Documenting Change Orders and using a construction change order form when a customer asks you to do extra work on a construction project are very important. If you don’t have some sort of procedure in place, you could end up not getting paid for that change order or extra work!
While the start of a busy construction season may not be the time to do a full-scale revamp of your current construction contract documentation and job costing systems, it is certainly time to give it a thorough review for the upcoming season, and perhaps make some modifications to your existing system within QuickBooks.
Many contractors (General Contractors, construction managers, trade and sub-contractors alike) often approach their projects being ill-prepared to guard against the financial impact of not being paid for the contract, change orders, and extra work orders, due to inadequate documentation and job costing methods.
It is sad to say, that the days of the “verbal agreement” or the “handshake”, are pretty much a thing of the past. You must now be able to prove or demonstrate that your company has been required to perform extra work on the project, and you must, also, be able to prove the contract value of that change order or extra work order. In other words, it is not enough for you to show that more money than anticipated was spent in the performance of the work on the project – one way to do this is through the use of a contract change order form.
When you put the requested changes in writing on a construction change order form and get your customer’s signature, there’s no “weasel-ing out” on the customer’s part when it comes time to payment. Just show them a copy of the change order form with their signature on it and they can’t claim that you did the extra work without their authorization.
- Separation of base contract and Change Order or Extra Work Order costs
- Monitoring Estimates vs. Actual and Job Profitability Reports
- Change Order or Extra Work Order Cost Codes should include Labor, Material, Subcontracts, Equipment, and Overhead Costs
- Including provisions for special problems that include a significant amount of equipment usage
- Taking into consideration the impact of delays and inefficiency
- Reinforcing the importance of good documentation
- Making sure your Subcontractor and Supplier records are adequate
- Protecting yourself so you get paid.
- The benefits of using a construction Change Order form
Purchase your copy of Documenting Change Orders today! $14.95
If you find this post to be helpful or of interest, please take a moment and share it on your favorite social networking site 🙂