By Jim Cory. Customers hate blown budgets. Whether it be from client-generated change orders, contractor-generated change orders, or unforeseen conditions, the reason doesn't matter. The extra expense at the end of the day really annoys people. Jill Liptow, of The Remodeling Center, a Pewaukee, Wis., design/build firm, calls it "the final agony."
"If your project is $200,000 to $300,000, and you hear change orders are anywhere from 10% to 25%," she says, "that's a pretty significant number for most people."
Eighteen months ago, to expedite production and hold budgets in line, Liptow eliminated allowances. Now, clients sign a design agreement and meet with designers to choose plans and spec all products. The construction contract is not signed and a contract price is not given until all components of a project are chosen.
That policy "really does spur the homeowner" into decision making, Liptow says. Liptow estimates it takes six to eight weeks for customers to select everything for a kitchen job that takes six to eight weeks to build.
One wild card that could send costs escalating are unforeseen circumstances and problems. To avoid that, The Remodeling Center will perform, as a contract option, what's termed "destructive inspections." For example, the company might poke a hole through a wall to find out what's behind a kitchen soffit. "You do a little drywall repair, and the customer pays time and materials for you to do that," Liptow explains.
Now, final costs exceed budget by typically 1% to 4%, which usually includes contractor-generated change orders. Another effect is that the average size of projects has doubled, from $51,000 to almost $100,000.