CHANGE ORDERS WHEN BUILDING A CUSTOM HOME

The inherent nature of the custom home building process is to accommodate change orders as the home’s construction project progresses. The experienced custom home builder will be able to accommodate these requests and adapt the schedule as needed. Here’s what you need to know about change orders when building a custom home.

Change Orders – A Service or Profit Center?

The widely held perception, in the industry, is that change orders are an area of high profit to builders. This may be the case for some, especially in the production field, where a home is built and the time schedule is founded upon a routine process, but this is not the case for most reputable custom home builders. It is important to note that, for most reputable custom home builders, change orders are performed as a service to the client. They are not a profit-making component. Remember, everything in your home is custom, so change orders are a change to the original design or specifications agreed upon by you, your builder, designer, and/or architect.

Understand the Change Order Process Ahead of Time

In custom home building, and you’ll need to have this discussion with your builder ahead of time, the margin added to a change order rarely recoups all of the associated time and administrative resources required to accommodate the actual change order. As a matter of fact, most builders would prefer to build a home without any change orders, but the nature of the custom home building process is to provide the homeowner with the ability to customize the home to their desired liking, even during construction.

How Change Orders Impact on Your Schedule

While custom home builders are usually adept at accommodating change orders, it’s important to remember that change orders can alter the construction schedule, push production timelines, and may cause a ripple effect in many other areas of the project. So, it’s imperative to consider each change order’s cost and impact on the overall construction schedule.

How to Pay for Change Orders

It’s also worth noting that most change orders are not included as part of the original financing of the home. So, in some cases, change orders will require either the homeowner to pay these costs out of pocket or, to communicate with their lender about ways to cover these costs in the financing.

Costs for change orders may be billed separately and usually we ask for a percentage of the cost or full payment up front before making a change, depending on the type of request.

It is common for most custom home projects to have some change orders because the homeowner’s decisions tend to evolve as the project progresses and they begin to see the actual space. In many cases, these changes enhance the project as the homeowner begins to touch and feel this evolution. But, the wise homeowner will carefully consider any change order decisions and their overall impact on the construction process and discuss these changes with the builder to help manage their overall expectations.

We realize that some finishes (or even floor plans) may be hard to visualize until they’re actually installed or built. From years of experience, we know that changes will happen and, consequently, we aim to be systematic about managing change orders. Our process ensures good communication and provides assurances between everyone involved. It also helps us stick to the schedule and minimize additional costs.