When it comes to construction projects, it is not always possible to take things forward as planned. It can be building codes, design changes, additional requirements of the project owners, unforeseen site conditions, and even a Pandemic, and all of these need contractors to be highly adaptable.
However, leading a successful construction business is all about effective change order management which in construction language is also called addenda or change directives. It just defines the agreement between both the parties involved with the project to agree with necessary changes that are made to the original scope of work.
But still, working on change orders can be counter-productive at times. Even if it looks like a small change order, it can create unexpected damage to the project as any wrong move made at any stage of the project could misalign the entire construction process.
Change Orders & Uncertainty
If it is something that can make change orders even more dreadful, it is the direct impact they have on budget, schedule, and resources. And then there can be situations where logistics-related issues may jump adding to the stress of already existing potential difficulties.
Since construction projects are executed in a fast-paced environment, spending time on processing change orders may cause delays or a halt to the work. This is why contractors work outside their contractual obligations assuming that project owners are operating in good faith.
Adding to that, the real-world implementation of change orders is not as neat as it looks in the contract papers. At times, the change orders related to a project could stipulate legal precedent to overwrite the existing contract. The other times, it can even be a verbal agreement that allows amending a contract even when the contract strictly prohibits the amendments.
In short, operating without specific contractual guidelines could possess risks to the project and even the business in case of legal obligations. There can be situations where crooked project managers may use change orders as a practice to avoid payments and forcing the contractor to complete the change to get payments.
But still, change orders in construction are unavoidable and therefore, it is crucial for contractors to understand the basic and essential practices that can help overcome risks associated with change orders. Let’s find out what these practices are:
The first thing which you need to do to overcome uncertainty due to change orders is practicing effective communication. From clear and effective communication, we meant to avoid any conversations made through phone calls or notes that may signal vague change orders.
It is essential that contractors must have a good sense of understanding with the project owners, especially when it comes to documented communication lines. This can not only help to avoid any time loss but have real-time communications that can help fasten the change order process. Also, a paper trail can help avoid any kind of disputes that might arise at later stages of the project or while making payments.
Moreover, lack of communication could make contractors liable against any costs added in favor of the requested change orders or even non-accomplishment of the change order. In both cases, it can hamper the business with the loss of revenue and damage customer relationships. Thus, it is always a good idea to keep things in the notice and have more formal means of communication when it comes to change orders.
The next thing that contractors need to learn to avoid any business loss due to change orders is to plan early. This is because the inability to plan the change orders and making any changes to the schedule might cause cost overruns. Also, working on the estimates associated with change order can help overcome the errors as well as adjust the budget and schedule for maximum productivity and profit.
Besides this, working in such a manner could help contractors to make final bills a clear deal and not any unexpected costs that might lead to conflicts. In other words, working on realistic costs could help in the ramification of the budget and revenue while keeping all the stakeholders on the same page. Though this may seem a very obvious task, working on it actually needs the contractor and project manager’s attention as it can happen to be the reason for conflicts.
Transparency In The Process
Last but not least, working through change orders in the construction business needs to be a transparent process that has some standardization. Some contractors use spreadsheets or order forms to check on change orders but that can turn to be an error process. Rather, it is always a better idea to adopt a construction accounting software technology like ProjectPro, which can help to keep all the teams updated with real-time project information.
Also, having a defined process for change order management could help you cut the uncomfortable conversations and even resist any unpleasing effects to the budget and schedule. Furthermore, it can help streamline the workflow for managing changes and help teams to understand their roles in the process making smoother transitions while resisting any costly contract breaches.
Making Change Orders More Manageable With ProjectPro
All in all, change orders have become an inseparable part of the construction process for any project. Even if you give your best to resist them, they are likely to happen anyway. Therefore, as a good contractor, you must ensure that change orders must not damage your bottom line and have a change order management plan that does not involve any guesswork.
Clear policies and procedures that are made in consideration of contractual obligations, can make things easier and more manageable for both parties. Moreover, you can simply rely on an advanced construction accounting software like ProjectPro to help you have change orders managed on the dedicated dashboard.
All you need to do is upload the documents related to change orders which can be synced with the system and be shared with all the teams. The cloud makes it even more convenient to make decisions that are made with acceptance and feedback from all the stakeholders. As ProjectPro can help you work on contracts and bills without any duplicate entry issues, you can counter any loss of revenue that might happen with the manual process.
If you are looking for a construction accounting software that can help you revolutionize your entire process of change order management, all you need to do is ask our experts to help you implementing ProjectPro for your unique business needs. For more information, you can simply contact our experts or plan a quick demo for free.