TECH TALK 6: MANAGING SELECTIONS AND CHANGE
ORDERS
By Bill Allen
This is the sixth article in the nine-part
Tech Talk series.
Technology can help you stay on top of the
umpteen variables associated with managing
selections and change orders. However, as I
stress throughout the Tech Talk series, good
systems come first.
Before you even think about automating your
selections and change order processes, you
need to do two things:
Determine how to price, package, and present
product choices and upgrades.
Get your change order management system down
on paper.
Both of these processes depend on your
employees agreeing on what will be provided
and presenting the same message to the
client. We've all heard about sales people
promising the moon to customers while knowing
full well what the folks on the production
side can and can't provide. Don't let that
happen in your company.
Automated systems go a great distance in
standardizing the presentation. However, the
computerized controls between the customer,
the design center, and the sales, contract
administration, and construction management
departments must talk to each other.
Process Details
It's a good idea to develop communication
plans that go hand-in-hand with your
processes for managing selections and change
orders. Even better, build them right into
your systems. Consider the following steps
involved in processing a change order. A lot
of people must be kept in the loop:
1. The customer requests a change (or
requests it through the sales
manager).
2. The request is forwarded to the
estimator.
3. The estimator calls for clarification, if
necessary, and prices the request.
4. The quote is forwarded to the
customer.
5. The customer signs the quote and it
becomes a change order.
6. The project manager determines whether or
not the change will impact the
construction schedule and adjusts the schedule accordingly.
7. The contract administration department
collects money from the customer for the
change.
8. The change order is approved by the
builder and is re-submitted to the estimating/purchasing
department for a detailed take-off and material procurement.
9. Field personnel are notified of the
change.
10. Additional purchase and work orders (if
necessary) are written and sent to
suppliers, trades, and other parties.
11. Additional work is performed on the
house. When you calculate your markup, make sure you factor in
the overhead costs for each step in your process. In Step 7, for
example, I recommend collecting a non-refundable deposit for the
change if you don't collect the full amount. If the customer
decides not to swap sliders for casement windows after
all, you won't throw away the money you've paid your estimator
and project manager to do prep work on the request.
A good change order system affects cycle time, construction quality,
customer service, and your bottom line in a positive manner. If
yours compromises any of these areas, you need to re-examine your
system.
Technology Options
Some software packages have the ability to
integrate all the contract-to-closing
processes - including selections and change
orders. However, many rely on proprietary
databases. A good solution for many builders
is to add private portals to their company
Web sites that allow customers to make
selections, request changes, and ask
questions online.
Post product catalogs your company has
developed, or link to manufacturers' catalogs
your supplier offers. Create selection sheets
and change order request forms in Microsoft
Word and make them interactive by saving them
as .pdf documents clients can access on your
Web site. Be sure completed forms don't go
directly to your trades or suppliers or to
their manufacturers. Maintain control of your
processes by staying on top of what customers
want.
Once you've looked over their product
selections or change order requests, you can
post them on a portion of your Web site only
suppliers and trades can access. Be sure to
notify them that the information is there so
they'll know what materials you need to order
and what work needs to be done, and can give
you prices.
You might also want to post an interactive
calendar up there, too. You can show when the
client signed off on the formal change order,
and have your supplier indicate when the
materials will be delivered so trades know
when they're expected to start work. (We'll
discuss scheduling in detail in the next Tech
Talk article.)
Whether you automate your processes or not,
make sure you respond to input from all team
members - especially customers - as soon as
possible. Communication really is a two-way
street.
Bill Allen is a long-time contributor to
NAHB's Business Management & Information
Technology Committee and is president of W.A.
Allen Consulting
(http://waallenconsulting.com). The Redmond,
WA, company provides information technology
consulting services and process management
assistance to the home building industry.
Contact Bill at 425-885-4489 or via e-mail at
skagit@foxinternet.net.
For more information about this item, please
contact William Heslop at 800-368-5242 x8472
or via e-mail at wheslop@nahb.com
