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Change orders: How contractors can optimize the process

Read time: 4 min

Change is inevitable especially when it comes to home construction projects. Whether it’s a homeowner’s request, a contractor's suggestion or an unforeseen hurdle following a home inspection, change orders can be an unavoidable part of the home renovation process.

As a home improvement professional, you likely expect change orders. However, navigating them can still be a challenge when it comes to managing budgets, timelines and homeowner expectations. To make the most of these shifts and effectively manage change orders, below are best practices for contractors to consider.

Learn more: See how Ally Lending's customized financing helps make it easier for your customers to cover increasing construction costs.

Provide clear guidance on processes

Communication is critical for change orders. Establishing a process for change orders and setting guidelines 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 defines the change order process. Don’t be shy about calling attention to the process upfront verbally as well. It might seem redundant, but being absolutely sure your clients are aware of what’s in their contract can save many headaches in the long run.

Key information to include in a change order

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, sets expectations and creates a frictionless experience for everyone involved.

As tedious as it may seem, a paper trail is an essential part of home improvement projects. Dutiful documentation of each step helps to protect you, keep homeowners fully in the loop and hold everyone accountable. What should that paperwork include? Start with these key details:

  • The contract number

  • Name and contact information for the contractor or subcontractor

  • Name and address of the project

  • Dates of deadlines, when the change order is proposed and when it’s approved

  • A thorough description of what adjustment is being made

  • Any difference in the price or timeline

  • An outline of the original contract terms alongside the proposed changes

By detailing the full process, you can easily refer to the steps that were taken to amend it. For change orders, this is doubly important since they’re adjustments that build upon 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 not enough later on in the project (especially if adjustments are called into question).

Find the best solution for everyone

As important as it is to meet homeowners’ expectations, as a home improvement provider, you’re also bound by your own capabilities and bandwidth, and it’s critical to set expectations accordingly.

Say you have a customer whose roof needs to be updated to meet code —  that’s a situation with a clear solution. Alternatively, you might encounter the unexpected when updating a customer’s kitchen sink, necessitating a change order because of mold under the counters. There could also be change orders that aren’t as cut and dry, such as the approach you might take when considering the removal of a load-bearing wall. 

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, you’ll 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 by allowing service providers to have the flexibility to modify the loan amount (up to the max approved amount) before it's funded, with the customer's approval.

Embrace change

The only thing certain during home improvement projects is change. The initial contract is a starting point, but circumstances shift, homeowners change their minds and unforeseen issues or coding requirements can be unavoidable.

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.

Learn About Our Home Improvement Financing

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