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Change Orders

The Change Orders keep coming

Construction Industry veterans know that for some contractors, the real profits are in the "change orders". In order to win a bid, some contractors low-ball their initial estimates, and plan to make it up with by adding on the additional work that is discovered once the project gets underway.

If you are a construction customer, monitor your contractors very carefully. Watch to see if some contractors, especially the one who come in with real low bids, seem to have more change orders than other contractors. That can be a problem. Some construction customers even throw out the lowest bids to prevent those types of problems.

Miami University has complained in writing about Buckeye Electric and their games regarding change orders. Richard M. Engle, Director of Miami University’s Physical Plant Department wrote to Donald Welsch of the State Architect & Engineer Office with the following concerns:

"At the time the outside lighting was revised at the Communications Building and a different fixture was selected by the Architect, they (Buckeye Electric) attempted to again substitute another make. In the course of developing the change order, we were advised by the supplier of the fixtures that Buckeye had told them that they were to withhold the actual true prices of the fixtures… so that they, Buckeye, could make an unreasonable profit on the change order. We were able to determine the true cost of the fixtures specified and were also able to accurately estimate the contractor’s (Buckeye’s) costs of labor and miscellaneous material required… When we received the prices from Buckeye for this change order, the total price was more than double our calculated costs, and… Buckeye had shown their fixture costs much higher than actual…"

Mr. Engle concluded his letter to the Office of State Architect & Engineer by stating that, " Buckeye Electric continues to be uncooperative and extremely difficult to work with on scheduling of work and coordinating with other contractors and the engineers."

While this letter may be somewhat dated, the fact still remains that Buckeye Electric’s reputation for dealing with change orders is not good at all. Customer service is very important in the construction industry, like other industries, and as the customer you should feel like you are being treated with respect. Does this kind of attitude that Buckeye has on change orders give you, the customer, the respect that you deserve?

Even after this exposure of Buckeye’s manipulation of change orders, some of Buckeye’s jobs have continued to feature change orders. The Emergency Operations Center job in Columbus, Ohio for the Ohio Division of Public Works was one of Buckeye Electric’s prominent jobs. Even so much that Buckeye Electric touts that job in their advertising literature. But Buckeye’s work on the Emergency Operations Center was riddled with change orders. On one small bid package, Buckeye picked up an extra $343 for repairing some damaged conduits. Then the grounding systems had to be tied together, for an additional $2,193. In other words, those two change orders amounted to another 5% of the original bid. No one is accusing Buckeye of deliberately underbidding these jobs or inflating those costs, as Miami University accused Buckeye of doing, on an earlier job. But Buckeye did bid only $45,000 on a job that was estimated at $74,872.

During later work on that same project, Buckeye Electric bid over $2.8 million for the additional work. Along with the additional bid work, came a flood of change orders for Buckeye. Buckeye received another $24,466 in change orders for modifications to the lighting switch systems, the addition of night-lights, and modifications to the flagpole lighting, which by itself was another $4,889. (Change order #108 and #109-405)

Another change for electrical consumption added $823 (change order #90-405). Replacements of lamps and ballasts and power to a fuel tank, tacked another $2,585 onto the job’s costs (change order #097-045). Then there was the addition of the sound system work for another $22,628 (change order #100-045). Then somebody damaged the projection screen during the construction job. That repair work totaled another $2,304 (change order #105-405).

The operations room lighting modifications racked up another $16,720 under change order #103 and #104-405. A new exhaust fan cost another $386. Reprogramming the fire alarms cost $544. Buckeye added on another $4,491 for working on the smoke detectors, air compressor and fluorescent lighting work (change order #88-405).

Buckeye really scored when they won the change order for the badge and access control system, which cost a tidy $43,049. Some remodeling work came available then adding $4,561 to Buckeye’s income (change order #081 and 089-405). Another eight change orders totaled $60,181 (change orders #61,72,76,77,78,80,84, and #85-405). At this point, Buckeye had picked up another $181,000 in change orders or 10% in income over their original bid. Many of the change orders came at the State of Ohio’s request. These many examples show in great detail how change orders can drive up the costs of a construction job and enrich the contractor.

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