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Everything in life changes. And, that's never more true than in a major renovation or construction project.
Often, homeowners who undertake renovation projects eventually want or need to alter their initial plans. In the construction industry, these are known as change orders. Officially, they are a written addendum to the contract between the homeowner and contractor that specifies a change, or series of changes, that needs to be made.
Unofficially, change orders are potentially dangerous additions or modifications that derail projects by causing delays and increasing costs for numerous reasons. It can take time to acquire additional materials. Upgraded materials will always cost more, and there may be extra shipping costs involved.
Any additional expense the contractor incurs -- from research and paperwork to drawing up new plans -- will be passed on to you. If you make too many changes to the project once construction is underway, the investment in your home may be impossible to recoup.
Fortunately, most change orders can be avoided, or their potential to derail a project can be eased with precise planning. Here's how.
- Don't make general budget allowances.
Budget allowances are used for items that have to be chosen for a project (e.g., carpet, tile, fixtures, flooring, or appliances). The allowances should never be sweeping or vague, such as a list of appliances for a kitchen or a general estimate for carpeting. Be explicit and account for every cost, such as a list of appliances that includes makers, model numbers, and costs (or all costs per square foot for carpet, padding and installation).
- Don't make decisions along the way.
Whenever possible, make all selections well before starting a project so the contractor can order materials and supplies on a timely basis.
For instance, if the tile or fixtures you want take 12 weeks to receive, you can plan for this time frame instead of stopping work mid-stream to wait for delivery.
- Don't make verbal agreements.
To avoid misunderstandings, change orders should be in writing and spell out in detail the additional work that is requested or necessary. Make sure you and the contractor sign and date each change order. It should always include whatever drawings, specifications, cost estimates, new deadlines, and payment terms that are necessary to complete the additional work.
- Don't agree to open-ended change orders.
Also known as time and materials agreements, these can blow up your budget and strain contractor/client relationships since they allow the contractor to charge for work as it proceeds and materials and supplies as they are needed.
Instead, ask for a fixed sum agreement, which obligates the contractor to perform work for an agreed upon sum. The contractor must absorb costs if they are greater than estimated, or conversely can make a greater profit if the work costs less than budgeted.
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 While it's inevitable that some things will change (not every architectural blueprint is perfect), change orders always mean more money. Be thorough in planning a project to minimize last minute changes.
Choose all materials and make all decisions on finishes before undertaking a project. If a certain tile will take three months to receive, see if you can exchange it for something simpler that can be delivered within the necessary time frame.
Many changes in a project indicate poor planning and direction. Also, contractors track their change order rate by computer and the national industry average is 20 percent. Look for a contractor with a change order rate that is less than this figure.
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