There is hardly any field where there are no changes. In fact, you must accept that change is the only constant. On the same note, changes are quite common in the construction world and it goes without saying that one must get accustomed to them.
No matter what the scale of the construction project is, changes are always there. The reasons for them to take place are many. They occur when the project owner wants to increase or reduce the work, when site conditions will not allow the completion of the work within the budget that was decided earlier or due to some other reason. Whatever the reason may be, when there is a change in the contract’s scope of work, a construction contractor, has to come up with a change proposal to indicate the scope and change order to provide the detail and get them duly signed by the property owner. This ensures that everything gets done seamlessly and there are no problems later on.
There are 2 sides to any job: the Contractor and Property Owner or Client?
Let’s say you are the estimator on the Contractor side
A change order is a document that depicts all the details of the changes in the design, construction, site conditions as well as project schedule. An estimator will have a major role to play in managing change orders because of the job profile.
An estimator is a person who calculates the materials, equipment and labor that will be needed for a particular construction project. It is therefore quite clear that you, the estimator, would actively take part in the management of change orders as well.
There is a need to calculate how much a construction project will cost and what the budget would be. There needs to be a complete assessment of the labor, materials and equipment that would be needed along with the quotes of suppliers and subcontractors.
An estimator is expected to bring forth the best price of a construction project while keeping in mind the quality and profit margin during bid submission. It must also be observed that the lowest price is not always the best one because quality matters. The client will look for quality too. Therefore, coming up with a good proposal depends on a skilled estimator.
Also, over the years, technology has become the best friend of an estimator. What used to be done with a pen, paper and calculator can now be done on the computer. This has definitely made life easy for you. However, technology cannot replace your skills, knowledge and experience. It is just that you, now, have the time to focus on deeper understanding of the job.
Coming back to change orders, timely action is very important along with complete documentation and keeping records. On larger jobs, change orders need to have the documents of the original contract, the specifications of the changes to be made, the minutes of meetings as well as day to day reports. Smaller jobs may not require some of those documents.
The owner has to authorize the cost of prospective change orders which, most times, because they do not have their own estimator, means agreeing to what the contractor has proposed after proper review of the whole proposal. As already stated, an estimator has a huge role in managing change orders.
Your role as the estimator on the Property Owner or Client side?
As a property owner, it is important to establish the cost limits of change orders for the following reasons:
- To predict the final cost of the construction project
- To manage emergency funds
- To negotiate the price with the contractor
There are certain points that should be considered during change order pricing and they are the following:
1) All changes don’t affect the cost of the project and that has to be considered.
2) The invoices for materials have to be checked by the estimator so that the quantities mentioned on them are as per the change order. This is mainly to avoid deviations on the part of the contractor as they may order extra quantities of products to minimize delivery costs. Make sure that everything is as per the change order.
3) A proper record of all the negotiations has to be maintained for reference.
Another thing that is very important is that you have not only the perspective of the client but that you have the experience in and knowledge of this process so you can make necessary negotiations with the contractors in connection with the change order submitted.
The bottom line comparison
Construction of any structure is a costly affair and the property owner would want to stay within budget while not having to compromise on quality. An in-house estimator might help the property owner in making sure that the contractor is not taking undue advantage in the guise of modifications.
If you are running a construction business and have tough competitors, again an able estimator may help you get the bid by quoting the most competitive prices.
By and large, the job of estimating software is an important one for a construction firm to lead the race, it is important to have the most capable person as an estimator. Though technology has taken the spotlight, nothing can replace expertise and brains.