Those “no big deal” changes can add up quickly for remodelers who work on a fixed-price basis. Conner Construction, Seattle, minimizes slippage by authorizing lead carpenters to write change orders they estimate will cost less than $1,000. Owner Denny Conner says his two-tiered approach, which delegates larger change orders to production managers, discourages clients from asking for small favors — such as “just” adding another couple of recessed lights.
The key, Conner says, is the construction agreement. Before any work begins, clients sign off on language stipulating that every small change they request will cost them a $75 administrative fee, a flat labor rate of $55 per hour, plus the cost of materials and subcontractors, with a 25% markup on all but the $75 fee. This time-and-materials approach compensates for the simple fact that “the lead doesn't always know what things will cost,” Conner notes, given the potential for dry rot discoveries or higher-than-expected subcontractor costs. “It's just an approximation.”
Every Conner Construction change order is documented on a three-part form that is coded to the job and signed by the writer and client. Copies go to the client, the office, and the production book in the field.
The system isn't infallible, but remodelers can avoid change-order losses “if they start with clear specs and drawings, and the homeowner knows that if they want to do something different, it's going to cost more.”