If I had a dollar for every time I had to set the record straight on commercial construction costs and change orders… I would still have this job. But, I would also be a lot richer. There’s a misconception that general construction contractors love change orders. Trust me, we don’t. To prove it, I’m going to debunk some popular change order myths and their affect on commercial construction budgets, project construction management and the design-build process.

Myth #1 – Anyone can request a change order
When it comes to taking orders in the commercial construction project food chain, it goes like this: client→ general contractor→ subcontractor. That doesn’t mean clients won’t walk the site and ask subs to make “small” changes. But, if the GC has done his job, then his subs know they can only fulfill change order requests made by the general commercial construction contractor – in writing. After all, the subs aren’t under contract with the client, they’re under contract with the GC. We tell our subs, if it isn’t in writing from us, it doesn’t exist. That saves everyone time, money and frustration when it comes to paying change orders – see Myth # 3.

Myth # 2 – Construction change orders are unavoidable
While some construction change orders will be out of your control, such as last-minute requests from a municipality, the majority of change orders happen because the full scope of work wasn’t included in the bid drawings. And that my friend is something you can control – design and construction.

When you bring a general commercial contractor into the design process as early as possible, and particularly when you hire a design-build contractor, it is their responsibility to review all architectural drawings to ensure the scope of work is complete before requesting vendor bids. It also means change orders come out of the GC’s pocket, not the clients’.

Myth # 3 – Commercial Contractors make their money with change orders
False! The biggest problem with change orders is that they typically come up in the heat of battle. Pricing is secondary to getting the job done. So the subcontractor completes the change order and submits his invoice to be paid in full. Then the client reviews the “new” commercial construction costs and wants them reduced. Enter the general contractor, who – if skilled enough in negotiations – can resolve the situation to avoid a potentially adversarial client and subcontractor relationship.

However, any of the following could still happen during the change order process:

• The client refuses to pay the subcontractor in full, so the sub puts a lien on the project.
• The payment dispute goes to court.
• The client gets the extra scope of work, but the general contractor ends up paying the sub in full. Now relations are tense between all three parties.

Bottom line – nobody wins with a change order. Not the client. Not the sub. And especially not the commercial general contractor. My best advice to elude change orders is to bring the GC in as early as possible on the project.

Do you have any change order myths you would like shed some light on? If so, let me know at chuck.taylor@englewoodconstruction.com. If you like this post and would like to receive more commercial construction tips, insights and trends, click here to have posts emailed to you.

Chuck Taylor
Director of Operations
Tel: 847-233-9200 x712

Questions? Comments? You can reach me at chuck.taylor@englewoodconstruction.com

www.EnglewoodConstruction.com