June 29

How to Reduce Losses from Change Orders in Construction

Sometimes, change orders in construction are small, right? You’ve worked with a client for a while, or it’s a big-ticket client, so small change orders are not something you want to nickel and dime them to death on. You might decide to just roll those small asks into the cost of doing business with them.

But what happens when the situation eats up serious time and money? Maybe it’s because you’re working on something without a complete or well-coordinated set of plans. Maybe you just have a really indecisive client. Often, it’s just because you run into issues that no one could predict. Whatever the cause, you can only bid and budget for what you knew when you started. But those small asks can turn into big (and expensive) tasks pretty quick. Costs can add up to 10-15% of the contract value, so it’s important to keep a good eye on these potential bites out of your bottom line. 

Capture Potential Change Orders

If you’ve got a good project manager, they’re focused on getting the job done—they solve problems and move forward. That’s a good thing and a bad thing. How could that be bad? Because as issues come up on the jobsite, someone shoots off an email or makes a quick call, and they take action. However, that means those actions don’t always get documented the way they should—which means it’s harder for you to fairly bill the client for those actions.

It’s important to capture potential change orders from the request to the result so you don’t lose money on ones that turn out to be a big deal. And, you need to be able to do it  in the moment, easily and quickly. You don’t want to make change order management a huge task for your field staff and you want to optimize it for your office staff. The last thing you or your project manager needs is a pile of extra paperwork.

Typical Change Order Management  

Say you’re excavating and something below the surface wasn’t on the plan. Maybe you hit rock. You have to notify the client and capture that situation quickly. Typically, you make a call, send an email, or send a text with a picture to get someone out to look at it and decide on the next move.

Is that going to be captured and remembered come invoice time? Maybe. Or maybe it gets lost in the flow of the job.  

That’s what RFIs are for, right? But ask yourself: Does everyone on your crew fill out a form every time an issue comes up? Probably not. They’re busy, driving forward to get the job done.

Managing Change Orders with IntelliSpeX

IntelliSpeX

With IntelliSpeX on your excavator’s or PM’s phone, they can take a quick video (time, date, and location stamped) that goes automatically into that project event. No spending time laboring over how to describe the problem on a form so that someone who isn’t there understands. Point the camera at the problem and show them.

Everyone involved in that project is on one central chain, communicating about what’s happening. All the texts, messages, questions, comments, and decisions about it are captured right there, so there’s a record of it to go back to later.

With IntelliSpeX, you can also set up a potential change order form in the project event. That means the boots-on-the-ground folks can make a few clicks, add some text, and immediately notify everyone who needs to know, all at once.

It’s organized without you or your crew having to do the organization.

Say you have a conflict between mechanical and electrical. You need the electrical contractor to come back in and reroute a conduit. If you’re the superintendent, you think that’s a potential change order. The PM tags the electrical subcontractor to get him to look at the video and see what needs to be done. And it’s all right there in that project event.

You save on multiple layers of time and costs because no one has to go back out on the site and everything is clearly documented.

IntelliSpeX Makes Construction Management Easier

IntelliSpeX sets up your projects in a storyboard format, which means: from start to finish, everything that happens in the story of your project gets logged and documented in the fastest, easiest way possible. All your potential change orders are captured and documented. What happens with that kind of automatic project organization?

First, it means that when issues or questions come up about what happened on site, you can navigate back to that exact point to find it.

Second, it means that you can view all that captured data whenever you need to. Look at all those potential change orders and figure out which ones you need to present as true change orders.

Watch our demo to see how it works

reduce losses from change orders

Added Value

Say you have 15 potential change orders in the month. You don’t want to charge for all of them. But there are 2 that are just too expensive to absorb. When you talk to your client about those additional charges, you can show how much value you added to their project in the additional work. But you’re not just saying so—you have documented, clear proof that everyone can see.

If you know that a billing situation might turn into a dispute, the proof you have right there is even more important. You don’t just have a form that says there’s a potential change, with no follow up. You have everything that happened documented in the context of the event—all the discussion, forms, and agreements about it. You don’t have to waste your PM’s time going back to gather documentation (that maybe they can’t find) so you can present it to your client. It’s all right there, easy to find and clear to present.

Optimize How You Capture Change Orders

The field is where most change orders originate–and an average of 35% of projects have at least one major change. Simple miscommunication and a lack of robust data about what’s happening in the field are the only things keeping you from capturing the profit you deserve from those change orders.

IntelliSpeX optimizes communication, data, and organization. It’s easier to document conditions and problems. It’s faster to find the proof you need when you need it. And your clients can clearly see the truth about site conditions, actions, and completed work.

Contact our team today for a walk-through of the system and find out how IntelliSpeX can help your business capture lost profits from change orders. 

 

 


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