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Thread: Change orders

  1. #1
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    Change orders

    Do we all agree that we don't make money on change orders? Yet we get these youngsters PMs from college, beating you up on pricing for every single Change order request submitted(Throughout the entire project). It is a daunting task.Constantly asking to breakout pricing. Even when you breakout pricing (labor and materials), they want you to breakout line item by line item.


    I want to see what kind of approaches taken, when submitting change order request, to keep GC's questions to a minimum. What are they actually looking for???

  2. #2
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    Who is "we?"

    I don't do paperwork for free.

    If it's part of the contract, it's part of the bid. If it wasn't part of the agreement, they don't get it.

  3. #3
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    Most of us have estimating programs nowadays. When I do a change order, I always do it in the estimating program. There are many ways to get around ridiculous requirements like 10% profit and overhead. Extra length on conduit, upping the price of material before it gets to the extension, etc. Make sure you charge for things like bond, equipment rental, warehouseman, and especially every minute you spend, talking about, laying out and pricing the change order. However, always keep something in your pocket, for example the Foreman's truck or a tool that had to be delivered. If you get grilled by the GC, tell him flat out that you will review the change but unless there is a blatant mistake every minute you spend will be charged to the change order, so even if you skim $10 off of it, it may cost them $20 in your time to do it. Given that you always hold something back the best answer you can give when they question is, "Thank you for making me go back, while I corrected the item you identified, I realized I hadn't charged for the tapconns so your price actually went up. Thank you again." If they try to argue about Project manager time, get a copy of the NECA manual of Labor Units or just reference it. It CLEARLY states that the labor units included do not cover supervision. I, as a project manager, am not assigned to only one project so, no change orders, no time sent. change orders, additional time spent. Period.

    I will say that I RARELY have a problem with change orders. I share the estimating data right up front most of the time and if not, when they ask for it I give it to them 10 minutes later so they know I didn't have to make it up.


    I know what I don't know, and I know where to go to find it!

  4. #4
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    Oh yes, I agree with you that no matter how much you can charge for change orders. I job is more fruitful if there are not any.


    I know what I don't know, and I know where to go to find it!

  5. #5
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    My company makes huge profits on change orders and extras.
    Rob

    Moderator

    All responses based on the 2014 NEC unless otherwise noted

  6. #6
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    Quote Originally Posted by infinity View Post
    My company makes huge profits on change orders and extras.
    When I worked for a commercial EC so did we. Boss lived for add ons and such.
    "Electricity is really just organized lightning." George Carlin


    Derek

  7. #7
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    Quote Originally Posted by jumper View Post
    When I worked for a commercial EC so did we. Boss lived for add ons and such.
    We have an age old saying for jobs that have very small or no profit margins, "we'll make it up on the extras".
    Rob

    Moderator

    All responses based on the 2014 NEC unless otherwise noted

  8. #8
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    Then there is the game I play with project extensions, requesting for additional days, or work OT to keep with schedule.


    And if you perform work at OT rate, there are multipliers after so many labor hours that are impacted by crews production. Burning your crews out. This is something that you need to educate your customer though. It is usually hard to grasp the concept, but the dollars are real.

    Additional Hidden costs are often forgotten about- Permit, parking, Small tools, Job trailers, the lists goes on and on. Through the number of years, I created a spreadsheet that capture these costs, that I can share with my customers.


    There is also information regarding lack of efficiency if you have more than 10% of change orders compared to the contract amount.

    I do all of the tactical approach. I know the game. It is just ridiculous to have to explain sometimes I guess.

  9. #9
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    Quote Originally Posted by Greenboy View Post
    Then there is the game I play with project extensions, requesting for additional days, or work OT to keep with schedule.


    And if you perform work at OT rate, there are multipliers after so many labor hours that are impacted by crews production. Burning your crews out. This is something that you need to educate your customer though. It is usually hard to grasp the concept, but the dollars are real.

    Additional Hidden costs are often forgotten about- Permit, parking, Small tools, Job trailers, the lists goes on and on. Through the number of years, I created a spreadsheet that capture these costs, that I can share with my customers.


    There is also information regarding lack of efficiency if you have more than 10% of change orders compared to the contract amount.

    I do all of the tactical approach. I know the game. It is just ridiculous to have to explain sometimes I guess.
    Absolutely. Anyone who doesn't do this, have a standard line in your change order form. Every change order you write put, "Time extension required to complete the work" Don't go overboard figure with say, 50% of you crew size how long. So 8 men, a 40 hour change order, put down 10 days. It is extremely rare that anyone will challenge it. When you get later in the job and they say, you are behind you have to work overtime, tell them they have to pay for it. When they say no, you say that you have however many additional days to complete the project on straight time. If they do challenge the extension of time, then you tell them flat out they can either pay you time and a half to do the work or they can get someone else to do it.

    I just don't run in to that much trouble explaining. Most GC's will prefer that you hide most of the costs and as long as the change doesn't "smell bad" they let you get away with it. For the pesky ones you are talking about. It is your responsibility to educate them that they are better off going with the flow. Every time the question you increase the cost of the change order, they will get the hint.


    I know what I don't know, and I know where to go to find it!

  10. #10
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    Quote Originally Posted by Strathead View Post
    Absolutely. Anyone who doesn't do this, have a standard line in your change order form. Every change order you write put, "Time extension required to complete the work" Don't go overboard figure with say, 50% of you crew size how long. So 8 men, a 40 hour change order, put down 10 days. It is extremely rare that anyone will challenge it. When you get later in the job and they say, you are behind you have to work overtime, tell them they have to pay for it. When they say no, you say that you have however many additional days to complete the project on straight time. If they do challenge the extension of time, then you tell them flat out they can either pay you time and a half to do the work or they can get someone else to do it.

    I just don't run in to that much trouble explaining. Most GC's will prefer that you hide most of the costs and as long as the change doesn't "smell bad" they let you get away with it. For the pesky ones you are talking about. It is your responsibility to educate them that they are better off going with the flow. Every time the question you increase the cost of the change order, they will get the hint.
    One needs to look at why you are behind. If it is because the GC or other's have held up progress, that is not your fault - if it is because you are not where you planned to be at that point, maybe you pulled some/all of the crew to do another job and got behind, and not a problem caused by others involved - then I think you have to eat that overtime.

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