How Do You get Paid for Change Orders?

So many people complain about not getting paid in this industry. One main point of contention is the change order. So how do you get paid for change orders? Well here are some ideas. By the way, I have some dialog in my podcast about the last post, Is It Time to Unionize Tower Climbers? that I didn’t write about here, just in case you’re interested. I had some things to say about the feedback I got.

Planning is key. You need to be sure you understand what your job is going to be. By this I mean the scope of the work. When you submit a bid, read the RFP or discuss the work with the customer. Read the SOW and modify it to match your assumptions and exclusions. You will need to match the desired outcome of the customer with the services you plan to do. Then you may move forward. Remember, you are in this to get paid for the work that you do! If you get paid for 20 hours of work but your crew works 40 hours, chances are good that you’re not making money, or at least making the margin you deserve.

Happy holidays everyone! Make sure you go to my Wade4Wireless products page where I have products to help tower climbers and deployment teams. Want to learn more about the SOW? I would like to give you the free eBook, a SOW Overview. If that helps you out then I have a tutorial outlining how to write and read a SOW in the SOW training package,  The SOW defines how you get paid! It may outline how change orders are done. Remember, it’s your bottom line that matters! This is a business.

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For the change order, the first thing you need to do is make sure the work being requested is outside of your scope of work (SOW). I just happen to have a tutorial on how to write and understand a SOW available here. Anyway, what you need to do is understand what work is defined in the SOW, and then you need to decide how far outside the boundary of that work you will go. For instance, if the customer asks you to do an additional 4 hour task, you may do it because they are a good customer and you want to help out, right. Brownie points go a long way in future work. That is if they don’t just put it out to the lowest bidder. If you work with customers that always put the work out to the lowest bidder, then there is no reason to do any work outside of the SOW. Then it will all be a change order.

If you can, put the change order process in the SOW. If not make sure you understand the customer’s change order process. You need to follow protocol so you get paid. If the change is something that is a one-off or very different from what you are used to, make sure that you know what the desired result should be so the customer can sign off on it and you get paid. If it is something that you do all the time then it should be straight forward, like if you need to install or move a dish and complete a link. Simple stuff, right?

I have had customers that really push the limit and ask for so much work that is out of scope. So what happens? If you do it then they expect it on all the jobs. That may be good if they throw you a lot of work. However, suddenly a 20 hour job may be 30 hours and you will lose margin and time on site. All things to be considered if you commit to do the work.

On the other hand, I have seen contractors that have a business plan of going in cheap and then requesting as many change orders as they can to make up the money they lost by being the lowest bidder. Many customers get sick of this, so there is a balance of what you could ask for and what you will get. It is better to prepare the customer up front rather than nailing them along the way with change orders they didn’t expect.

So, define the work and define, to your team, what you will do outside of the scope. That is priority one!

Then, define the change order. If the customer gives you a verbal, ask them for an email or PO so you have some proof that they authorized the work. If they want a paper document, then make sure you know that. You should have authorization. Who may authorize the work for the customer and the contractor. Just because you are on site doesn’t mean that you have the power of authorization. If it is something that they want done while you are at the site, define the work, determine or estimate the pay. Chances are if you need to do it while at the site you know what to do. Just make sure that someone gets more than a verbal authorization. An email is usually enough but a PO is even better. Many customers do not appear on the site for the job except to complete the punch list and inspections. They may pay time and materials, (T&M) this is quick and easy but in today’s world most people want a not to exceed number.

If the customer has a change order process, make sure you and the field personnel understand what that is. Make sure the customer has someone who can authorize the change order! All job site leads should know what the change order process is. If you have a process, make sure they understand what to do for that customer! Each customer may have a different process. It would be a good idea to understand that prior to starting the work.

When the work is completed, how will it be inspected? You will need to determine how to get paid. If you are installing something then they may not pay until the unit is tested and operational. If you are turning up a point to point link, then it is easy, the link is up and tested, then you send a bill. If it is a cell site, you have to wait until they integrate and test it. That may be in a week or in 3 months depending on the roll out. It may be beefing up the tower so they may need to see a complete closeout package. So then you should determine how long you need to wait for your money. Remember that the original Terms and Conditions (T&Cs) may apply. Make sure that when you write the SOW, you include a change order process or if the customer has a change order process get a good look at it and determine how the payment will be made. Making sure how to mark the job complete is how you will get paid, so then you will need to determine what marks the job as completed.

So make sure that you understand the change order process for your company and from the customer. Payment is what keeps you in business! You should get paid for the work you do and you should get paid for the additional work you do. Time is money, change orders take time, and you should get paid for them.

Be smart! Be safe! Pay attention! Make a plan, follow the plan, improve the plan and you should do fine.

Let me know, did this help? What do you think I should talk about next?

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