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Note: I am not a lawyer and this not legal advice. Please seek competent local legal advice before any use of the following.
My definition: A Change Order - (CO) is a written document signed by authorised persons, directing a contractor to make a change under the Changes clause of a valid contract.
Basically a CO is a description of an addition/change/deletion to a contract's scope of work and the addition/deletion/no change to the contracts quoted price.
So ... there must be a valid contract (a verbal contract can still be valid - well written and signed is much much better) and the contract must include a clause allowing for change. This clause is often omitted or poorly written, which can be a costly mistake.
My contract Changes clause includes at least the following:
I recommend that you prepare (ahead of time) a proper CO form. Mine includes at least the following:
I hope this is helpful. Far too many people are very talented in their technical expertise but very ignorant of business best practices.
Be a company - not an individual - if you are contracting work.
Have a Business Plan - update it at least yearly.
Have a lawyer and an accountant that you can communicate with - and do so.
Learn to write Proposals.
Learn to write contracts - and change orders.
Learn ... learn ... learn ...
[edited by: stuntdubl at 11:18 pm (utc) on Nov. 14, 2004]
[edit reason] generalized member [/edit]
We sent the client a bill for the work, and ultimately were told they wouldn't pay. Our software didn't meet the specification, and they hired another company (buddy of new boss?) to complete the job. The client guy who approved our change developed a convenient case of amnesia, and denied approving any changes in the spec.
We ended up eating the entire project cost. For a variety of reasons, we decided not to sue the client. The overriding factor, though, was that we had no proof at all that the client approved the change.
That's a costly lesson in why formal change control is necessary.
Scope creep is another big factor. As you are going forward in a project, it's easy for the client to say, "Hey, can you do this, too?" When he gets the bill with the additional work added, amnesia strikes again. "I'm sure I never approved any cost beyond what was quoted... " I've got a contested bill right now due to that kind of thing - and the client is an attorney, of all things.
Change orders are your friend! Don't neglect them!
When he gets the bill with the additional work added, amnesia strikes again
There was a time when no IBM employee who walked among customers was without a little pad of potentially billable forms.
At the first hint that you were asking for something that might be extra to the contract, they'd pop a hand into a pocket and tear off a nice blank form.
They'd full it out with the details, and you'd sign and agree that you might be charged for the work being discussed,
It only said potentially billable so the charge might get waived or overruled by their superior. But it certainly put a sudden edge on whatever was being discussed.