I’m a little new trying to learn the business side of remodeling so bear with me.
Boss at works seems to think he can’t charge the same on changes as he does for “normal” work.
His explanation to me is that it’s hard to get people to spend more, and at times there is a failure to communicate in that the customer may think something is included that is/was not in the orginal proposal.
On that point I think things could be cleared up with better spec’s and communication. but I’m having problems grasping the “spend more” part.
In my mind, my/our time does not become less valuable because someone decided to change something. the problems I see with charging less for changes are:
1. It says we were over charging on the orginal pricing if we can cut the price on a change.
2. A change can result in scheduling conflicts with up-coming jobs.
3. Lead time on certain changes can increase the time spent on the job, increasing the time before scheduled payments and collecting final payment.
I’m sure there are other negative aspects I do not know. So in my mind changes should be charged at least the going rate.
So all that to get to my question of what do most of you do when pricing a change order? Discount it, mark it up higher, or go with your normal rate.
Never be afraid to try something new. Remember, amateurs built the ark, Professionals built the Titanic.
Replies
Change orders should be paid in full as soon as they are done and have no effect on the regular scheduled payments. Any change orders should be written up immediately & materials for the change should be paid as soon as the change is written up and the whole tine schedule should be added on.
Say yuo have a 2 week job that runs monday till 2 weeks ending on a friday with pay draws on both Fridays. On the first Wed. they want to add a change - write it up get payment of materials for the change, add {let's say it's a 2 day job } 2 more days to the schedule , Friday you get paid for the completed change & you should draw the regular pay schedule because that's when you had planned on receiving it.
You need to charge more on the changes because it throws the next job off. You may need to pay overtime to the men to keep the job going. It's Business 101 - does your boss like to eat? Tell him if he wants to be a nice guy & work for nothing to go work on his mothers house. I charge more because I'm in this to make $ not friends.
As you know, I do mostly T&M or cost plus work, partly to avoid the nightmare of all this clerical work, but I have a contrat about once a year.
In it I state a change order fee of $500 for any major change order. My biggest reason is that to execute a timely production schedule, I have to know what happens when from the beginning. I start that snowball rolling on day one and it can be hard to stop it.
Momentum and production rates slow drastically on a whole project when a change order hits the fan so it is not just that one item that is changed, it is the whole process. I explain this up front at desogn time and again at contract time with emphsis on gertting it right the first time.
Excellence is its own reward!