Effective management of change work orders in roofing projects

By Cotney Consulting Group.

Seven strategies for effectively managing change work orders and ensuring that your roofing business operates smoothly.

In the construction and roofing industries, change work orders (CWOs) or additional work orders (AWOs) represent a critical juncture where project scopes are adjusted and additional services are agreed upon. These changes can either enhance the project's value or lead to potential disputes and financial discrepancies if not managed correctly. This article will dive into best practices for handling change work orders, ensuring that roofing projects remain on track, within budget and profitable.

Introduction to change work orders

Change work orders are formal documents that amend the original contract terms between a service provider and a client. They typically arise when unforeseen changes to the scope of a project are necessary or when the client requests additional services. Understanding how to manage these changes efficiently is crucial for roofing contractors to ensure that they are compensated appropriately and that the project timeline is minimally affected.

The challenge of change work orders

The primary challenge with changing work orders lies in the potential for disputes that can emerge over additional costs and the scope of work. For example, if a client requests you to install a new feature, such as a sliding glass door, without a formal change order, it could lead to misunderstandings regarding project costs and delay payments. Properly documenting and agreeing on these changes is vital to maintaining a clear, enforceable agreement.

Best practices for handling change work orders

1 - Formalization of the process: Implement a standardized procedure requiring all change requests to be formally documented and approved before additional work begins. This process should be clearly outlined in your initial contract to set proper expectations with the client.

2 - Accurate estimation and documentation: Pause the project to estimate the costs associated with the change accurately. Document all aspects of the change order, including additional labor, materials and any potential delays or third-party approvals that might be required. Ensure that the client signs this change order before proceeding.

3 - Appropriate pricing adjustments: Apply a standard markup to the costs associated with the change. Consider adding at least a 10% markup, with higher markups on smaller changes to compensate for the proportionally higher administrative burden they may impose.

4 - Clear payment terms: Define specific payment terms within your change orders. Introduce a fee structure for processing these orders after a set number of changes, which helps to deter frivolous change requests and compensates for the administrative efforts involved.

5 - Detailed documentation: Each change order should comprehensively detail the original contract price, the added costs due to the change and the new total project cost. This level of detail helps prevent disputes and ensures that all parties are aware of the financial implications.

6 - Enforce timely signatures: Establish a firm deadline for the client to review and sign the change order. Inform them that any delays in signing can result in project halts, which might increase the project cost due to scheduling disruptions or the need for additional work.

7 - Comprehensive change orders: Document all changes, no matter how minor they seem. This practice avoids setting a precedent for uncharged work and ensures that all project modifications are tracked and billed appropriately.

Preparing for potential change work orders

It is advisable to include a robust clause in your contracts that addresses the procedures for handling change orders. Specify that no additional or altered work will commence without a duly signed change order. This clause should detail the steps for documenting, approving and executing changes.

Conclusion

Effectively managing change work orders is essential for the smooth operation of roofing projects and the financial stability of your business. By institutionalizing a formal process, maintaining meticulous documentation and setting clear expectations with clients, roofing contractors can confidently navigate the complexities of project modifications. These practices safeguard the contractor's interests and ensure client satisfaction by providing transparency and accountability throughout the project lifecycle.