What is a Change Order in Construction?
Today I’m going to talk to you about a very touchy subject for contractors and homeowners: change orders.
What’s a change order?
If you’ve done any remodeling, you know that awkward moment when your contractor comes to you and says: “This isn’t covered by your bid. It will be an upcharge.”
A Comparison
If you haven’t had any remodeling done on your house yet, you may be unfamiliar with this term. Think about it like this: You see a commercial for a car on TV, and the ad says that the car starts at $30,000. You might think to yourself, “I have $30,000! I’m going to go buy that car!” But when you get to the dealership, you find that the car actually costs several thousand more than that.
What happened? The car you saw on the ad was fully loaded, but the base model of the car, with no upgrades, is $30,000. At this point, it’s up to you whether to continue with the sale and buy the much more expensive, fully-loaded car. Or, you walk away because you don’t want to spend all your budget on settling for the base model.
It does not work like this in the construction world. In construction, change orders typically happen in the middle of the projects. Your options then are either to live with it and not do what you wanted to do originally, or you pay the higher price.
Why Change Orders Happen
Change orders can come in for many reasons. Sometimes there are unforeseen repairs that have to be made. Sometimes homeowners might change their minds about what they want to do. There may be mismatched expectations between the homeowner and the contractor.
Another reason you might see change orders is that your contractor gave you a low bid on the project to get your business. They lowball you at the beginning because they know they’ll make up their profit on change orders. You could start with a $30,000 project that ends up being $50,000 or more, depending on what you’re having done to your house.
