Fees For Change Orders, Not For The Work, Just For Providing The Change Order

Ed the Roofer

Does anyone assess a fee charged in their change orders just for the discontinuity of the anticipated work flow?

I don't mean for the actual work scoped to be done as an extra, but just for the job scheduling upheaval?

Yes, adding more Materials And Labor to the project should be profitable, but many times, just getting to the point of getting the Signed Extra Work Authorized, it creates a Slow Down on the other production until it is agreed to.

Even if there is no slow down, there is unexpected downtime, even if it is only the fact of going over the new work authorized with the crew or foreman.

Comments?

Ed

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dakzaag

Ed,
I am getting a new contract written up by a lawyer at this time and I had him add a statment "$150 dollar fee to generate a change order" due at the time a request is made. Total cost of change order is due at time of signing to offset the expense of changing schedule, putting off next customer etc. I might add lingo that the $150 will be applied to the CO if it is signed.

Looking to control all the what if's I get. Don't get me wrong, I will add on to any project gladly, but usually with a change order, you have gotten prices and done the figuring and then they respond with " I had no idea it would be that much, lets just leave it the way we planned."

This hopefully will cut down on requests, and at least pay the phone bill checking on prices and wasted down time, esp. if it delay's ongoing production.

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SLSTech

I don't do it, but I have heard of people charging a handling fee which is listed in the contract.

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Leo G

$75 dollars for the change order request. And whatever the change of price upgrade/downgrade is. But the $75 is for writing the change order and that is all.

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Patrick

We dont have a specific line item for change order cost, but what we gennerally do is mark up items a little more when they are part of a change order, especially if its something that is a PIA that we would rather not do.

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rbsremodeling

$450

it is also in my original contract that the fee will be charged. It usually takes 4-8 hours to get all the info and documentation for a change order to be put together by me our the office. My change orders are usually for larger amounts and require some form of research and technical info.

How many hours do you think goes into one of your change orders?

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nadonailer

I don't - if you add enough slush to your original bid and enough to your change order to make it super profitable, then you're fine and it's just going to be looked upon as cheesy (at least in my area). I think a Contractor should have enough in their O&P to cover the pain of doing a simple CO

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rbsremodeling

Agreed. Sometimes as bad as this sounds you want to stop random change orders. A few fees attached and they become less random

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Pearce Services

My contract specifies a $100 admin fee for any changes. The idea of charging is to stop the changes from destroying the productivity.

I will usually allow one "Mulligan" from which I show them how much disruption, and replanning is caused by changes. Following the signing of the Freebie change order, I tell them to now come clean with any and all idea that they may have for other changes. If we resolve any changes at that time, I will generally waive the admin fee, with a firm understanding that there will be no more freebies. All subsequent changes, additional work, or even discussions that cause a delay to the project will be billed, and due immediately.

The real killer for me has been when more that one decision maker is involved, and the conversations regarding any change could consume a day or more. I try to limit the number of people recognized on my contract as having the authority to make changes.

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Ed the Roofer

It always makes my final invoicing of the project a sheer PITA.

For some items added on, I don't have the invoice from my supplier yet, so I am guessing from the most current price lists.

Then, when I am compiling them at the end, and double and triple checking to make sure I didn't miss anything, or double bill for anything, my concentration waivers too much, at least for me personally.

The extras could be charged at a higher premium too, but then the line item amounts can be questioned more than at the initial proposal stage, because they are broken out.

Ed

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buildpinnacle

Ed,

It amazes me how much different roofing in Texas differs from rest of the country. I guess I can throw in OK to boot as I have roofed up there since I was a younger buck. Most subcontractors around here are charging anywhere from $40-$45/sq for a walkable 1 off and they eat the dumps. As none of them have insurance, we have to carry them as uninsured subs on our yearly premium counts. I've been using the same roofing crew for over 3 years now and they do a great job. Every roof we put on down here, we put on like it was recieving a manufacturer's warranty with all the extras. You'd be surprised how many are torn off, some 15# thrown on and new 3tabs thrown up with all the existing flashings, vents, turbines, etc left in place. Noone calculates attic ventilation. I read a post from Douger a few days back where he mentioned the square rate they were getting and I was amazed. I am sure labor, ice damming, and local municipalities come into play much more in your area. I guess that thwarts the 'everything is bigger in TX' addage.

