There may come a point during your custom home construction project where you want to change your plans. Perhaps your circumstances changed or maybe you simply don’t like the results of your initial design. In these cases, if you want to modify the design after already approving them, you will need to complete a construction change order form.
This post introduces the concept of a construction change order and how to use it to get the results that you want. But be warned: if you change the plan after you’ve approved it, it is likely to cost you.
What Is A Construction Change Order Form?
In construction, the term “change order” refers to an amendment to a construction contract that alters the work a client requires a contractor to do. If you are building a custom home, you (as the client) must apply to the contractor or builder for an amendment.
To do this, you will need a construction change order form. This document sets out various details concerning the changes that you would like the contractor to make before they deliver the final project.
The shape the document takes relates back to the policies set out in the original construction contract. In some cases, there may be limitations on what changes are possible and when. Talk to your builder about their specific process and how they go about submitting change orders.
Construction Change Order Best Practices
Following construction change order best practices allows you to minimize disruption for both parties and keep things fair. Here are some of the steps that we would recommend:
Provide Relevant Information
Head the change order form with all relevant information including your name and details, the contractor’s name and details, and any subcontractors, architects or engineers also involved in the project. Include the name and address of the project and the change order number (or the running total if you submit more than one).
When creating a change order, write down the date that you first told the contractor about the change. Alongside that, write down the date when you issued the change order for approval.
Please note that construction contracts will usually specify that you need to submit change orders within a certain number of days. If you delay, any change orders you do submit could be invalid.
Use A Standard Template
To ensure that you keep things well-defined and minimize costs, use one of the many standard change order forms available over the internet. These templates prompt you to provide all the information required to ensure that the process goes smoothly. You should be able to complete most forms on a single side of paper. Give a description of changes needed, reasons for change, any supporting documents that justify your decision, and specifications, if required, for any new parts.
Forms should also include sections on changes in contract prices and times. Here you should specify the likely net increase (or decrease) in the time and money cost of completing a project.
Cost Of Change Orders In Construction
Before you put pen to paper, you’ll want to consider the cost of change orders in construction. Typically, change orders can cost around 10 to 15 percent of the total project contract value and reduce productivity by anything from 10 to 30 percent. Granted it does depend on the changes being requested. Changing the color of the counters isn’t going to add 10 percent of the project. Adding rooms or changing the design of the home, could very well cost a pretty penny.
Construction companies categorize these costs into three silos:
Direct costs are those that arise directly because of the change order. Obvious items include labor, equipment and materials required to make the change. Other associated expenses are things like fuel to run the equipment and admin staff hours to organize new shift patterns.
Indirect costs involve costs that don’t relate to the specific project but which constructors must make anyway while working on your project. These include back office costs, marketing and advertising.
Lastly, consequential costs are “soft” expenses that companies incur when they accept a change order. These could include things like crew reassignments, damage to morale, time delays and brand reputation issues.
How much custom home owners wind up paying for change orders can, therefore, vary considerably. In some cases, making the required changes is easy and doesn’t require massive reallocation of resources. In others, changes can lead to a domino effect, causing costs to climb.
Your best bet to keep costs down is to ensure that you complete a change order form to a high standard to minimize confusion. Succinctly communicating your needs to the construction company reduces the risk of errors.
Thankfully, if you work with Bianchi-Tillett Developers, there is a defined process to make changes, and most of the work is done for you.
In summary, a construction change order is a powerful tool that you can use to make modifications to a custom home construction project. But you shouldn’t use it lightly. Submissions can increase the cost of a project by thousands of dollars.
Contact us today to learn more.
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