change order

Are you afraid of change orders?

One thing is for certain in installing a floor.

There will be bumps in the road.

Hiccups, unforseen by the GC, or whims expressed last minute by the owner will generate change orders.

Do you fear them, or do you love them?

 

Our commercial flooring database tells us that change orders represent about 16-20% of your revenues (up from 12-15% a year ago).

Successfully navigated they can increase the delivered gross profit margin by 2-5%.

That's a lot of moolah!

 

We have observed a lot of fire fighting behaviors in this change order arena.  You know what we are talking about!  We know it happens to you.

 

Picture the end of the job, the GC is trying to close it out and get the Certificate of Occupancy.

Tensions are high.

Reputations and careers are on the line.

Your GC contact has 20 trades all shouting at him presenting hundreds of change order payment requests that he (and maybe you) lost track of over the life of the project.

It turns into a confrontation.  Then a negotiation.  Then capitulation. Everyone leaves battered and bruised.

What should have been a moment of great jubilation, the delivery of an iconic building with a stately foyer and palatial floors, becomes a hot bed of angst, finger pointing and disappointment.

 

Let us spare you the usual drivel about getting change orders in writing, creating a change order log, levels of authorization, escalation protocols, blah blah blah.

Our mission at Flooring by the Numbers is to help flooring companies get better.  To get better you have to act differently.  To act differently you need to think differently.

 

Effective management of change orders is the primary vehicle to customer delight and ultimately, clients for life.

99% of the time, the mindset of the flooring contractor is getting the job done which manifests in the following behaviors:

  • do whatever it takes
  • get the work done now and fix the problems later
  • avoid conflict
  • take a hit on that change and hope to recoup on another

Let's think differently about the goal.  Let's focus on manage and deliver a succesful project which drives the following behaviors:

  • Project management competence is the number one priority
  • Change event processes are discussed up front
  • RFI's are elevated in importance

Responding quickly to RFI's in the project = Fire Prevention. 

Dealing with Change Orders later in the job = Fire Fighting.

 

On larger complex jobs we have seen 10-20 RFI's going out a day.

Multiply that by 20 trades and you can appreciate why the GC PM is overwhelmed.

They are managing hundreds of these RFI's and don't have the time or expertise to know  whether they will require a change order.

They just want it sorted.

This is your opportunity.

 

Not all RFI's turn into change events, but timely response is key.  Here's the flow

RFI comes in.

Is it information or does it trigger a change event?

If change event, does it incur cost?

If yes, address and present a change order to your customer.

 

Here's a prescription for customer delight:

  1. Change the way you look at things–from job mindset to project management mindset
  2. Institute a Daily RFI Standard Operating Procedure within your Management Operating System
  3. Track RFI events in your scorecard by volume and by ageing
  4. Deliver the change event to the GC in a way it is easy for them to convert into an agreed change order
  5. Track unauthorized change orders in your key operational metrics.

Once you do this your value proposition changes.  You are not just another me too flooring sub who won last look.

You are a a project execution partner who helps your customers navigate risk and complexity to deliver succesful, stressless outcomes.

Now that means more work and more money because the customer will keep coming back!

 

We teach all these principles in our Flooring Academy.  Come and join us.