CHANGE ORDERS - IS IT FAIR?
By Mike Young, CDT
When I finished a technical article discussing what
I called “some common wisdom that should be posted on every project manager’s
wall”, I thought that would be the end of the story about my slope retention
saga. I was wrong. At one of the recent Denver Chapter luncheons, a fellow
member approached me and said that they can’t wait to see how it ends. I guess
sharing the sordid details of how I completely screwed up a simple little
project isn’t enough for some of you.
So how does it end? So far, it hasn’t, but I do believe we have a solution. The
solution took working through a little change order process, which, after
thinking about it, could make a reasonable technical article. The reality of it
is that no matter if a request for a change and the resulting change order is
for a single $100 item or several items totaling a $1,000,000, it’s all the
same. The mental hoops you jump through might be easier to navigate on the
single item valued at $100, but they are the same for the more complex, big
dollar request.
So how does one approach analyzing a change order? Those of you that deal with
either asking for change orders or paying for change orders may think I’m over
simplifying this, but here is the secret to analyzing any change order. All you
need to do is satisfy one question…is it fair? That’s all that matters. Is it
fair?
Often, satisfying that question is difficult, especially in situations where a
change has been forced upon you through regulatory agencies, unforeseen
conditions, weather, etc. But the bottom line is that change happens, despite
our best efforts to predict it or avoid it. By the way, you can’t avoid it, so
your best plan is to expend your time, money, and energy trying to predict, or
anticipate it. But at the end of the project, if everyone walks away with a fair
profit and a finished product with value, then the project has been a success.
(Value, as defined by our friends at Webster, is “An amount regarded as a fair
equivalent for something, esp. goods or services.”)
One of the hardest things to work through in the fairness argument is the
concept of a fair profit. When I was just starting out in construction, I worked
under a “seasoned” superintendent who drilled into me the most important thing
to remember when dealing with people on a project: “Never mess with a man’s (or
woman’s) family!” Since I rarely met the family of anyone I worked with on a
project, it took until I had a family of my own to fully appreciate what he was
telling me. Why do I go to work every day? To make money. Why do I need to make
money? To take care of my family. You mess with a person’s ability to make
money, you mess with a person’s ability to take care of their family. Respect
that, and things begin to come a little more in focus.
So that’s it. It’s that simple. If you can honestly say to yourself that the
change you are asking for consists of a fair profit for you, and that the amount
is a fair equivalent to the goods and/or services you are providing, then pursue
it. Complimentary to that, if someone provided you with goods and/or services
that you asked for or needed for the completion of your project, and they are
asking for a fair reimbursement for it, pay them. If either party feels that the
other party is being unfair, address it head-on. If you can’t work it out, keep
in the back of your mind that some mediator will be hearing both sides of the
story and will be deciding for you what is fair.s.