If your company is not using change orders, you could be missing out on some income potential, as well as missing out on an opportunity to increase your credibility. Here’s why. What if a client wants to add something to his project. You follow their wishes, and then invoice them. They weren't expecting the increase of cost, resulting in both parties being unhappy. They gripe, “I wouldn’t have done it if I knew how much it would have cost.” So, a change order protects you, and perhaps at the time the customer thinks the extra paperwork is a hassle- in the long run, however, you look very professional. Let's say your customer wants to make a change to the project, the first step you need to do is gather the existing specifications and estimates. This will show the client that the current price reflects the current specifications. Sounds simple and obvious, but it needs to be shown. So, the next step is to gather the new specifications, and then develop a change order immediately. Once you provide the change order to your client, it is very important not to do any work until your client signs off on it, or the scenario listed above could happen. No matter how much you trust your customer, do not pay attention when they say, “I don’t care about a change order, just go ahead!” If your customer is wary about accepting a change order, explain the need for it. Let them know how this will alter the price- materials and labor. They will receive a copy of the change order to add to their contract, and they will be able to see the reason for the contract change. If you simply invoice them for more, even though they know the additional work was done, the change order says it in black and white. Perhaps a change order has no effect on the price for some reason. Even still, one should be made and signed off on. It is still a change and/or extension of the contract. On a final note, change orders are not just good for the client, but also for you. If you find that you are making quite a few change orders on every project you are doing, chances are there are some things being missed during the design stage. You can take this as an opportunity to better finalize contracts before beginning. Perhaps there are too many uncertainties between customer and contractor before the work begins. If you work out the details completely beforehand will make for a better chance of being able to follow the initial job specifications through job completion..
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If your company is not using change orders, you could be missing out on some income potential, as well as missing out on an opportunity to increase your credibility. Here’s why.
Nick Hurd is the developer of LiteningFast Estimating Building Construction Contractors
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