Managing Change Orders in Construction Projects
Good contractors always create a budget at the beginning of a job. But we all know that the budget isn’t set it stone, it changes as the job changes. Therefore, you need to be able to track all changes orders and how those affect the budget. Then, when you compare the current costs on a job against the estimated costs, you can get a real-time picture of where you are on any given job. Meanwhile, as the change orders are created, they not only affect the budget but the contract as well. Do you have the ability to track the contract from its starting value to current value? Can you see the effect of all the change orders, both on the contract as well as the budget?
These are important questions to ask of your software – if it is not able to provide the information you need to track the ever-changing budget or contract, you may be losing money. I’ve worked with many contractors who have discovered, only too late, that they never invoiced the full amount of the contract. Some change orders just fell through the cracks – as did the profit on the job.
As the margins on jobs become tight in today’s economy, a good construction accounting software can help you maintain your margins. Have you ever overpaid a subcontractor? Have you ever lost money on a T&M job because a bill for additional costs appeared long after the job was finished, invoiced and fully paid? Or perhaps you’ve lost money because some bill was entered into your accounting system, but never coded to a job. These are all common horror stories from companies who were using a generic accounting package, not tailored to the construction industry.
How Sage Construction Software Helps You Manage Change Orders
Because both Sage 100 Contractor and Sage 300 Construction and Real Estate fully integrate their Accounting, Estimating, and Purchasing modules, all of your contract documents (contracts, subcontracts, updated plans and drawings, purchase orders, meeting minutes, requests for information (RFIs), and other project related documents) including your change orders, are in one place.
This centralized source of information gives you the confidence of knowing you have a complete and current picture of all your projects.
Software like Sage 100 Contractor and Sage 300 Real Estate and Construction helps you take charge of your change orders by allowing you to easily control the change management process: You can quickly:
- Identify potential change orders
- Solicit quotes and pricing
- Record when quotes are due and from whom
- Approve pending change requests and/or commitment change orders forward them on to accounting.
One your change orders have been added to the system you can use the Dashboard and reports to get an overview of your projects or drill down into any of the details.