Introduction
This purpose of this article is to explain the Website Change Order (or change request) scenario and how it relates to the overall web design process. Change orders and Website Cost Overruns are two of the largest causes of profit loss- or even going in the red financially on a project. It is also very important to know that project overruns are extremely detrimental to the billable time business model, which most web designers fall under. As you read this, you will learn how to avoid this problem, and also remain profitable. You may even discover how to earn extra profit on the Change Order!
PalmettoSoft has built hundreds of websites over the years and would like to share some of this great information we have learned with you. Because we are developers, this article is written primarily from the developer’s perspective. However, anyone should be able to follow along and hopefully they might learn something interesting- if not a lot more!
What is a Change Order?
Every website development project begins with a proposal. It is an agreement between the vendor and customer to build a website. Typically, much of the language is boilerplate, but the site tree, technology, timeline, price and hosting are specifically tailored to the customer. It is also very important to think of the proposal as a basic “fence around the project.” And this fence is also a first-layer-of-defense which helps to contain the scope of the job. Why is this so important? If you are building a website and you quoted a fee for 12 pages, you don’t want to end up building 15 pages with an added shopping cart and not getting paid for it.
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So What is It? It is a client-side requested scope change that occurs during the development of a website project. Sometimes, it will also be referred to as “New Work.”
The change request is actually very common during website projects and typically happens at any point after the proposal all the way to the project launch. There can also be multiple change requests during the job.
The Conceptual Differences between a Change Order and a Project Cost Overrun?
The change order mainly is about the expansion of a project scope whereas the cost overrun is about the expansion of billable time. Both of these occurrences can substantially influence whether or not a project is profitable. How they are handled can also directly/indirectly affect the client satisfaction level of the project once it is completed.
Special Note #1: Change Orders and Cost Overruns can work against you- or they can work for you.
Special Note #2: These scenarios and terms are also commonplace in the construction industry. This makes total sense when you think in terms of “building something.” Because the web design industry is so new in relation to construction, we are very much behind the curve when it comes to understanding these concepts and applying them to our service offerings.
Common Examples of Change Requests
The below list represents some very common instances of change requests. However, there are an almost unlimited amount of possibilities- that is very important to know.
Adding more pages to a website. This is one of the most common examples.
Requesting a photo gallery be added. Be careful with this one. Why? You need to consider programming, image collection, image loading, pagination- and training for the customer.
Asking for more page copy. “I want to add more text to two pages in my site.” If you are subcontracting to a copywriter, this addition has to be paid for.
Adding FAQs. Think about the format of the page, FAQ collection and pagination.
Embedding videos. You may need to set up a YouTube channel and create IFrames to display the videos.
Changing the functionality of a shopping cart. Be real careful with this one. If your out the box cart does not support the change, this could become a big programming job. Somebody, somewhere is about to get paid big time- and it probably is not going to be you.
Programming Changes. Changing anything from the user path, user groups (adding another user type), login scenarios, connecting to a new type of software, etc… When it comes to anything related to programming remember the iceberg rule: You only see 10%- the remaining 90% is underwater (or on the backend).
The customer wants to content manage certain areas of their website. Consider setting up backend areas for the customer. There may also be some tutorials (written and/or how to video) that you need to create later on.
How to Thrive with Change Requests- A step by step process
During the sales cycle, mention this to your customer. Explain what change orders are during sales conversation and plant the seed.
Add Change Order (CO) language in all applicable areas of your Website Design Proposal. Example can be found in our generic proposal.
Train yourself and anyone on your team how to spot a CO and act on it. Never assume those on your team have a deep knowledge like you do. You need to train them routinely and keep them in-the-know. It is also very important to have an experienced project manager because they can act like a first-line-of-defense in safeguarding project profitability.
Create a Change Order document. THIS IS EXTREMELY IMPORTANT. Like your proposal, this is also a “statement of work.” It not only adds to the proposal. In some instances, it can supersede it authority. Yes, I just said that. How does this happen? In some cases the scope change is so major, the entire project goes in a new direction.
Once approved, add it to your project notes and adjust your development schedule. And have a meeting with your development team to ensure they understand exactly what needs to change in the project. Like I said directly above, if the change request is large, I recommend having some form of a new kickoff meeting so your team can discuss how it impacts the project across the board. For example: Your lead programmer already has vacation planned. Before the change order, this was not a problem because the launch date was before their vacation. Now, with the new change, the project launch date now extends into their vacation time. Some schedule maneuvering may be required… but you get the point.
There is a special way in which to BILL THE CUSTOMER for Change Orders and we are going to share this with you in this section.
- COs should be paid as soon as the client approves.
- COs should be paid 100% in full.
Why the above?
First of all, a change order typically results in a delayed project. This means your final payment will happen further in the future. If you have employees are contractors, they need to be paid. Second, by taking the full payment upfront, this “financially discourages” (or incentivises) the customer to not keep changing the project.
Never deviate from these business rules. If you do, you will lose. Getting paid upfront for extended projects helps guarantee your success. Businesses run off income and not gasoline!
A Short and True Story
In the middle of a project, we were assigned a new point of contact (POC). This is not a common occurrence, but it does happen from time to time. To a degree, you need to start the project over from the beginning with the POC beginning with introductions, documentation, roles and responsibilities, etc.. It is also important to get “buy in” from this stakeholder as you don’t want to assume they have the same motivation as the last person they replaced. Know this as well: There is a good chance they will bring new ideas along with a wish list of new work.
In this case, they did.
They added about $600 dollars of new work to the project. It was written in a nicely worded email. “I would like to change this to that and would like to see that over there….” Imagine this writing style done in rolling paragraphs- that is exactly what we got. Regardless of their mastery of the English language, it was scope creep and we had just received approval a week before from their predecessor. My project manager, aware of the timeline and project parameters called a meeting with myself and our team. We created a Change Order in a PDF format and attached it to a nicely worded email and sent it to the client.
As you can assume from reading this post, we referenced the proper documentation and I had a quick phone call afterwards to further explain the new fee. Two days later, we received an email approval… will billed them and eventually finished the project. Most importantly, they were happy and we were compensated fairly for our work.
Change Orders work!
Summary
If you are a developer or casual reader, I hope you gained something of value from this article. While there are many explanations of a Website Change Order, we have shared our concept of it. Some of the opinions mentioned are strong, but are also meant to be. Why? I think you will get more value out of something that has been learned as a painful lesson, rather than a vanilla coated personal theory or recycled content from somebody else. It is much easier to learn from another, than have to go through it yourself.
Also don’t forget, there can be two main profitability destroyers of a web project- Change Orders and Cost Overruns. But, they can also be profit enhancers if properly understood and managed correctly. Thank you for your time and please check back with us periodically for new content. We love to hear your thoughts below in the comment section- and always appreciate shares!
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Author Bio
Rhett Cameron DeMille is the founder and operator of PalmettoSoft, a digital marketing company founded in 2005. Among his peers, he is known as a “process and methodology” guy and loves to help expand the online presence of his customers.
He also periodically writes subject matter expert blog posts on SEO, PPC, web design and reputation management topics. And several of these posts are globally ranked on the 1st page of Google.
