Change orders

[Dennis Alwon]

I worked for a contractor in Kingston, NY whose main business was in the IBM plant. Huge place with new work and changes going on all the time. My boss told me he would take a larger job there at a loss just so he could get into the building. Once you were in the building they always would grab one of us to go move something or add an outlet etc. He made his living on those small jobs and changes,.

 

[Alwayslearningelec]

My company makes huge profits on change orders and extras.

Yup..they should if approached and handled correctly

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[Alwayslearningelec]

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.

You've seem to have a good handle. Do they let you charge estimating or engineering time separately related to the c/o or they claim that's part of overhead.

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[drktmplr12]

We have an age old saying for jobs that have very small or no profit margins, "we'll make it up on the extras".

not if we designed the job and are watching it :happyno:

 

[jumper]

not if we designed the job and are watching it :happyno:

No problem, then I will install exactly what you spec to a tee, any omissions or mistakes included. Plan every nut and bolt very, very carefully.

 

[kwired]

No problem, then I will install exactly what you spec to a tee, any omissions or mistakes included. Plan every nut and bolt very, very carefully.

And when another trade has something off by just an inch it might mess up everyone else in one way or another - now every trade is submitting a change order.

 

[drktmplr12]

No problem, then I will install exactly what you spec to a tee, any omissions or mistakes included. Plan every nut and bolt very, very carefully.

change orders are inevitable. i didn't mean to say no change orders permitted when we watch a job, although reading it a second time-that's how it came across. i meant that we do our best in putting out solid designs that don't need to be change ordered into oblivion to achieve project goals. we want clear, bid-able documents that speak to contractors. we also work with the contractor when conflicts are identified to determine an amenable solution.

that said, engineers aren't perfect (some would have you believe otherwise). i believe a contractor shouldn't have to pony up for errors and omissions. they bid what was on the paper. its our job to make the documents clear without making them an instruction manual (place nut F on bolt M, turn 140 times and torque to 12 N-m.)

 

[Greenboy]

You've seem to have a good handle. Do they let you charge estimating or engineering time separately related to the c/o or they claim that's part of overhead.

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I will try it, and most of the time, they will say that my time is overhead. My argument is Overhead is office, admin time, etc. and My time is direct because I have to researh time. Engineering is an obvious one, as circuits gets changed, and Engineer takes time to do it. Engineering is subbed out for me, so it make sense to me to charge for that as a sub contractor.

That is my approach anyway.

While most question it, some gets it.

 

[Greenboy]

I know contractors that live for change orders. I've always tell people that if the bid is too good to be true it probably isn't a good bid and you'll start getting hit with the, "oh we didn't bid that."

IMO, this would be an uphill challenge.

If it is a plans and specs job, and if it is on electrical drawings(And even architectural drawings, some GC believes), you own it. If you missed something in your estimate, you are responsible for it. It's not like I can line item out everything that I have captured, and expect to charge something that I may have missed.

Or maybe you can? If there is a way, please clarify!!


I can see if this is a design build project, and as things change and / or added, you can charge them for all of the extra work. With design build work, I like to line item out everything we are providing, so there are no confusion when there is some thing that is missed, and I can charge for them.