The Fine Art of Pricing Change Orders
By Paul Stout
It's an unfortunate fact: Contractors have to "sell" change orders, even changes requested by the owner that everyone recognizes as valid. It's part of the normal course of project management and it's frustrating. And even if the scope of work is not in dispute, the price can be a different matter.
Assuming unit prices have not been established for additional work, these tips might help you overcome defenses to your price.
Provide a Detailed Description of the Additional Work
Provide a Detailed Price Breakdown
Show Contract "Approved" OH and Profit Amounts
Use Real Invoice Pricing for Material Purchased Specifically for This Change Order Work
Use "Retail Shelf Pricing" for Materials Already on Site
It's never a perfect art or science, but incorporating the above into your change order processes will give you a better chance at winning in the change order game.
About the Author
Contact Paul Stout by e-mail at paul@powersummit.com, or visit his website at www.powersummit.com to reach new levels of business success.