THE PROCESS OF CHANGE ORDERS

July 13, 2017

During a change order, work is either added to or subtracted from the original contract plan in the beginning. When this occurs, it could cause unexpected costs or differentiation in the completion date. Below is an outline of the process in which contractors must go through when a change order has been introduced.

The contract is signed.

Keep in mind, there are many more steps prior to getting to this point in the project timeline. Moving forward, once the original contract is signed, the construction process begins.

The issue is raised.

Uh oh… you are week six into your project and now an unforeseen site condition or a need to change the original project plans has occurred. What are you going to do? The first step would be to contact whoever is in charge of the project and raise the issue to them.

*TIP: Take pictures of what the problem may be. This will be easier for others to agree upon the change, and it will be proof of the situation. We cannot stress enough the importance of thoroughly reporting all aspects of the event that creates a need to change the original contract. A detailed report creates transparency between the contractor and client relationship allowing for both parties to have a full grasp on the issue they have encountered. Communication is arguably the most important factor in situations such as these.

Change is proposed.

During this stage, a plan will be considered for the discussion between the client and contractor. This plan will need to be a detailed conversation/negation between both parties with the inclusion of all the specifics prior to the meeting. 

The change order plan should include:

-      Detailed scope of work

-      Revision of the completion date

-      Analysis of the need for change that has arisen

-      Change of the contract price

-      Modification to the contract documents.

Each relationship between a contractor and client can be different in so many ways, which makes it difficult to estimate a time for a change order claim to be approved. However, we have noticed a good estimate to be somewhere around a two week period.

Change is agreed upon.

Once the change has been proposed, it will go through a bilateral agreement between parties and the contractor. In some change orders, there will be a guarantors and/or sureties. While trying to amend a contract without a guarantor’s consent could possibly release the guaranty. This could cause problems that one would typically want to avoid.  The sureties will guaranty the contractual performance. This will be under a performance bond or a payment bond.

The contract is amended.

Once the change order has been agreed upon, a new contract will be amended. The original contract will still exist; however, the amendment will replace the specific part within the contract to fit the new change.

© 2017 Retail Construction Services, Inc.

HOW TO HIRE THE PERFECT CONTRACTOR

July 7, 2017

Whether you are starting a new business, a long time investor, or maybe even looking for renovations to be done—the first step you will do is start searching for a contractor. While you begin this process, make sure to keep these essential questions in mind.  This will give you an abundant head start on making your finished project successful.  

How long have you been in this business?

·        Being able to know the length of their establishment will be very critical. Don’t get me wrong – I am sure a start-up contractor can get the job done, but at what cost? Your best bet will be going with a company that has been in the business for over 30+ years. They have the experience, connections/relationships, and they know the trends that have evolved.

What projects have you done that can relate to mine?

·         By asking this question, you will get a feel on what types of places they have built and if it relates to your future store/renovation. You are going to want to choose a company that has built a variety of stores. If you choose a contractor that has only built shoe stores and you are building a salon, well then you may not want to go with them. Seems like common sense, right?

What is your insurance policies and licensing?

·        Any company can talk the talk, but when they can’t walk the walk, there will be a problem. Make certain you know what kind of insurance and licensing they have, and receive proof. Also, you have to understand the coverage of their insurance and guarantee it will work for your company.

The BIG question: How much will it cost?

·        Of course it is important to hear from more than one contractor, and of course you are going to want the cheapest option. However, if you go the cheapest route you are more than likely going to deal with a company that has survived by cutting corners only to produce poor quality work. Many times, choosing the contractor with the initial bid slightly higher than the others could save you thousands (sometimes millions) in the long run. But if you’re willing to take the gamble, then go for it.

How will we communicate?

·        Whether it is after hours, during the day, or when a problem arises—make sure you have the resources to be able to communicate with whomever you may need to speak to. You will be able to tell how well a contractor communicates with you from the start.

What is our schedule?

·         Find out your start and end date. If any changes were to occur on their end, you would be able to hold them accountable.  At the end of the day, you are their client and they need to make certain you are satisfied with the work getting done. Another serious question would be to ask about the contractor’s expected payment schedule.  This will give you a timetable idea on when payments are going to be made.

What part of my job concerns you?

·         Find out what contractors are going to be the most honest with you. Truth builds trust. Being able to have them tell you the exact concerns they may have upfront and how they are going to overcome it are people you want to work with. They are prioritizing your needs and comforting you that whatever challenge it may be, they will lead you in the right direction to get it done.
 

What is your relationship with subcontractors?

·         Discover how the general contractors will find the best subs to fit your project and how they will monitor them throughout the process.  Discussing money and schedules may get difficult at times; yet, it would be smart to converse early on when you will pay them.

If you are looking for that perfect contractor, be certain to keep these questions in mind and see how their company will respond to them. Do not be afraid to ask other questions that you may be concerned about or do not understand. Time to take action!

© 2017 Retail Construction Services, Inc.