quartz right away to ensure it arrives on time.
The new material arrives and the build team completes the remodel. However, when the customer sees the final cost for installing quartz countertops, they’re unhappy and don’t want to pay the difference.
Without construction management software: Even though the owner requested the material change and gave a verbal agreement to the increase in cost, if the appropriate change order wasn’t issued prior to ordering and installing the new material, the contractor may be held responsible for the difference in cost. This is because the quartz material was outside the scope of the original contract, which outlined granite as the approved countertop material.
With construction management software: If the contractor was using a construction management system with a mobile application, they could have initiated the change order on site and had the customer sign for the change in material and increase in price on the spot.
Highly rated construction management systems
There are numerous construction management systems on the market that can help automate and improve your business’s change processes. The following are the three highest-rated products (for customer satisfaction) in Software Advice’s Construction Management FrontRunners:
Key features of eSUB include:
- Project calendars, scheduling, and project progress reports
- Equipment tracking, issue/incident tracking, and employee time tracking
- Document management, change orders, RFIs, and submittals
- Financial tracking such as purchase orders, job costing, and payments
eSUB has over 100 reviews on Software Advice. Here’s what a few reviewers have to say about the product:
Positive: “The ability to track all your submittals and purchase orders in one place. The ability to track costs based on PO’S, and change orders versus the contract budget and amount. It’s great to be able to send emails through eSUB.” – Genevieve from Oahu Metal & Glazing, LP
Negative: “The biggest con with the software is in their file management for uploaded job information such as drawings. If you have a typical project layout for how you want to file things, you’ll be fine, but if your project becomes unusually complex it may require some extra effort to make sure everything stays clear.” – Doug from Rowan Electric
Key features of CoConstruct include:
- Project scheduling and tracking, job log, time clock, and change orders
- Financial management features such as bidding, estimates, proposals, and budgeting
- CRM functionality such as lead and contact tracking and client and subcontractor messaging
Project overview screen showing financials and change order costs in CoConstruct (Source)
CoConstruct has over 700 reviews on Software Advice. Here’s what a few of the reviewers have to say about the system:
Positive: “CoConstruct has most of the features we expect and they are always listening to what is needed. The customer service and dashboard resource articles and videos are extremely helpful. They spent a lot of time and effort making sure customers had what they needed to use and understand how to use the software.” – Chris from United Construction Solutions LLC
Negative: “Would love to see more (complete) mobile functionality and a gantt chart that can drill down to minutes….what an amazing help that would be!” – Greg from Glue and Nails
Key features of ProjectTeam include:
- Project management with team calendar and reporting dashboards
- Document management with file sharing and custom form builder
- Financial management with budget reports and payment applications
ProjectTeam has over 20 reviews on Software Advice. Here’s what a few of the reviewers have to say about the product:
Positive: “The ease of use in adding people to forms and providing access to documents. Seriously intuitive and user-friendly. Also, the user interface is seamless. I don’t even have to think about “how” to do something. The buttons and clicks all make sense.” – Shannon from The Federal Proposal Experts
Negative: “Document uploads are extremely slow, it took 2.5 hours to upload 64 drawings. Drawing and spec packages cannot be linked easily.” – Valorie from Barge Design Solutions, Inc.
If you’d like to learn more about construction management tools that can help manage change orders, here are a few steps to consider next:
- Read our construction management softwarebuyers guide. Once there, you can compare different products, read reviews, and see how your peers have evaluated each product for qualities such as customer support and ease of use.
- Book an appointmentwith our advisors for a free, no-obligation consultation. Our dedicated team of construction software experts will carefully review your business and industry requirements and shortlist products that meet your needs.
- Take our online evaluation. Don’t feel like talking on the phone? Answer a few short questions for an evaluation of your needs. After a short assessment, we can provide you with a free custom price quote.
NOTE: The content in this piece that provides opinions and points of view expressed by users does not represent the views of Software Advice.
Change order в строительстве
Change order — In project management, a change order is a component of the change management process whereby changes in the Scope of Work agreed to by the Owner, Contractor and Architect are implemented. A change order is work that is added to or deleted from… … Wikipedia
change order — noun A description of changes to be made to a work order that describes the new work to be done (and any modifications) and the price to be paid for this new work. Wed lose money on most of our jobs if it wasnt for change orders … Wiktionary
Engineering Change Order — (ECO) is used for changes in documents such as processes and work instructions. It may also be used for changes in specifications.ECOs are also called an Engineering Change Note or Engineering Change Notice (ECN) or just engineering change (EC).… … Wikipedia
Change management (engineering) — The change management process in systems engineering is the process of requesting, determining attainability, planning, implementing, and evaluating of changes to a system. It has two main goals: supporting the processing of changes – which is… … Wikipedia
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change of circumstances — A reason for a court to modify an existing order for the payment of alimony and/or child support. In most cases, in order to seek a change in the support amount, the person seeking the change must show that circumstances (such as the employment,… … Law dictionary
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What is a Change Order? – Managing Your Construction Business
Change orders are a vitally important tool for contractors, and if you’re not sure why then it’s important that you read to the very end of this resource article today. Many contractors and subcontractors start off by offering their services to friends, making verbal contracts, and performing great work while trusting that they’ll be paid. Any modifications to the original project are discussed and verbally agreed without a fuss, and everyone walks away happy.
