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Jun14You’ve signed the contract, you’ve started work, and the customer decides to tweak the job. Maybe it’s a substantial change, maybe it’s just a “tiny modification“, they want to add something here or take away something there. Whatever the change, you know it will impact time, materials, and/or manpower.
You don’t want to create a hassle and you trust your customer, so you just agree to the change and then invoice them later. Only later, the customer does not remember things quite the way you do, is ‘shocked‘ at the price increase, and everyone is unhappy. In serious cases, you end up swallowing the cost (so long, profits!) or in court trying to get your money.
You DON’T want to lose money, and you DO want to look professional. Change Orders will do both for you.
If the customer wants to make a project change, the first thing you do is get together all the existing specs and estimates you already worked up. This does two things: it clearly shows that the current job price reflects the current specs, and it lays the groundwork for justifying price increases due to the changes. Yes, it sounds really obvious. But you have to walk through the process cleanly and clearly if you don’t want trouble.
Next, get the new specs together and develop the change order.
IMPORTANT:
Do not do any work whatsoever until the customer has signed off on the change order.Seriously, this is not the time or place for handshake deals. If the customer says he doesn’t care about paperwork and to go ahead and start, just tell him you do everything straight up and by the book and please sign here now and you’ll be happy to get rolling right away.
Let’s say the customer wants the change but truly doesn’t see the need for more paperwork. Explain to him that the project spec change will change the materials and labor, which changes the original contract, and the change order just lays it all out in black and white. Help the customer understand that putting it all in writing protects him.
Even if a change order doesn’t impact the price, make it and get it signed off. Any change in work alters the contract and makes you legally liable. Documenting ALL changes using change orders keeps your bottom line legally covered in the event of a dispute - the customer can’t claim he didn’t approve something when there is his signature on a Change Order form.
Lastly, use change orders as a way to streamline the way you do business. If you find yourself having to make all kinds of change orders on job after job, that is a real good indicator that you are missing some crucial things during the design and estimating stages, or that your communications with your customers could use some improvement. Learn from examining the pattern of your change orders to anticipate problems. This will help you write better contracts, which make for fewer change orders - and faster job completions.
Change orders are not just an optional hassle - they are a necessary and amazingly useful part of your business toolbox.
Change orders allow you to be flexible without operating at a loss, opening yourself to legal liability, or wasting time the same way job after job after job. Change orders really are your friend!
Val Barclay
JA Projects – Keeping an eye on your Construction in Jamaica.CommentsOne Response to “Our Quick Contractor Business Tip - Changed Mind? Change Order”
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Build without always being in Jamaica.
"What a great way to to keep an eye on our new home in Montego Bay. We live in Massachusetts and now we feel we can build without always being there".
It works for me!
"Thank you, what a great way to save time and money, it works for me! Having already constructed the outside of our Villa/Hotel we wanted to fill it with Jamaican furniture.
We posted the style and discuss the arrangement, all through JA Projects, the database did the rest, knowing our discussion and pictures were private. It's a great way to do business!
what is your address in Duncans Bay - wish to visit to discuss options when next in JA in Oct