Change Order Disorder

When the market is strong and sales are good, many builders refuse to accept customer change orders. In leaner
times change orders become popular as a means to secure sales. Frequently once the change order gate opens,
change order creep occurs and alterations get made later and later in the schedule, sometimes without payment or
complete documentation. What follows is often insanity for the field staff, errors, disagreements, and customer
dissatisfaction.

Swinging from no changes ever to some changes maybe to almost any changes almost any time may be a tempting
marketing strategy. But caution is in order: As this change order pendulum flails back and forth, remember that the
entire company flails right along with it.

Managing customer change requests is as much an operational issue as a sales and marketing issue. Each
company– whether production, semi-custom, or custom–evolves its operational style based on philosophy and
experience. Documentation and communication systems develop to reflect and support that evolution. Altering these
components is possible but requires planning, discussions, and revisions of the plans. From sales through warranty,
every company function must be aligned to manage and respond to changes effectively.

The ideal situation is to have systems and attitudes in place that accommodate reasonable change requests within
reasonable time frames with reasonable profit accruing from the effort. “Reasonable” in this context is defined by
what works successfully for both customer and company. Such changes are then correctly implemented resulting in
ecstatically happy home buyers.

Regrettably, many builders lack effective change order management systems. Jumping back and forth among
operational styles means that change order practices don’t have a chance to be fine-tuned before they mutate to a
different form. Reasonable is replaced by “seat of the pants” and “spur of the moment”.

Builders might do better both short- and long-term by making peace with the whole change order challenge. Is it
really fair to expect customers to make every decision about a product this expensive and this important and never
second guess any of their choices? We’ve all seen builders make changes to model homes two days before their
grand opening–yet buyers are expected to get all details right often before construction even begins.

And desirable as it is to operate without the extra work and annoyance of change orders when times are good, that
approach leaves a company without polished systems for managing change orders when accepting them is essential
to selling homes. Hurrying to develop and implement this complex process under stress is a recipe for frustration,
mistakes, misunderstandings, and expense.

As we all know, it is easier to speed up a moving vehicle than one standing still. Slight adjustments to a competent
change order system are easier than creating a system from the ground up under the pressure of a tough market.

Silver Bullet Syndrome

We all understand the uses and limitations of a hammer: it’s a great tool when you want to hang a picture but it’s of
little use when you need to wash a window. Why are we so unable to use this same insight with business processes?

Take for instance the current popularity of “lean” processes. Lean’s focus on efficiency offers clear advantages. The
logic of finding and eliminating waste, duplication, and omissions is unassailable. Yet applying lean thinking to
customer service can result in mean service. When working with individuals there is such a thing as too efficient.

Case in point, information operators in a major U.S. metropolis were instructed to skip amenities when assisting
callers to save time and increase productivity. Is handling five percent more calls worth sacrificing common
courtesies?

If you’ve been in the work force for very long you will recall when “empowerment” was all the rage. Meetings were
held. Slogans were printed, framed, and hung on walls. Managers in hundreds of companies unleashed the creative
energy of employees with the exciting pronouncement, Go ye forth and make decisions!

And they did–to the shock and dismay of many bosses who commented: “You did WHAT?!” Empowerment
without adequate education, training, and experience can result in some spectacular (and expensive) on-the-spot
decisions. For instance, one superintendent “empowered” to solve homeowner issues told the mother of four to “Go
somewhere for the weekend and send warranty the bill” while her hardwood floors were re-finished. The bill
included a hotel in Vail, ski lift tickets, dry cleaning, and a pet spa for Boomer, the family dog.

The list goes on. Management by Objectives was going to solve all our problems at one point just as Total Quality
Management (TQM) and Quality Circles were expected to do. Accountability had a turn as well. Each silver bullet,
in turn, proves itself not quite up to the task of solving all our problems and is too often therefore cast aside as
useless only to be replaced by the next silver bullet, typically referred to in buzzword short-hand and represented by
numerous industry articles and $26 must-have business books few of us ever finish reading.

But the fact that I have a dirty window to clean does not drive me to throw my hammer in the trash. Needing to put
a nail in a board does not mean my spray bottle won’t be helpful tomorrow. Maybe we can keep this in mind with
lean, accountability, TQM, and whatever other silver bullet lurks on the horizon. Each has uses and limitations;
success comes from mastering a wide repertoire of tools and making wise choices about which one to apply to the
situation at hand.