By Ron Pestone
Do not worry about being the good guy. In the end what will be remembered is the quality of the job not the price it was squeezed down to. It’s your company, your money and if you do not fight for it nobody is going to give it to you.
One of my gripes is the sites that review and grade contractors. It seems to me that owners often use these sites as leverage to get contractors to do extra work for nothing or next to nothing. In my opinion the whole concept is based on self-interest and idiocy. What a notion, rank amateurs with little or no knowledge of how to build anything passing judgment on professionals. It’s no less idiotic than pulling a guy off the street and asking him to perform brain surgery. If you think I’m exaggerating and that there is no comparison, do you have any idea what you have to know to dig a hole and put up a building in New York City? When you couple this with the fact that good reviews many times are going to be based on the owners feeling on how well he did on price. In other words if an owner cannot buy what he wants cheap enough he’s going to give the contractor a poor review. Unfortunately in construction like the rest of life people who are pleased with a transaction usually do not write reviews because, as the saying goes, in reality good guy sleep while the bad guys never sleep.
Sorry for the diversion, returning to the actual change orders, it is my opinion that contractors rarely ever get the right price for their change orders. What makes the situation really difficult is that contractors in general think they have gotten the right price and they rarely look at their change orders in relationship to the whole project.
In my book, BOOK OF ELM, VOLUME 1, COMMON SENSE SUBCONTRACTING WITH ELM JOB COSTING & MORE I dedicate considerable space to change orders. The book has numerous templates tracking different aspect of change orders. These template bear fruit in the Project Status Report which is generated monthly for each active project.
During the progress of the project you will see how much your company would have made without change orders, how much additional is made with the change orders, how many days the project was extended because of change orders. Most importantly you will see what you and your company had to use in resources to product those additional change orders.
The report is quite enlightening and for many it will answer the following questions. One, am I getting enough for my change orders? Two, would I have been better off without any change orders? Three, could I have used my resources in a more profitable manner? Four, what areas of work does my company excel at and what areas should I stay away from?
In the end change orders are a little bit like illness, unless you have the proper medicine you will never get better and in fact you could possibly die.
The best medicine for change orders is a system that takes them from birth to completion and clearly demonstrates in a project’s bottom line if they were positive or neutral or negative for the project. Anything less than positive is unacceptable and what needs to be changed is how you price change orders.
Don’t Forget: We Build America