Remodeling Contractors: How to Handle Change Orders

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If you’re looking to hire a remodeling contractor to redo your home,here are some important tips. First,be aware that changes are expected and normal. Do not hire a contractor who demands full payment before you start work. It is best to wait until all work is completed before making any final decision. However,it is not a good idea to pay up immediately.

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The average remodeling contractor’s revenue increased from $12.7 million in 2010 to $40.9 million.

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According to the National Association of Home Builders” Remodelers’ Cost of Doing Business Study in 2010,the average remodeling contractor earned $40.9million. The study was based in part on a nationwide survey. Remodelers were asked to provide income and balance sheets for their fiscal years ending in 2011. The data is used to assist remodelers in comparing their financial performance against industry benchmarks as well as to evaluate their overall financial health.

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To set fees and maintain consistent profits,the construction remodeling industry uses gross Margins. The industry is expected grow at nearly 19% in the next five years. It is a major source for employment and has seen a rise over the past years.

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Specialization is the key to the industry’s growth. Specifically,remodeling contractors who specialize in a particular service area have better processes to manage the home improvement projects,which improves their productivity and enables them to better market their services. This trend is likely to continue as large remodeling contractors grow in size and specialty.

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Change orders are a part of the process

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While most remodeling contractors use Microsoft Word or Excel documents for their work,they can also use a variety other software applications to create and implement change orders. These programs often include standard forms that speed up the process and reduce liability for any unauthorized changes. Unauthorized changes can cause delays in a project.

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Change orders can add ten percent or more to a remodeling project’s total cost,which is why it’s critical to have a change order process in place. The client might forget to pay for the changes,and the contractor may not be able to justify the additional cost to the client. To avoid this situation,contractors should collect payment for change orders before they begin working on the project.

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A change order refers to an addendum or amendment to a renovation contract. It accounts for any additions or deviations from a plan. The homeowner can initiate it or the contractor. In either case,the homeowner will need to sign off on the change orders. Typically,change orders arise because the contractor underestimated the scope or overlooked details during the planning phase. Contractors might also choose to omit certain items in order to offer a lower price.

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Be professional and civil

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Remember to be polite and civil when you hire remodeling contractors. Contractors don’t like dealing to rude and unprofessional customers. Contractors want the project to be completed quickly and efficiently. Also,make sure to keep your requests and demands to a minimum. This will ensure there are no resentments,which could lead you to a lawsuit.

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Avoid hiring contractors who require full payment before work begins

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Most contractors require some form of payment in advance,but if a contractor insists on receiving the entire amount before work begins,that is a red flag. The average project cost should be between 10 and 20%. In some cases,it may be possible to negotiate upfront payment and a payment schedule.

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It is important to discuss payment terms with your contractor as well as any subcontractors. Remember that subcontractors are ultimately responsible for your work. If a subcontractor fails to make payment on time,they will need to be paid. In addition,you should discuss potential problems with your contractor before work begins and document all issues in writing. Before you sign a contract with any contractor,be sure to ask for references from at most three of them. You should not sign a contract if a contractor is unable to provide recent references.

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It is important to ensure that the contract includes clear details,including contact information. If the contract contains any unclear or vague terms,it’s best to move on to another contractor. A contract should be clear and easy to understand. Talk to a lawyer or another legal representative if you are unsure about any aspect of the contract. Also,make sure there are no fine print or legal ambiguity in the contract. Move on to a different contractor if the contractor insists that full payment must be made before work can begin.