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Why Change Orders Are Good

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Business

Why Change Orders Are Good

Use these few simple steps to alter how your company addresses change orders


By Mark Richardson June 8, 2022
project construction manager reviewing plans
This article first appeared in the May/June 2022 issue of Pro Remodeler.

There are so many misconceptions in remodeling: Homeowners think a project should be done in half the time and cost half as much because they watch HGTV. They also might believe that collaborating with a professional remodeler is the same as hiring a random person with a truck. Some think that if they put a project off until next year, the costs might come down.

There are also many misconceptions among remodeling business owners.

For example, a long backlog may allow you to sleep a little better, but it is not good. Imagine if Andersen said they could not deliver a window to you for a year. What would that do to your relationship with them? All the energy Andersen put into making you a client is vaporized.

Other misconceptions include the idea that local remodelers are your biggest competitors or that growing a business by 25% is healthy.


RELATED: Indicators of a Softening Market and How to Prepare


Change Orders Today

One current misconception that is especially relevant today is “change orders are not good.” First and foremost, let’s alter the terminology. I suggest you eliminate the words “change order” and begin to call them “addendums.”

So, what’s the difference? Nothing. However, the word “addendum” does not come with baggage or stress.

Next, make a list of why using addendums can help you and even create a better client experience. The following are a few reasons.

1.    It allows you to move the project into permitting or scheduling faster

2.    It allows you to collect money faster

3.    It can reduce some stress for the client who struggles with small decisions

4.    It creates a nice vehicle to add or delete work

5.    It is a wonderful way to formally communicate so mistakes are reduced

6.    It allows you to achieve a higher margin

7.    It can make the overall remodeling experience better


RELATED: A New Approach to Achieving Your Goals


Keys to Success

Here are a few key steps to make this idea successful.

1.    Everyone needs to be aligned with this theme: sales, design, and production

2.    Addendum forms need to be part of every client meeting including contract signing, pre-construction, and weekly meetings

3.    Everyone needs to be trained to communicate about an addendum and execute it

4.    You need to breakdown the client’s fear of changes early in the process

5.    Addendums should be an integral part of your process

 

I know when you open the door to allow your team or the client to have more flexibility in the process, it can be a little tricky, but tricky is not bad. You just need to develop the rigor to allow for this flexibility. Addendums are a part of life and can actually make the remodeling experience better.

 


written by

Mark Richardson

Contributor

Mark Richardson, CR, is an author, columnist, and business growth strategist. He authored the best-selling book, How Fit Is Your Business? as well as his latest book, Fit to Grow. He can be reached at mrichardson@mgrichardson.com or 301.275.0208.

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