A Change Order as loosely defined by Wikipedia is: A component of the change management process whereby changes in the scope of work agreed to by the Owner, Contractor and Architect are implemented. When executed appropriately, a change order can be a valuable (and necessary) tool. Frequently however, contractors use change orders to exploit their clients as is illustrated in the following hypothetical scenario.
A couple (we’ll call them the Wisers) is looking to remodel their bathroom in an older Washington DC row home. The space is original and they want to reconfigure the existing bathroom: the commode and sink will swap places, the tub is to be converted to a large walk-in shower and the hinged door will be replaced with a pocket door. Doing their due diligence, the Wisers call three general contractors who all submit an estimate.
The first salesman is late to their appointment and is clearly clueless. The second is early, and makes a point of thoroughly explaining both the design and construction components of their project. He is sincere and clearly knowledgeable. The Wisers really like him and the company he represents, but his price is much higher than what they were hoping for. The third salesman (we’ll call him Timmy) is a smooth talker and has an answer prepared for every question. He is not a great listener, and seems to push his own agenda. But any reservations are erased once Timmy submits his proposal. The price is almost too good to be true; plus his crew can begin work next week! (Which means that the new bathroom will be ready to show off at their big Super Bowl party.) A contract is quickly signed, and construction gets underway.
Things go well the first couple days, and the Wisers are excited! But on day three, Timmy calls and says they need to talk. So it turns out the wall in which the pocket door is supposed to be installed is actually load-bearing, he explains. Significant structural framing will be necessary, which he did not account for in his estimate. In order to keep the pocket door in the plans, a $1,200 change order will be necessary. No problem, say the Wisers. After all it’s remodeling, and there’s no way to predict exactly what’s inside each wall.
A few days later Timmy calls again. He offers congratulations, and assurance that the project is progressing better than planned. But there has been another small glitch he explains. The existing outlet in the bathroom was not up to code, and they will need to pull a new circuit from the main electrical panel. It’s not a big deal, but since he hadn’t planned on this, he’ll need to issue another change order. The Wiser’s pay up quickly, as they are determined to have the bathroom finished in time for their party as planned.
Not even a day goes by before Timmy is on the other end of another incoming phone call. He’s very sorry, but the plumber has informed him that the old waste line for the tub is only an 1 ½” in diameter. In order to bring the drain for the new shower up to code, the plumber will have to replace the existing waste line with a 2” drainpipe. Because the plumber is up-charging Timmy, he will need to pass this cost along by way of another change order. Obviously the Wisers are not happy, but they write Timmy another check, as they want their new bathroom to meet building codes.
And so the pattern continues. The Wisers come to expect the “unexpected”, which is always relayed by Timmy, followed by a request for an extra payment. Eventually the Wisers cannot contain their frustration and push back. Timmy becomes indignant and accuses them of trying to stiff him. He says that this is an unusually complicated bathroom remodel, and the Wisers should be thankful to have hired such a skilled problem solver. Other contractors would have simply glossed over these anomalies, leaving an unsafe finished product (as Timmy explains it).
In the interest of finishing the project on time (which doesn’t happen) and avoiding conflict (which doesn’t happen either), the Wisers continue to pay up, and eventually the bathroom is finished and Timmy is out of their lives. The final cost has run over thirty percent above the initial contact, and the Wisers feel cheated (with no means of recourse). After all, the only reason they hired Timmy’s company in the first place, is because of his (seemingly) unbeatable price.
But if the Wisers knew the real truth, they would feel far worse than cheated. None of these “unforeseen conditions” was really unexpected. Anyone who has completed even one or two remodeling projects can tell with a glance if a wall is structural or not. Much the same, it is common knowledge that an old tub drain will be smaller than what is required by code for a walk-in shower, and that bathroom outlets were not wired with dedicated circuits in the early 1900’s. Timmy knew all this, but needed to sell a job to keep his company going. So he low-balled the estimate, knowing that once the contract was signed he could change-order away, to make up the difference.
And many contractors (particularly those who are struggling to find work) play this premeditated game of bait and switch, in which they use change orders as their leverage. Fork over money above and beyond the agreed upon contract price, or you will not receive the product that was promised