How Contractors Can Organize and Optimize Change Orders

Change is inevitable in all things, and when it comes to home construction projects, it’s simply part of the process. Whether it’s a homeowner’s request, a contractor suggestion, or an unforeseen hurdle following a home inspection, change orders are an essential piece of the home project process.

But as expected as they are for contractors, navigating change orders can still be a challenge when it comes to managing budgets, timelines, and homeowner expectations. To make the most of these unavoidable shifts and effectively manage change orders, contractors should follow these best practices.

Clear communication is a critical tool for solving many of life’s challenges. This holds especially true with change orders. Setting clear guidelines and processes from the beginning of a home project can help contractors and clients avoid countless challenges down the road. Start by incorporating language into contracts and proposals that clearly defines the change order process. And don’t be shy about calling attention to the process upfront verbally as well. While it might seem redundant, being absolutely sure
your clients are aware of what’s in the contract can save many headaches in the long run.

Develop standard templates for all change orders, so that when the need for one does arise, documenting them is as easy as filling in the blanks on predetermined forms. While no two change orders may be exactly alike, ensuring the process for you and homeowners is as consistent as possible helps to save time, set expectations, and create a frictionless experience for everyone involved.

Say you have a customer whose roof needs to be updated to meet code — that’s a situation with a clear solution. But you’re sure to come across change orders that allow for extra creativity, such as the approach you might take when considering the removal of a load bearing wall. As important as it is to meet your clients’ expectations, as a home improvement provider, you’re also bound by your own capabilities and bandwidth, and it’s critical to set expectations accordingly.

Ultimately, contractors and project managers need to ensure the best interests of both parties are maintained as changes arise. By providing the homeowners with all feasible options and the additional costs and timeline changes they’ll require, they maintain transparency and trust in the project.

If an unexpected change affects the cost of a project, you’ll want to ensure your clients are able to budget for changes (and make certain you get paid). That means a flexible financing solution is a must. Ally Lending's customized financing helps homeowners cover increasing construction costs, while service providers have the flexibility to modify the loan amount (up to the max approved amount), before it's funded, with the customer's approval.

As tedious as it may seem, a paper trail is an essential part of home improvement projects. Dutifully documenting each and every step can protect you, keep homeowners fully in the loop and hold everyone accountable. For example, updating a customer’s kitchen sink could turn into a far more involved project if you encounter unexpected mold under the counters or rusting pipes. By detailing the full process, you can easily refer back to the steps that were taken to amend it. For change orders, this is doubly important because they’re amendments that build on or detour from the original plan and contract.

To make sure all parties are on board, get all change order requests and approvals in writing. And just in case questions arise later, thoroughly photograph any conditions that require change orders. It may seem like overkill, but you’d rather have more information than you need than not enough later on in the project (especially if changes are called into question).

The only thing certain during home improvement projects is change. The initial plan is a starting point, but circumstances shift, homeowners change their minds, and unforeseen issues or coding requirements can be unavoidable. This
is particularly true now, as home improvement providers are maneuvering through the supply chain challenges brought on by COVID-19. The more agile and better prepared contractors and providers are to guide homeowners through the change order process, the smoother projects can proceed, on track and on budget, for everyone — no matter the hurdle.

Ally Lending could give your customers a way to cover increasing construction costs, no matter what change orders arise.