Change orders are a critical aspect of construction management, requiring accurate documentation, effective communication, and contingency planning to manage costs and protect contractor reputation. Building trust with owners, understanding cost estimation psychology, and maintaining strong relationships help navigate negotiations and minimize the impact of design issues and low bids.

In this episode of the Management Under Construction podcast, Brad Wyant and Dee Davis delve into the complexities of change orders in the construction industry. They discuss the importance of understanding change orders, the psychological factors influencing cost estimations, and the impact of low bidding on project costs. The conversation emphasizes the necessity of building trust between contractors and owners, the significance of accurate documentation, and the challenges posed by design issues. They also explore strategies for effective negotiation and the importance of contingency planning to manage unexpected costs. Throughout the discussion, the hosts share personal anecdotes and insights, providing listeners with practical advice for navigating the often-contentious world of change orders. When you are done with this podcast and implement the wisdom imparted, you will have begun your change order wizard journey. This is the way. 

Takeaways

Chapters

00:00 Introduction to Change Orders
01:45 Understanding Change Orders
04:17 The Importance of Documentation
06:41 Psychology of Cost Estimation
09:23 Economic Incentives in Change Orders
11:59 The Role of Marketing in Bidding
14:18 Trust and Relationships in Construction
16:48 Owner's Perspective on Change Orders
19:12 Time Pressure and Change Orders
20:05 Constructability Issues and Design Changes
24:53 The Amnesia Factor in Change Orders
33:28 Design Responsibility and Liability
38:14 Navigating Change Orders and Owner Expectations
39:05 Building Trust and Setting Expectations
47:00 Effective Communication in Change Orders
56:10 Negotiating Change Orders and Fair Pricing