Change Order Exhibit to Contracts

[cmwarner2003]

I wanted to see what you guys do to establish change order rates up front. I have thought about working up a sheet and offering it as an exhibit to our contracts to have an established change order rate for all change orders.

Similar to the following:
Foreman Rate and % of time based off of total labor hours (12.5%)
Electrician Rate - Blended Rate is what I have always used ($XXX)
PM Rate - ($XXX)

I am thinking about doing this as a way to alleviate the argument over change order rates in the future. It seems contractors what to nickel and dime change order rates, and if we can have it established from the beginning, maybe that will make change orders go more smoothly. Just curious everyone's thoughts.

 

[cdslotz]

It's usually spelled out in the specs

 

[cmwarner2003]

It's usually spelled out in the specs

I’ve never seen hourly rates spelled out in a contract. OH&P is generally the only thing I see spelled out in a contract.

 

[zbang]

I would only do that if the rates are already specified in the proposal/contract, otherwise a change order is just like another proposal- "If you want XXXX it'll cost YYYY and take UUUU days" sort of thing.

Also depends on the size of the jobs and how many layers of approval there.

 

[brantmacga]

I’ve never seen hourly rates spelled out in a contract. OH&P is generally the only thing I see spelled out in a contract.

That’s all I’ve seen as well; 10% cap on O&P.

I can’t think of any instance where someone argued a change order rate with me. Your foreman labor percentage looks fair. I’ll use an average rate as well, 10% for PM and usually 5% for office labor and estimating to process the change.

If you’re going to use the same rates and percentages on change orders as you do when you bid the job, I don’t see a problem with having that clearly defined in the contract. I’m not sure how much it would change things though unless you are quoting changes as T&M, which I rarely do.


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[petersonra]

Often what I have seen is a request to include these rates as part of the bid package. I don't think I've ever seen a contract that actually sets them though. But it's not like I've negotiated tons of such things.