Additional Services Documentation Made Easy
Here is my solution...
But there are plenty of changes that originate with others, and you can choose to charge for them or not. Some examples. The client increases or decreases the scope of the project, or just changes a requirement. The codes change during design. The contractor makes a mistake requiring a change or a new design.
When others create the change you have three options:
(1) Refuse to make the change, e.g. tell the contractor to fix the mistake.
(2) Make the change, but ask for compensation.
(3) Make the change, but DON’T ask for compensation.
How do you decide whether you will charge or not? Most of the time this is a marketing or emotional decision. But I suggest that the infrequent extra work that will cost you less than $200 is not worth the trouble. Changes that will cost more than $500 (remember your consultants) are almost always candidates for additional services. In between it is a judgement call.
In every case I recommend documenting the change even if the cost is "No Charge". Each insignificant change is worth mentioning/documenting. Many clients will be oblivious to the circuitous path they are on if you don't document it for them. Several "No Charge" changes will build goodwill that you may need. Think of it as marketing.
- If you are working by the hour the change in fee takes care of itself unless you have a cap or maximum.
- If your fee as a percent of construction cost, the change in scope might work if the change increases the cost of construction proportionally to the extra work. Often it doesn't.
- A fixed fee never gets you paid for a change.
So how do you document changes? Here's what I do. Create a simple one-page form that you can complete in a minute or two and email it to the client for a ’Yes’ or ’No’. We use this simple form.
#1. You get the form back, signed and move on. (~33% of the time)
#2. You get a call or email canceling the proposed change. (~25% of the time)
#3. You get neither #1 nor #2. However, you now have the perfect reason to make a contact for clarification, "Do you want us to proceed with the change? I haven't received the authorization yet."
I have found that no one faults you for being business-like unless they were hoping to take advantage of you. Getting paid for these changes is a form of Business Development!
Additional Services are additional revenue. Often getting paid for Additional Services is the difference between profit and no profit.
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This post is a revised version of one that appeared on Feb 15, 2013.