By Ron Pestone
The answer is, it all depends. Depends on what? The truth, a thousand and one things. So where does that leave us? With a lot to think about.
Let’s start with the basics. Does the individual [maybe you] know the business and how to properly estimate? What I mean by does he really understand what is entailed in the change that is being estimated? Take something as simple as changing a window size on a job. Suppose after the project is 90% complete, the window, siding, trim and interior wall has been installed that the owners then decides they do not like the window that has been installed per the owner’s drawings. Replacing a window at this stage of a project is going to be a lot more expensive than changing the window when the project was in the framing stage.
The installed siding and trim on the outside will have to be removed and if the window is located on the second story new scaffolding will have to be erected to effect the change. Also if the siding and trim has been properly installed it will take a lot longer to remove and save it for reinstallation than it took to install it. On the inside the sheetrock and insulation will have to be removed as well as the trim. If the sheetrock has been taped and spackled it will have to be re-taped and spackled. Since it is such a small job he is going to have to break his schedule to accommodate you and that isn’t going to come cheap.
If electric has to be moved to accommodate the change you are going to have to call back the electrician and like the tapper he isn’t going to be cheap.
As the owner sees it the work involved in the change consists of removing the window, installing a new header and installing the new window. Any contractor who sees the change in the same way is going to price the change order way below the actual cost to the contractor and as a result he will not be in business long.
Even if you have all the experience in the world and really know your business but are a lousy negotiator you are going to get hurt. Worse, if your concern is to be seen as a good guy why not just give your customer your pickup truck and tools and end it all in a hurry because either the bank or uncle Sam is going to wind up with them. You’re out there delivering a quality product and its not against the law to make a profit, in fact the basic law of business is if you continually pass up profit for good will you are headed for the poor house. And let me give you a little tip here, nobody but nobody is going to have a soft spot in their heart when you go to the poor house.
What about the timing of the change. If, as in our example, you are 90% complete with your installation when the owner requests the change you and your crew are going to be on the job longer than you originally planned. If you have to bring in a tapper and an electrician you might be on the job for an additional week or more. Who pays for that? If you only charged $1,500.00 for the change is that going to be enough to cover the cost for you and your crew for an additional week? To put it mildly, NO WAY.
Let me tell you a little secret, in general owners really do not care. They know and will be quick to tell you the window cost $500.00 because they priced it a Home Improvement Store. So they think the $1,500.00 you charged which is really a disaster for you is way too high to begin with. That’s when you begin to hear they are thinking of going on line to one of those sites that review and grade contractors and report the contractor abuse.
It is essential before you start a project that you sit down with the owner and explain in no uncertain terms that the price of any change order is going to be based on when it is requested in the building schedule. The owner needs to understand the best buy they can achieve is requesting a change before a single nail is driven or a piece of wood purchased. In short the further down the line, the higher the price.
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