Once you’re really in business, however, things may not always go so smoothly. Most customers are fantastic to work with, but you’ll find a few that always want more done than you’ve agreed to and may not always be willing to fork over the extra cash to make it happen. You’ll have to start clearly defining the scope of work and writing detailed contracts with explicit pricing to protect yourself and your business.
This resource article explains what change orders are, how they fit into your overall business processes, when and why to use them, and how to go through the process with your customer.
Scope of Work and Contracts
Before we can start a conversation about change orders, it’s important to establish a contract and a scope of work. A change order cannot exist without an original contract – otherwise, there would be nothing to make changes to! Construction contracts are an important mechanism for holding both you and your customer accountable to the terms that you agree on. Any client that wishes not to be bound by contract should not be trusted – these are the same types that will try to pressure you into doing extra work and claim that you’ve promised things that you never mentioned – always work with a contract!
A construction contract can be full of clauses, but it has two key components: the scope of work, and the price. A detailed scope of work is crucial for project costing and for managing expectations with the customer – sit down and work it out together, ensuring that it includes everything the customer wants and which you intend to provide. Pricing can be given as a total but is best given as an itemized list. This offers the customer more transparency into what they’re paying for and can help when calculating the value of changes in the future.
Your contract might also include a delivery schedule for the project, payment terms, default conditions and penalties, and other clauses, but if you’ve got a scope of work and some pricing, you’re ready to implement change orders within your business.
What is a Change Order? – Implementing a Change Order Process
A change order is a document used to record an amendment to your original construction contract. Change orders in construction create a record of additional services being provided to the customer, along with costing for those services. A subcontractor that neglects to use change orders may forget to bill additional costs related to the changes requested, or forget to complete the changes altogether.
A change order form has the following features:
- A revised scope of work – this could mean less work or more, but usually, the customer is asking for something in addition to what has already been agreed.
- Pricing for the new work.
- Any relevant modifications to the original contract that result from the new scope of work, for example, extending the delivery schedule for the project because the scope of work is now greater.
- The signatures of both the contractor and the customer.
Making Change Orders Work for You
The most important function of construction change orders is that they show the customer that getting more work done costs more money. Change orders were made to help you manage the customer that always wants more for less, and when combined with a detailed scope of work, you’ll have an easy time ensuring that both parties are treated fairly. Requests for changes can be awkward if you fail to manage expectations from the beginning, so here’s a step-by-step guide on how to do it right the first time:
1. Establish a construction contract with a clearly defined scope of work. Tell the customer: “This scope of work is meant to be detailed so that you get everything that you want in the project, and so I can provide the most accurate cost estimate. Let’s flesh this out together to ensure you’re getting exactly what you want”.
2. Manage expectations about your change order process. Say: “Now that we’ve agreed on a scope of work, it’s important that you understand that you can make changes in the future. If you decide there’s something else you want, we can add it to the scope of work along with any additional costs associated. I use a document called a change order for that, and we would both have to sign it.” Some contractors even include this in their contract – the customer has to tick a box indicating their understanding that additional work will incur additional charges.
3. When the customer requests a change, say: “That sounds like a great idea and I would love to get that done for you. I’ll create a change order and determine what additional costs there would be, and then we can move forward.” Always be candid about the fact that additional work costs money. Never attempt to gloss over it without addressing it directly.
4. Write the requested changes down on a change order, price it out for them, and sign it together. Append the change order(s) to the original contract in your records and don’t forget to bill the customer appropriately once the work is complete.
A Final Word on Your Construction Change Order Process
Scope of work, pricing, and change orders can all be touchy subjects for some consumers. As a contractor, contracts and change orders protect you from feeling pressured into performing work that’s beyond the agreed scope and outside of your anticipated budget for the project. Managing expectations is the most critical aspect of your change order process – you should always discuss the process with your customers in advance so they are aware that additional work will cost extra, and of the process for requesting those changes. This will prevent them from feeling “ripped off” when they request a change and you ask them for more money.
Aside from being necessary for proper documentation within your business, change orders are an important tool for managing expectations with your customers. Some contractors love the informality of working without contracts and negotiating changes as needed, but contracts are important for both the customer and the contractor and we would encourage all contractors to work with them.
An effective change order process will help your customer relationships, make your business seem more professional, and add to your bottom line as you become more procedure-oriented when it comes to billing for changes to scope of work. Templates for change orders are available online, so look around for one that suits your business and start using them today!