Change Order Management

Change orders don’t have to be a problem, but they definitely need a clear process.

Custom Home Builders who build fantastic homes for satisfied customers share some important traits, one of which is an obsession with details. Clearly communicating those details to their clients is another. Great builders are great communicators, documenting every party of the job.

It takes a lot of work to craft detailed construction documents, but that work pays off by showing the homeowner exactly what they’re getting. On the flip side, it also helps the builder understand exactly what the homeowner wants. These documents set expectations and ensure a smoother, more enjoyable building process. Some critical documents include: the contract, the plans, the specs, and the change orders.

What is a change order?

Normally, a change order is anything that alters the scope, schedule, or cost of the work after the homeowner has signed the final contract. Builders strive to minimize changes by helping clients make the most knowledgeable selections before work starts. While this effort can limit changes, it can’t prevent all of them.

Sometimes, the building inspector may require a change to comply with a municipality’s interpretation of a building code; or the excavator may encounter unforeseen soil conditions that require extra work; or the homeowner may decide after the drywall has been installed that they really want an additional window.

Know what you’re getting.

It’s hard to overstate the importance of detail here. Vague change orders are notorious for generating bad feelings, and lots of homeowners complain about builders who bill them for extra work they didn’t know about or didn’t think was going to raise costs.

To be fair, most builders don’t intentionally mislead homeowners – they just lack communication skills. Take the example of a homeowner who wanted a different bathroom tile than originally specified. If the builder orders the new tile but doesn’t tally the cost until after installation, it may add an unexpected $1,000 and the homeowners may feel like they’ve been gouged.

Great builders and designers check the cost of the new tile and its effect o the schedule, present the numbers to the homeowner on a standard change order form, and won’t order the new tile until the homeowners have signed off on it.

Most builders also add contingency fees to cover the time required to research products and prices, complete paperwork, and call trade subcontractors to determine the effect on the schedule. If that new tile will take an extra two weeks to get, the builder will have to work with the plumber to reschedule the toilet installation. If the homeowner cancels the change after the subcontractor has done this work, they may still have to pay an administrative fee.

Misunderstandings about products and specs can arise on even the best-managed jobs, however, with even the most detailed documentation. The sheer number of products and decisions that go into a custom home make it impossible to foresee every detail. These issues are easily resolved if there’s mutual trust between the homeowner and the builder, which is why it’s so important to hire a trustworthy pro in the first place.