Death By Change Order – and What You Can Do to Avoid It
New clients of Pendant often express frustration at being nickel and dimed by control systems integrators (CSI) in their past projects. In some cases, the frustration is so intense that the clients have become paranoid about the proposals they receive for the controls part of their projects. Change orders are sometimes necessary and unavoidable. But unnecessary change orders cost money for both you and your CSI.
Our experience is that most change orders are the results of an initial contract that doesn’t capture the project correctly, rather than mid-project changes in direction.
If you have been frustrated by this in the past, there are some steps to take and questions to ask to keep change orders only to a necessary minimum during your upcoming projects.
Before You Award the Contract
Start with a high quality request for proposal. If your request is riddled with inaccuracies and unclear on key info, you will get poor quality proposals in return. Be specific about what you want. If you do solicit multiple proposals, make sure that you are comparing apples to apples. The higher-priced proposal might actually be the one that addresses what you really want – and the lower-priced proposal may end up costing you much more after all of the inevitable change orders are processed.
Steps to Take After You Award the Contract
- Communicate, communicate, communicate – Make sure that you and your CSI are really on the same page. You need to be sure that your CSI understands what you want and how you want it. Having it on paper is critical, but you need to talk about it, too, preferably face to face if possible.
- Anticipate what could go wrong – Look at the risks. Where are you trying something new and different? Where are the tight spots in the timeline? Does everyone on the project team know what they are responsible for? Are you sure you have enough resources to get the project done on time? Talking about these things in advance increases the likelihood that problems will be dealt with effectively, because you will have already planned for the problems.
- Establish clear responsibilities and accountability – The buck stops with whom on your team and the CSI’s team?
- Use checklists – It’s a simple but powerful tool. See here for more on this subject.
- Be willing to accept input from your CSI – They may have some great ideas to help minimize your overall costs, produce a better system, or better anticipate problems. Invite their input.
- Repeat the previous items if you do have a change order – Managing the change order is just as important to prevent further unnecessary change orders. Make sure that the change you are making is the correct change to make.
Two Key Questions to Ask Your CSI
- What is your typical change order rate? How many change orders do you average per project? What percentage of your total revenue comes from change orders?
- What is your process for managing change orders? How do you document change orders? What are your rates for time and material change orders?
It takes discipline and solid project management to execute all of this well, and there is a price to discipline. But how does that price compare to the price of regret?