Do you give back OH&P on credit change orders

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tkb

tkb

Senior Member
Location
MA
Add it to a change order and never give it back on a credit is the way I have always done it.
 
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tx2step

Senior Member
Location
North Texas, DFW area
You may have figured the original OH&P for the job as a %, but once the contract is signed, you're counting on making that much to cover company OH & hope the profit will really go to profit...but it'll only go there after ALL of your company OH is paid for - often, projected profit ends up going to pay for OH instead of being Profit. Original OH&P also cover your estimated risk for doing the job...what if your labor goes over? Will the owner pay for that? Original OH&P was intended to cover that risk, so don't give any of that back.

You should only give back OH & Profit on a deductive change IF your contract or project specifications specifically call for that. Otherwise, give back only cost, less handling & other costs associated with materials & equipment already delivered or in the pipeline. Also deduct any lost labor for re-planning or re-layout of the work. After the deductive change, you should still be left "whole", with all costs covered & your original OH&P still intact.

The % OH & P you charge on changes should be much higher than what you actually used in your original bid - only you should know what you used in your original bid. OH & P on changes is hardly ever enough...changes always alter your original plan & always disrupt your work. It's hard to make as much as you think you will with a change order.
 
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Strathead

Senior Member
Location
Ocala, Florida, USA
Occupation
Electrician/Estimator/Project Manager/Superintendent
horsegoer said:
Why and/or why not? Thanks
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You charge them as much as you can get away with, and give back as little as you can justify. Regardless of how change orders have a reputation of being inflated, you never make enough on them. I have told many a GC, that I would love a job where the plans were perfect and I only needed to estimate, contract, bill and close out a job. NO as-builts, no paperwork, no redirecting labor, no shuffling to get material, no rework, no BS.
 
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tx2step

Senior Member
Location
North Texas, DFW area
Strathead said:
You charge them as much as you can get away with, and give back as little as you can justify. Regardless of how change orders have a reputation of being inflated, you never make enough on them. I have told many a GC, that I would love a job where the plans were perfect and I only needed to estimate, contract, bill and close out a job. NO as-builts, no paperwork, no redirecting labor, no shuffling to get material, no rework, no BS.
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You said it better than I did...and I agree with you 100%!
 
A

Alwayslearningelec

Senior Member
Location
NJ
Occupation
Estimator
Strathead said:
You charge them as much as you can get away with, and give back as little as you can justify. Regardless of how change orders have a reputation of being inflated, you never make enough on them. I have told many a GC, that I would love a job where the plans were perfect and I only needed to estimate, contract, bill and close out a job. NO as-builts, no paperwork, no redirecting labor, no shuffling to get material, no rework, no BS.
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So what % do you usually charge for OH&P on a c/o? Do you add anything else in there as TX2 mentioned or redirecting labor or inefficiency etc.? Thanks
 
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Strathead

Senior Member
Location
Ocala, Florida, USA
Occupation
Electrician/Estimator/Project Manager/Superintendent
horsegoer said:
So what % do you usually charge for OH&P on a c/o? Do you add anything else in there as TX2 mentioned or redirecting labor or inefficiency etc.? Thanks
Click to expand...

Completely job by job dependent. For me, I basically try to use "trade prices" for material (about 15% to 20%) more than you would pay for full box quantity. 150% labor dollars per hour journeyman only, and 15% and 10%. Also NECA labor rates. Don't forget bond increases too. Note that this is for smaller change orders, when they get to a few thousand doallars, I change the structure downward. It is when they think they are smart and come back with a comment that I start adding things. material handler, estimating project managing. printing cost, as built cost, time extension requests, I have had pretty good success over the years letting them know that If they think it is bad, it can be worse. Again, I justify this, because all of the above are VALID costs. It is just easier to put together a quick change with the higher mark ups and let it all average out, but when they want to play the game, then you need to hit them for every penny. Like lawyers, Construction Managers have hoards of people just itching for something to do and that is often mess with you.
 
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Alwayslearningelec

Senior Member
Location
NJ
Occupation
Estimator
Strathead said:
Completely job by job dependent. For me, I basically try to use "trade prices" for material (about 15% to 20%) more than you would pay for full box quantity. 150% labor dollars per hour journeyman only, and 15% and 10%. Also NECA labor rates. Don't forget bond increases too. Note that this is for smaller change orders, when they get to a few thousand doallars, I change the structure downward. It is when they think they are smart and come back with a comment that I start adding things. material handler, estimating project managing. printing cost, as built cost, time extension requests, I have had pretty good success over the years letting them know that If they think it is bad, it can be worse. Again, I justify this, because all of the above are VALID costs. It is just easier to put together a quick change with the higher mark ups and let it all average out, but when they want to play the game, then you need to hit them for every penny. Like lawyers, Construction Managers have hoards of people just itching for something to do and that is often mess with you.
Click to expand...

Thanks for sharing Strat you really have some great info. I am gogin to be near Ocala probably in November...we should golf. Just started playing 2 years ago and I am addicted......
 
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