By Craig A. Shutt
Remodelers hate change. More specifically, they hate change orders, those alterations to projects that arise after the customer has signed. "I can't stand change orders," says Gary Nash, president of Nash Construction in Marshall, Va. "They're the number-one source of anxiety for remodelers. You never can get enough money for them to make them pay for themselves."
Unfortunately, there's no way to avoid them altogether, adds Dale Nichols, president of Artisan Remodeling in Granite Bay, Calif. "You can't control the customer changing his mind or having a follow-up thought once work begins. But if you aren't sure to add in every cost, including overhead and travel time to pick up products, you're giving away your profit on the job."
Gary addresses his procedure for change orders twice in the sales process, first when going over the contract prior to signing and again in the preproject conference. He spells out four situations that require change orders:
- When additional work is required due to unseen conditions.
- When additional work is requested by the client.
- Due to variances in allowances (caused by clients wanting higher-grade products than originally agreed to).
- Handyman projects that are not included in the project.
The last type is the most insidious and often avoids detection, he warns. "The project manager's job is to make the client happy. So if something comes up--a closet shelf falls down, for instance--he takes a couple hours to fix it." That's fine to do, Gary stresses, but it has to be written up and paid for.
Having a readily available form to handle small changes ensures the work isn't lost and is added to the final contract, both remodelers agree. Crews from Nash Construction keep pads of handyman tickets available so they can quickly write down the work and provide a price. Artisan crews use a three-copy form that provides copies for the customer, office and field.
If the job is more complicated--Dale once had a client add a new garage onto the existing scope of work--it goes back to the office and is calculated on a worksheet (see the accompanying forms). "The work sheet ensures we don't miss minor activities like going to the store or cleaning up a new area," he says. "It's easy to forget everything that new work requires."
Neither remodeler has had a client reject a change due to the price--but neither negotiates, either. Customers sometimes are surprised by the cost, because they don't understand the need to add in overhead, total time required for product acquisition, etc. Dale will show customers the worksheet to explain a cost if it's requested. Since changes are completed on a cost-plus basis, there are no real secrets. It's simply a matter of ensuring everything is included and explaining what is entailed in adding to a project.
"We explain that we don't work for free," he says. "They sometimes ask why it's so much, since it'll only take an hour or two and we're already there. We explain that we agreed to this scope of work for this much money. Now we're being asked for something outside of that." He explains the company has to pay its tradespeople by the hour, plus supervision, travel times, etc.
Gary agrees that remodelers have to be firm. "I made mistakes early in my business, and I learned. Don't be afraid to charge for every change, but don't pad the bill, either. And make sure everything gets written down."
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