Navigating the Unexpected: Your Guide to Managing Change Orders and Cost Overruns with Your General Contractor

Home improvement projects rarely go exactly as planned. Whether you’re renovating your kitchen, adding a bathroom, or undertaking a whole-house remodel, change orders in construction typically account for 10-15% of the total project cost, with around 35% of projects experiencing at least one major change. Understanding how to properly manage these modifications with your contractor can mean the difference between a successful project and a costly nightmare.

What Are Change Orders and Why Do They Happen?

Change orders are written agreement that updates the original construction contract, formally documenting any modifications to the scope, cost, or timeline of your project. These changes can occur at any stage of the project, from pre-construction to post-completion, and often arise due to unforeseen circumstances, design modifications or miscommunications.

Common reasons for change orders include:

• One of the most common reasons for construction change orders is a change in design. This could happen for several reasons, such as evolving client needs, new regulations or updated building codes. Design changes can also stem from miscommunication between the design team and the contractor or owner
• Another cause of change orders is unforeseen site conditions. This can include issues like discovering unexpected soil conditions, existing utilities that weren’t documented or hazardous materials on-site
• Errors or omissions in the original construction documents can involve missing details, unclear instructions or incorrect specifications in the original plans
• For instance, an owner might decide to upgrade the finishes, add additional features or modify room layouts after construction has begun

Understanding the Difference: Change Orders vs. Cost Overruns

It’s crucial to distinguish between legitimate change orders and problematic cost overruns. Change orders are planned changes to the project scope, agreed upon and documented, while cost overruns are unplanned budgetary excesses, often reflecting project management challenges.

While change orders involve formal documentation and mutual agreement, cost overruns indicate a lack of control or foresight, have no formal agreement or documentation process like change orders, and can lead to financial instability and disputes.

Best Practices for Managing Change Orders

Working with a reputable General Contractor Wantagh, NY like Ray Coleman Home Improvement, which has over 50 years of experience and prioritizes high quality work and customer service, with every phone call getting answered – before, during and after the work is done, can make all the difference in managing project modifications effectively.

1. Establish Clear Documentation Requirements

A formalized change order process ensures that modifications are adequately documented, reviewed, and approved before work proceeds. This transparency helps maintain clear communication among all parties, establishes accountability, and provides a verifiable audit trail that can be crucial in resolving disagreements.

Essential documentation should include:

• A detailed description of the work to be added, deleted, or modified; a clearly-stated reason for the change, and the responsible party
• A detailed cost estimate from the contractor or subcontractor, itemizing labor, materials, equipment, subcontractor costs, overhead, and profit associated with the change
• Schedule impact analysis that shows how the change will affect the project timeline, including any proposed extensions or acceleration measures

2. Address Issues Early

Before your project starts, be sure to revisit the plans and specifications in order to address any ambiguities, errors, omissions, and conflicts. Make sure to present any change orders right away, because doing so after construction begins increases the likelihood of cost overruns, schedule delays, and friction.

3. Understand the True Cost Impact

Many homeowners underestimate the hidden costs associated with change orders. For a moderately complex change order: 8-15 hours of PM time. At $85-120 per hour fully loaded, that’s $1,000-1,800 per change order. On projects with fifteen changes, that’s $15,000-27,000 in coordination costs showing up as general overhead.

Additional hidden costs can include:

• Changes frequently require removing or modifying completed work: Demolition labor takes longer than original installation. Removing drywall without damaging studs takes longer than hanging drywall. This time is rarely estimated or billed
• Material waste and rush orders: Small quantity orders cost more per unit
• Crew disruption and lost productivity

Working with Ray Coleman Home Improvement

Ray Coleman Home Improvement exemplifies the type of contractor that can help you navigate change orders successfully. Based in Wantagh, NY, the company truly values the state of all clients’ homes and is 100% licensed and insured to protect your safety and theirs. Their approach emphasizes keeping time lines as promised, maintaining quality of work, and keeping clients informed of every step along the way to avoid any surprises.

Client testimonials consistently highlight their professionalism: “Ray was always available to talk or go through numbers and ideas. He truly puts his customers first!” This level of communication is essential when managing project modifications.

Protecting Yourself from Disputes

A disciplined change order procedure enables project owners to control budget overruns and schedule impacts by requiring detailed cost estimates and time extensions tied to each change. Managing change orders properly helps avoid cost overruns, delays, and contract disputes.

Key protective measures include:

• Include detailed schedule of the project’s labor, profit, overhead, and markup rates in your contract
• Never proceed with work before receiving official approval and signatures, as starting work before approval puts the contractor at risk, and if the owner disputes the change later, payment may be withheld
• Establish a clear process for handling client requests and ensure that all changes are documented through formal change orders

When to Seek Professional Help

Disputes over change orders, specifications, and cost overruns are very common. The good news is that they are usually resolvable if both parties are willing to listen to the concerns of the other party and compromise. However, if disputes escalate, “Change order disputes can profoundly impact a project, especially if you stop work while the parties dispute the change order. If they are not resolved in a timely manner, change order disputes often cascade into project delays and additional costs for both parties”.

Conclusion

Change orders are an inevitable part of most construction projects, but they don’t have to derail your renovation dreams or budget. By working with experienced professionals like Ray Coleman Home Improvement, establishing clear documentation procedures, and maintaining open communication throughout the project, you can successfully navigate modifications while protecting your interests.

Remember, done right, change orders prevent budget overruns, reduce disputes, and keep projects moving forward. The key is choosing a contractor who prioritizes transparency, maintains detailed records, and keeps you informed every step of the way. With proper planning and the right professional partnership, your home improvement project can adapt to changes while staying on track for success.