Monday, August 11, 2014

The Impact of Change when renovating

The Impact of Change

Even small changes made after work begins can have surprising effects on the budget. Here’s why.
Minimizing change orders is one of the most effective things homeowners can do to control costs during a remodel. This is especially true when you have a fixed-price contract. The reason is that seemingly small changes can have cost impacts beyond the remodeler’s control—costs that ultimately are borne by the customer.

We’re not talking about unscrupulous contractors who write vague specifications to create low bids and then nickel-and-dime clients with change orders to increase profits. We mean honest remodelers who write detailed specs, price accurately, and manage their jobs in a professional manner.

Arriving at a contract price for a complex remodel that gives the clients value for their money and provides the remodeler with a fair profit takes a lot of time and experience. The remodeler must plan the job down to the last detail. Deviations from that plan after project kickoff tend to raise the budget.

The kickoff usually happens at the preconstruction meeting, where the remodeler and clients review and sign off on product and design choices. Purchase orders are then generated and sent to subcontractors and suppliers, setting firm prices for every part of the job. If clients request changes after this point, they are responsible for any extra cost.

How much cost? That depends not only on what is being changed, but also when. For example, suppose a major kitchen remodel includes a new door to a deck or patio. If the clients decide later that they want a sliding door rather than a standard door, it will cost less if they decide before or soon after demolition. If they wait until the standard door has been installed and the walls around it wired, insulated, and drywalled, the change is more costly.

Less obvious are seemingly minor changes that have a ripple effect. These can multiply the cost of an item to several times what it would have been as part of the original specs.

Suppose the kitchen remodel also includes a nearby powder room, and the homeowners decide they prefer a pedestal sink over the small vanity they had chosen. The remodeler’s staff has to cancel the order for the vanity and possibly for a granite top. If those items have already shipped, the supplier will likely charge a restocking fee. 
The pedestal must be ordered from the plumbing supplier, taking additional time. If the hot and cold water pipes are already in place, the plumber has to move them, and the plumbing inspector has to inspect the change. If the wall has already been finished, the drywaller must be called back. This minor change may throw off everyone’s schedule by a week or more.

Every change also requires time from the remodeler’s staff—time to complete and track orders, to reschedule workers and subcontractors, and to update the budget. That’s why change orders include an administrative fee.
This explanation is not given to discourage important changes. Clients are entitled to make their home their own, and most clients decide to make at least some changes during a project. But they should do so with a clear understanding of the costs those decisions will bring. It’s a reminder that making firm selections up front is in the clients’ best interest.

Warm Regards,

Doug Abbott
Village Builders


This is an excerpt from a newsletter that is distributed to all former, current and future clients of Village Builders Inc.  If you would like to receive this newsletter feel free to email me at www.robabbott@villagebuilders.ca

Rob Abbott
Operations Manager
Village Builders Inc

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