Don't sweat the small stuff - Use FAVORS instead of change orders
Change orders are common in construction for “extra work” that wasn’t part of the base bid. Is it possible that your changer orders are causing you to get less work in the future? As the owner of a 45 person general construction company, I can tell you with certainty that Change Order requests from subs can ruin your relationship with a GC if you are not careful.
The alternate of a change order is performing a favor. Doing something extra and not charging for it. This might seem counterintuitive but I will explain how powerful favors can be. In this post, I will outline from a GC’s point of view when you should submit a change order request and when you should do a favor.
What is a valid Change Order request?
I’m not suggesting that trade contractors should never ask for change orders. Most of the time, when a subcontractor requests a change order, it’s for a valid reason. There are some change order, however that just feel unreasonable and difficult to accept. Here is a list of valid change order requests:
Scope of work was increased by the client and the GC will be paid for it.
Scope of work was increased by the building department by inspection or plan check and the GC will be paid for it.
Existing conditions that were not known prior to the base bid revealed added scope and the GC will be paid for it.
In all three of the above cases, the general contractor should be able to pass this change order cost onto the customer. That is the key. If the GC is getting paid, then so should the subcontractor. If the GC won't be able to charge for it, this is when you may want to consider it a favor. I'll explain more as to why that's a good idea.
When is a Change Order request not a good idea?
Too many subcontractors have the mentality that….”I won’t do anything extra without getting paid for it”. I get it. These subs have probably been burned in the past by GC's. Unfortunately for them, this mindset will not lead to creating long standing relationships and loyalty with general contractors.
If the general contractor is not able to get a change order paid for by the client or the work request is small and can be done quickly without much extra work…..don’t request a change order. Instead, consider it a favor that you remember.
Why? When a general contractor has to pay for something out of their own pocket, it harms the relationship between the GC and Sub. I can tell you from experience that I won’t use many subs because they cost me money due to their change order practices. If I use them, I have to add contingency so that I don’t have to pay it out myself.
Now, let me be clear. I’m not suggesting that the subcontractor has to foot the bill for every change requested by the general contractor. I’m simply saying to ask yourself or the GC directly “Will they be able to charge the client”. If the answer is no and the work is minor and doesn’t take much time or money, consider doing it as a favor. Trust me, when you do favors, it cements loyalty to your company. The vast majority of the subs that I use on a regular basis do small favors and don’t sweat the small stuff. I feel confident using them because I don’t have to worry about losing money unexpectedly for small silly things.
Here is a partial list of some favors by subs:
Moving an electrical outlet or switch to another location before the walls are closed up to avoid an unforeseen conflict.
Patching an extra few holes in the sheetrock at the same time as texturing another wall.
Painting touch-up on a separate wall when you are already painting with the same color.
How to avoid being taken advantage of?
It’s important not to be taken advantage of when doing favors. The key is to know where the line is drawn between favor and change order. Something done as a favor should not cost the subcontractor more than a few hours and minimal materials. This limit can vary based on the size of the project and the opportunity/relationship with the GC.
3 Tips to Maximize the power of Favors.
1) Track Favors performed
It’s important to record and track any favors performed. You will want to remember what you have done for your client or GC. Why? Because you may want to leverage this later. Besides creating good will and loyalty with your GC, you should also “bank” these favors so you can use them later. Don’t forget, favors can go both directions.
Tip: A great way to track favors is to use a phone app like BuildCenter so workers can add notes about their work and record favors.
2) Remind your GC about favors when submitting Change Order Requests
When you have a valid change order request, it’s a great opportunity to list out any work performed that you are not charging for. I like to list these items and on the price put “No Charge” or $0. This is a great way to politely remind them that you did this work and it takes some of the sting out of receiving the change order request. In addition, the GC can use that favor on their Change Order to their client. It helps them sell your change order.
3) Trade favors with the GC
Favors should not only be performed by the subcontractor. The GC can do favors for the sub in return. For example, we require our subs to pick up and dispose of their own trash. When projects are running at a quick pace, it may be hard for the subcontractor to keep up with this task. Taking care of that for them is one example how we repay favors to our subs. The subcontractor can ask for help with scheduling to make them more efficient too. For example, you could say….”sure, I’ll take care of that for you….I won’t even charge you…..but can you clear the other subs that keep slowing us down for two days so we can be more efficient?”
Change orders are part of construction. The key for a subcontractor is to know when it’s a good idea and when a favor is a better option. Harnessing the power of favors and leveraging them is a great way to boost your subcontractor business with GC’s.
Read related post “How to be a GC’s favorite subcontractor”
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