The bane of many real estate developers’ existence, change orders are an unwelcome but necessary part of doing business.
There are a number of reasons for change orders to be issued: There might be unexpected alterations to the building site, the client may change their mind about what they want done, or perhaps there were errors or items inadvertently left off of the original plans. Whatever the reason, whenever a change order is expected, it is crucial to communicate with the client, designers and all affected subcontractors in order to minimize fallout.
Discuss any changes that need to be made to the schedule, and advise your client of any work that needs to be stopped. Check the change order to ensure that all labor, material and equipment needs are addressed. If any work already completed will be negatively affected by the new work, ensure the impact is accounted for in the change order.
Remember to consider how subcontractors will be impacted by the change orders. Determine how the change order will affect your subcontractors’ costs and schedule and how it will affect their contracted work. It is important to review the overall impact of multiple change orders if you are faced with multiple change orders on the same project. And be sure to analyze the impact on your productivity and your resources, staff and equipment.
Employ Real Estate Development Accounting Powered by Acumatica to smooth workflow, reduce number of change orders
To avoid disruptions in the project flow, it is crucial to plan and schedule your resources and subcontractors carefully to avoid a large number of high-impact change orders. The best way to ensure logical planning and reduce errors is by employing Real Estate Development Accounting powered by Acumatica: state-of-the-art real estate development software.
Managing change orders effectively can prevent a project from falling apart. Project delays, increased costs and workflow disruption may be the price for not addressing and resolving change order issues early.
Our solution offers increased efficiency because transactions need to be entered just one time (i.e., an invoice). That one transaction will be reflected in payables as on invoice to pay, updated as a contract draw on the contract, in project costing as a cost to manage and applicable for the loan draw process – negating the need for duplicate/triplicate entry and possible data entry errors causing report differences.
Providing a more accurate view of project costs throughout the timeline
Our Solution gives users the ability to manage project costs and, through single-point entry, know the exact status of a project from budget to committed/contracted costs to actual costs to date. The ability to factor in forecasting changes means users can get a more accurate view of the estimated completion costs at any point during the timeline of the project. Our solution also provides a single point of reference with backup schedules to report both budgeting and project costing of a project that integrates into financials.
The ability to manage change orders effectively doesn’t have to be complicated. With the help of Real Estate Development Accounting powered by Acumatica, project preparation and communication with all parties involved in the project will pave the way to success. For more information or learn more about our solution, please Contact Us! today!