If there is one thing an owner instinctively get’s their back up about it’s change requests in construction. The concept behind a change request is simple – the owner, consultants or project requirements involve doing something different than the contract documents. In today’s article we’re going to walk through some common best practices for change pricing on construction projects.
Ask For A Construction Change Document
One of the biggest mistakes you can make is to blindside someone. Noone likes to be surprised and people like it even less when that surprise comes with a bill.
If you know there is goinfg to be a change on the project ask for a Change Notice, Site Instruction or even an email asking the owner or consultant for your to price the change. This will take away the “surprise” and will ensure everyone is aware of the coming quote.
Preparing The Change Quotation
There are a number of steps related to preparing the change quotation – these can be broken down as folllows:
- Distribute change documentation to subcontractors
- Obtain quotations from subcontractors and suppliers
- Compile above noted quotations in a spreadsheet
- Compile a cover letter
- Review
- Submit to owner
- Follow Up
Subcontractor Quotations for Changes
One of your first steps once receivingf a change is to send it to your subcontractors and suppliers for pricing. If the change is well defined in a change notice you’ll be able to distribute the document directly to them. If the change isn’t as well documented you’ll need to describe what you’re looking for exactly.
When distributing your change – make sure to give a deadline for quoting. Your contract may stipulate a turn around time but the industry standard is five working days from date of issue.
Compiling Your Construction Change Quotations
As you start to receive quotations it’s important to file them and track which ones you have. It can be very easy to get overwhelmed in all of the construction communication. Make life easier – you receive a quote file it and check off in a spreadsheet that it’s been received.
Once you have all the quotes it’s time to compile them all. In order to do so you need a construction change management software or a spreadsheet. If you’re a small business just starting out considering grabbing our change spreadsheet from the files section.
Your spreadsheet should include trade name, value, description of the work, and any overhead and profit you think will be necessary to cover off your costs and fee.
Depending upon your type of contract you’ll want to provide more or less information. On lump sum contracts you typically provide high your breakdown and subtrade quotes if necessary. On construction management contracts a more detailed breakdown will be required.
Writing the Construction Change Cover Letter
One of the best best practices we recommend is to write a cover letter along with your change. The reason for the cover letter is simple – it may not be your direct day to day contact signing off on the change. If an executive who is involved at 10,000 feet is signing off on your change this is your opportunity to explain the cost in a way that you want explained.
Try to keep the cover letter short – include all of the basic facts and information including title, cost, change document reference (CN, SI etc), and a brief description of the work included along with the reason why.
Submit Your Request for Change For Approval
Compile all of the documents in a single PDF (make reading it easy for people). Include your cover letter, summary of quotations, quotations and consultant change document.
Once everything has been compiled email the document to your approver and provide a deadline. Make sure the email is clear and concise and doesn’t repeat what’s in the letter. Include a reference number for the owner to track with (ie change request 1) this way your emails don’t get lost
Follow Up On Your Change Request
Once the change has been submitted make sure to follow up regularly. This can take the form of a simple email, or a more formal change log distributed each week to make sure everyone knows which ball is in which court.
Be patient, however, know how changes affect the schedule on your project. If a change will start affecting the project let the owner and architect know in advance so there is no confusion when the time comes and they can work towards the timeline in getting you approval.
Lastly and the best advice we can give is to be fair and transparent in your changes. Contracting has a stigma that everyone is in it to rip you off. By being open and fair your owner will trust you more and allow you to get your changes approved more quickly with less hassle.