Beyond the Build

Customer Relationships

Change Orders and Communication: How to Avoid Hanging In the Balance

On construction jobs, the unexpected is…well…expected.

Circumstances inevitably change. In our case, codes are updated, conditions in earthwork shift or we encounter any other variety of circumstances that affect the outcome of our work. To me, when considering a construction contract–or for that matter any written agreement–good communication and change management are essential to success and long term relationships.

I remember a particular Friday last March very clearly. I was meeting with one of our then project managers, when I realized we had not been keeping a customer relationship in-the-know about a changed aspect of their project.

Later that day I called our customer to explain what might be on the horizon. For several weeks following, I spent many hours gathering information and systematically sharing it with him.

The situation turned out okay, but could have been much different had we not immediately communicated what we saw on the radar. It might have been late, but fortunately it was not not too late for our relationship.

Because of our experience, I was glad to seen an article on the topic from Construction Executive Magazine. I found these points helpful and thought you might too, whether you are a contractor or in any service industry.

There is a legal distinction between “change” and “extra.”

  • A change is a modification to something listed in the contract.
  • An extra is a service or material not listed in original documents.

*As you read potential contracts, look for how these are addressed.

“Change Orders” and “Change Directives” are different animals.

  • Change orders are when both parties can agree on the timing and price of changes.
  • Change directives are born of disagreement. There is a dispute over what should be changed and how much should be charged.

I find it critical to communicate “early and often” if change is suspected. This gives us the benefit of time and more importantly, allows us to take the appropriate steps to mitigate.

How have you been successful at managing the unexpected?

Merrill Stewart Jr.

Merrill Stewart is Founder and CEO of The Stewart/Perry Company, a commercial building contractor based in Birmingham.