Beware the Culture of Change Orders

By Mark McClanahan, President of Mosby Building Arts

The remodeling industry is tough on consumers.  The Better Business Bureau typically receives more complaints annually about remodeling companies than any other industry.  Considering this – along with what a person hears firsthand from friends and family –  it’s no wonder why homeowners are gun-shy when it comes to hiring a remodeling firm.

Unfortunately, there are some remodeling companies who contribute to the sentiment consumers have about the industry.  Some companies look for ways to make more money once they’re in your house.  I’ve heard this referred to in the remodeling industry as “having a culture of changes orders.”  In layman’s terms, it means a company trains their field associates to sell additional work beyond the original contract and scope of work.

Another way this is accomplished is by initially providing incomplete project bids.  To compete with other companies and land the job, some contractors will purposely provide a lower bid and are fully aware of an upcoming moment when the client’s house is torn up mid-job and something else will need to happen to complete the job. At this point, the client is hooked, and it’s an opportunity to charge more than the original contract price.

This “culture of change orders” has created a legitimate reason for consumers to expect needing 30% – 40% more money beyond what they signed for on a fixed-priced contract. Paying more than initially quoted is not a remodeling industry standard; this is a tactic used by only a small portion of contractors.

So, how can you protect yourself from this change order ploy?  There are 4 key signs to look for:

1.  If the remodeling company never visits your house yet has a contract with a dollar amount for you to sign, you should walk away. It is impossible for the contractor to estimate an accurate cost for the work without seeing the conditions of your house first hand.
2.  If the remodeling company doesn’t pull permits, you should walk away. There are plenty of instances of an inspector learning of non-permit work underway in your home, and they will halt the job until permits are obtained. This results in a significant delay to the job as well as an increase in the cost of the project.
3.  If the remodeling contractor quickly writes out a bid on a piece of paper and hands it over in lieu of a proper contract, you should walk away. This typically does not hold up as a binding contract and is a sure sign of trouble to come.
4.  If the remodeling company submits a bid that is significantly less than a competitor, you should walk away. This is a sure sign they’ve left out something important to successfully complete the project. In fact, many companies that appear to have an expensive bid have simply included all expenses in their honest, up-front bid, and do not rely on cost overruns.

Another thing about low bids; Mosby’s St. Louis designer Jake Spurgeon put it best in this article when he wrote: “That low price tag too often means that required work was missing from the initial work scope. Items like an electrical panel upgrade, plumbing stack replacement or code compliant upgrades will come up once the project is underway. These become change orders, and it adds to the final bill.”

Should homeowners expect change orders?

Yes, change orders are a common occurrence, but they should happen for only two reasons:

1.  The homeowner wants additional work done because they are happy with how things are going.
2.  Something is uncovered during construction that was not in the contract because the house conditions hid something from view. These are usually referred to as “unforeseen conditions” on your initial contact.

Change orders should not be considered a normal (and unknown) part of your home remodeling project cost. A professional remodeling company considers all details of a job to come up with a fair price for expert work backed with a warranty and assurance of future support to you.  What may seem like a higher price tag upfront is really an honest estimate of what it will realistically cost when done without excessive change orders.

Choose a remodeling contractor that gives you an upfront honest price for honest work so that the cost of the project will be worth every penny. I’d like to recommend Mosby Building Arts as just such a company for your St. Louis home remodeling needs. Here are a few reasons why you should choose us. And for any questions, please call us at 314.909.1800 or contact us here.