Sorry for the Hijack.

Insofar as the C/O fee. It's kind of like charging for estimate. We all need to be doing it. It's on my long list. This forum has been very helpful for one thing, to say the least. It lets us all know just how inadequately we run our businesses from time to time.

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thinking4ward

In the remodeling arena ( at least for me ) I usually have 3 to 4 change orders per job and each change order sheet will have anywhere from two to six items on it. In my contract I have it stated something like this: Any additional work performed that is not stated on the plans, job cost or spec sheet ( at the Owners request or out of neccecity for the project i.e. termite damage, unforseen wood rot etc.) will constitute a change order and will be paid on or before the next scheduled draw. I don't have a specific cost for the change order it self per say however when I do the write up on my job cost sheet it automatically adds in the extra I need to get for supervision, administrative, overhead and profit. This seems to work well, it is stated clearly up front that any extra work will be an extra cost.

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Ed the Roofer

What method do you use to come up with your supervision and administrative costs to be added on?

A percentage or a fixed fee?

If a fixed fee, how do you work up to that figure?

One more thing, have you found SiteBuildIt easy to use and create your alternative website?

Ed

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buildpinnacle

I don't know what 'IT' is, but now I want it.

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Darwin

No fees for change orders. It seems to penalize the H/O if I brought this up to them. But you could figure in a little somethin' extra when the change order is written...?

Leo G

Why no charge? It will cost you time to figure out what you need to do for the change. Why shouldn't you get paid for your time?

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Mitch M

This is what I have in my contracts. I have not had anyone to argue with it yet.

ARTICLE 8. CHANGE ORDERS
8.1 A Change Order is any change to the original plans and/or specifications. All change orders need to be agreed
upon in writing, including cost, additional time considerations, approximate dates when the work will begin and be
completed, and signed by both parties. 10% of the cost of each change order up to a maximum of $1000.00 will be paid
prior to the change, with the remaining amount paid upon completion of the change order. A 20% fee shall be added to all
change orders and overages in excess of initial allowances. Additional time needed to complete change orders shall be
taken into consideration in the project completion date. Only one (1) signature from each respective party to this
agreement shall be necessary to execute the change order.
Owner understands that an estimating and coordination fee of $50 per hour will be incurred on the design, drafting, and
pricing of the change or additional work, whether the change is elected or not by the Owner.

Mike(VA)

This is in our contract:

21. ADDITIONAL WORK AND CHANGE ORDERS: Without invalidating this agreement, Owner(s) and/or Contractor may order extra work or change the existing Contract work by the use of a CHANGE OR ADDITIONAL WORK ORDER. A change may consist of additions, deletions, or modifications to the original Contract work; the Contract sum and Contract time being adjusted accordingly. Any additional sums incurred for such additional work as defined in this section, shall be paid in full (100%), at the next progress payment due or the final payment due, whichever comes first. The change may occur providing the document is mutually agreed to and signed by both the Owner(s) and Contractor. Only one (1) signature from each respective party to this agreement shall be necessary to execute the change order. Such modifications to the original Contract, or subsequent Contracts or CHANGE OR ADDITIONAL WORK ORDERS, will only occur with a signed CHANGE OR ADDITIONAL WORK ORDER.
Owner(s) understand(s) a design/estimating and coordination fee may be incurred on the design, drafting, research, and pricing of the change or additional work, whether the change is elected or not by the Owner(s), and this fee is to be paid in full (100%) prior to the start of any design, drafting, research, or pricing.

This last part leaves the door open to charging a fee, if any, appropriate to the amount of work (and costs) related to preparing the specific change order.

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Ed the Roofer

Thank you both.

I now have some clause revisions to consider and run past my attorney for approval.

Ed

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jimmys

We don't charge for change orders, except for not having to shave the way you might for a bid you really want. We handle Allowances and some other to-be-decided line items through change orders. If we charged an admin fee (that showed up on a CO line) that would penalize the customer for, say, a certain tile choice. We do only custom work, and ymmv in a spec or commercial environment of course. My homemade CO form (Excel) shows date updates, dollar updates, etc., and my contract refers to (and includes an attached sample CO) COs, so everyone knows what to expect. I know some guys use COs to bill at a higher rate, but we don't.
Jim