Stop Working for Free! How Contractors Give Away Profit

If your crews are performing unsigned change order work, you’re financing someone else’s project.

“You’re the only subcontractor who gives us a hard time about this.”

“Your competition doesn’t make us sign everything.”

“Sometimes you have to do a little work for free to protect the relationship.”

I’ve heard these statements more times than I can count.

And I’m calling BS.

I was talking with a contractor recently dealing with this exact situation. His contract clearly stated that additional work required written approval via a signed change order. The client wanted the work completed. They agreed it was additional work. They wanted him to keep the project moving.

BUT they wouldn’t sign the change order!!

Then came the pressure with the typical responses….

“Why are you being difficult?”

“Be a better trade partner.” 

My favorite… “Your competition doesn’t make us do this.” 

“Sometimes you have to take a hit to maintain the relationship.”

Sound familiar?

This contractor is one of many. Out of the hundreds of conversations I’ve had with contractors, I would rank change orders as one of the top three pain points labor-intensive contractors continually have to navigate.

Unsigned change orders can bury a contractor.

Your crew performs the work, and the money is spent. Payroll still hits. Material still gets purchased. Equipment still burns hours.

The work is done. Now you’re chasing the money.

Here’s another line I hear from a GC.

“We do work for free all the time to keep our clients happy.”

Really?

If you’re a GC or CM subcontracting the work, exactly what are you doing for free?

You don’t have 15 concrete finishers standing there burning labor. You don’t have operators sitting in equipment. You don’t have electricians or plumbers installing additional scope out of your own pocket.

The trade contractor does.

Sure, a GC may approve your change order and ultimately have the owner refuse to pay them. Now the GC eats it.

That happens.

But don’t let someone convince you that protecting your company somehow makes you a bad trade partner.

There is a big difference between being difficult and refusing to gamble your company’s money.

Performing work without a signed change order is gambling, and the house always wins. Or in this case, it’s their word against your word AFTER the work is done, so they have the upper hand all the time. 

So what should you do?

Let me be very clear.

Do not perform work outside your original contract without a signed change order from the contractor you have an agreement with, confirming they will pay you for that additional work.

That should always be the standard.

Not a phone call. Not someone telling your superintendent, “We’ll take care of you.” Not a handshake. Not a promise to clean everything up later.

Get it signed before you spend the money.

But this isn’t as easily done as said. So, I’m inclined to dig a bit deeper because construction isn’t always that clean.

Maybe it’s a few thousand dollars. Your crew is already there. You need the change completed to maintain your own progress. Stopping could cost you more than moving forward.

If you make the business decision to proceed anyway, get something in writing.

At minimum, get an email from someone with the authority to direct your work stating that they are directing you to proceed with the additional scope.

It’s still not the protection of a signed change order.

But somehow, some way, protect yourself with a written record.

I know contractors who have lost millions performing additional work without proper authorization.

Then the project ends and everyone’s memory suddenly changes.

“I never approved that.”

“I thought that was included.”

“I thought you were doing it to maintain your schedule.”

“I never told you we were paying for it.”

Now what?

The labor is spent. The material is installed. The work might already be buried behind somebody else’s work, and you’re sitting in a conference room trying to reconstruct conversations from eight months ago.

Verbal commitments don’t protect your company.

And don’t wait until there’s a problem to establish the rules.

Bring this up during a new project kickoff. Review how changes will be handled, who can authorize them, and what your team needs

before proceeding. 

Be very blunt about this process BEFORE you start the project!

Relationships still matter in construction. Your reputation as a good trade partner matters too.

But I would never bet my company’s money on someone’s handshake.

Trust the relationship. Document the business.

Change order management, contractual risk, knowing when to push back, and understanding where a PM’s authority ends are topics I spend a lot of time on in my PM and operations training.

Why?

One bad decision in the field can wipe out the profit from months of good ones.

If you’re reading this wondering whether your PMs, supers, and project teams would all handle this situation the same way, that’s probably a conversation worth having.

If training your team is on your radar over the next few months, reach out. Let’s talk about where your people may be carrying more risk than you realize.

Gerard Aliberti
Pro-Accel, Owner

EXCITING NEWS

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ALSO, check out the new updated website at www.pro-accel.com. We updated the training page, pricing, speaking, and more. 

Ways We Can Work Together

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Leadership and Organizational Development. As contractors grow, the people and structure that got them here may not be enough to get them where they want to go. I help develop stronger leaders, clarify who owns what, and build a team capable of taking on more responsibility as the company grows.

The goal across all of it is pretty simple. Better people. Better decisions. Better operations. Better results.

If any of this sounds like something your company is working through, reply to this email and let’s talk.