Mike Dolt Enterprises
Mike Dolt Enterprises
User: pepevegac, Location: MA
Asked on: Thursday, March 31, 2011 at 9:34 am EDT
Answered on: Tuesday, May 14, 2024 at 3:33 am EDT
Question: Quick question, does anyone know the steps to credit something that was bided on a new change order? Foe example if you bided a (10) 2x4 lay in fixtures and a new revision wants to remove 5 2x4 lay in fixtures and add 5 down lights instead, how would you go about crediting back for this fixtures that were removed and charge for the new downlight labor and material. Hopefully it makes sense. Am trying to learn the estimating process and I notice this comes up quite a bit with the company that I work for right now. Please comment or send me an email if you can help.
Steps to Credit and Charge for Changes in a Change Order
1. Calculate the Credit for Removed Fixtures
Determine the unit cost of the removed 2x4 lay-in fixtures. Multiply the unit cost by the number of fixtures removed (e.g., 10 fixtures x $50/fixture = $500). Deduct the calculated credit amount from the original bid amount for the 2x4 lay-in fixtures.
2. Calculate the Charge for New Downlights
Determine the unit cost of the downlights, including materials and labor. Multiply the unit cost by the number of downlights installed (e.g., 5 downlights x $75/downlight = $375). Add the calculated charge amount to the original bid amount.
3. Update the Change Order
Create a new line item on the change order for the credit of the removed fixtures, using a negative value. Create another line item for the charge of the new downlights, using a positive value. Update the total amount of the change order to reflect the net change in cost.
4. Invoice for the Change Order
Once the change order is approved, invoice the customer for the net amount of the change. Clearly indicate the credit for removed items and the charge for new items on the invoice.
Example
Original Bid
10 2x4 lay-in fixtures at $50/fixture = $500
Change Order Revision
Remove 5 2x4 lay-in fixtures and add 5 downlights.
Unit Cost of Downlights
$75/downlight
Credit Amount
5 fixtures x $50/fixture = $250
Charge Amount
5 downlights x $75/downlight = $375
Net Change Cost
$375 - $250 = $125
Invoice
Credit: 5 x 2x4 Lay-in Fixtures at $50/fixture = -$250 Charge: 5 x Downlights at $75/downlight = $375
Total Change Order Amount: $125 Flag for review