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Automate Your Selection and Change Order Processes

Technology can help you stay on top of the umpteen variables associated with managing selections and change orders. However, as I have continued to stress throughout this tech talk series, good systems must come first.

Before you even think about automating your selection and change order processes, you need to determine the functionality of your processes by first doing these 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 upon your company determining, and your employees adhering to, the selections that will be provided and then presenting a consistent message to your clients. We’ve all heard about sales people promising customers the moon while

Automated systems definitely will help you standardize the presentation, but the computerized controls need to facilitate good communications among everyone involved in the process — the customer, the design center, and the sales, contract administration and construction management departments must talk to each other.

Communications Comes First

It’s a good idea to develop communication plans that go hand-in-hand with your processes for managing selections and change orders before automating your processes. Even better, build your communications right into your systems.

The following lists the typical steps involved in processing a change order. Notice how many people have to 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 from the sales manager or customer, 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. For example, in Step 7, above, 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, the deposit means you won’t have to absorb the costs for the prep work already completed by your estimator and project manager.

How to Fold Technology into the Process

A good change order system also reduces cycle time and improves construction quality, customer service and your bottom line. If, instead, your system compromises any of these areas, you need to re-examine it.

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.

Make Your Web Site Part of the Process

A good solution for many builders is to add private portals to their company Web sites so that customers can make selections, request changes and ask questions online. I recommend posting product catalogs your company has developed on the Web site, too, or simply link to manufacturers’ catalogs your suppliers offer.

Create easy-to-understand selection sheets and change order request forms and make them available on your Web site by posting them as interactive pdf documents that customers can complete and send back to you. Make sure they go to you and not your trades, suppliers or their manufacturers or you’ll lose control of your processes.

Communicate With Your Suppliers and Trades Through Your Web Site, Too

Once you’ve examined your customers’ product selections or change order requests, you can post them on a portion of your Web site that only your suppliers and trades can access. Then notify them that the information is posted so they can begin processing it and give you pricing.

You might also want to post an interactive calendar. That way, 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 your trades will know when to expect to start work. (We will discuss scheduling in more detail in the next tech talk.)

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.

Earlier Articles in This Series

• To read, “Know Your Technology Needs Before You Invest,” Part 1 of this series, published April 14, click here.
• To read, “Strategic Planning Software Can Help Focus Your Business Model,” Part 2 of this series, published April 21, click here. 
• To read, “Does Your Planning Software Match Your Project's Sophistication?” Part 3 of this series, published May 5, click here.
• To read, “Don't Put the CAD Before Your Product,” Part 4 of this series, published May 26, click here.
• To read, “Manage Prospects and Buyers More Efficiently With Technology,” Part 5 of this series, published June 9, click here.

Next: Improving scheduling and your cycle time

Note: Various software products are mentioned throughout the tech talk series. The intent is not to recommend these products as being right for you, but to identify some fairly well-known players and to note a few new ones. My apologies to vendors who are not mentioned — the omission was not intentional.

Bill Allen is president of W.A. Allen Consulting and a member of NAHB’s Business Management & Information Technology Committee. His company, headquartered in Redmond, WA, provides information technology consulting services and process management assistance to the home building industry. Allen can be reached at 425-885-4489 or via e-mail. Or visit the W.A. Allen Consulting Web site.

Want more information about using technology in your business?

NAHB’s Business Management Department offers a variety of online resources to help you run your business better and more profitably. Click Business Management Tools for articles about human resources, financial management, sales, production, technology, customer service and other business-related topics. In addition, visit the NAHB Software Users Network Discussion Forum (SUN) to ask technology consultants and other builders what they think of various software packages and applications.

BuilderBooks.com also offers a variety of publications about computer technology. To view or purchase these publications online, click here.

Subscribe to NAHB’s Business of Building e/Source

NAHB’s Business of Building e/Source is your monthly electronic guide to the hot issues and emerging trends in home building business management. You’ll find practical advice, tricks of the trade and sound business guidance — all delivered monthly, straight to your desktop, in a quick and easy-to-read format. Business of Building e/Source is available free to NAHB members and their employees. To subscribe, click here on the members only side of www.nahb.org.

University of Housing Offers Courses on Customer Service and Business Management

The NAHB University of Housing offers a course on business management designed to help builders improve their business and profitability. For a list of current offerings, click here.

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