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Change Management

Post-contract changes need not be a problem, but they absolutely need a clear process

Professionals who build fantastic homes for satisfied customers share some important traits. One trait is an obsession with details, and another is clearly communicating those details to the homeowners. Great builders are great communicators, and part of being a great communicator is documenting every part of the job.

It takes a lot of work to craft detailed construction documents, but that work pays off by showing the homeowners exactly what they’re getting and by helping the builder understand exactly what the homeowners want. These documents set expectations and ensure a smoother, more enjoyable build process.

Critical documents include the contract, the plans and the specs. They also include change orders.

The usual definition of a change order is anything that alters the scope, schedule or cost of the work after the homeowner has signed the final contract. Professional builders strive to minimize changes by supporting clients to select products before work starts, and by writing detailed specs (product descriptions) for the homeowners to review and approve.

But while this effort can limit changes, it can’t prevent all of them. The building inspector may require a heavier (and more expensive) beam for that big wall opening; the excavator may encounter unforeseen bedrock that requires blasting; the homeowners may decide after the drywall has been installed that they really want an additional window.

Such changes need to be carefully managed. That’s where good change order documents earn their keep.

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 contractors who bill them for extra work they didn’t know about or didn’t think was going to raise costs.

To be fair, most of these contractors don’t intentionally mislead homeowners—they just lack management and communication skills. Take the example of homeowners who want a different bathroom tile than originally specified. If the contractor orders the tile but doesn’t tally the cost until after installation, it may add an unexpected $500 and the homeowners may feel like they’ve been gouged.

The professionally managed company doesn’t make such mistakes. Instead, it checks the cost of the new tile and its effect on the schedule, presents the numbers to the homeowners on a standard change order form, and doesn’t order the tile until the homeowners have signed off on it.

Most professional builders also add an administrative fee to change orders. This covers the time required for staff to research products and prices, complete the paperwork, and call subcontractors to determine the effect on the schedule. If that new tile will take an extra two weeks to get, the builder’s staff will have to work with the plumber to reschedule the toilet installation. If the homeowner cancels the change after the contractor’s staff has done this work, in most cases they still have to pay the administrative fee.

By the way, misunderstandings about products and specs can arise on even the best-managed job with the most detailed documentation. Fortunately, these are usually minor. The homeowners may have expected three coats of paint on that new siding when industry standards call for two, or perhaps they assumed a tile baseboard in the bath, even though it wasn’t in the specs. 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. And one trait of such a pro is great communication systems.