- PlanHub
How Digital Takeoff Protects Margins by Reducing Estimating-Driven Change Orders
Key Takeaways
- Change orders are adjustments to an estimate made after the project has already been approved by the client or general contractor.
- Change is not always entirely avoidable, but contractors should take considerable steps toward minimizing the need for change orders with a thorough pre-construction process.
- Change orders can have significant financial implications and interrupt a project while also eroding trust between a general contractor and client or subcontractor and general contractor.
- Digital takeoff tools can help simplify the pre-construction process, prevent construction estimating errors, and set the tone for a smooth project.
The Challenge of Change Orders
Change orders are viewed by many as a necessary evil in the construction industry; that said, certain types of change orders can be entirely avoided with an intentional approach to the pre-construction process. A construction change order is a documented adjustment to the initially agreed-upon project budget or scope of work, whether it results from owner decisions, evolving designs, or unforeseen site conditions.
While they can be an important part of the construction process when unforeseen and necessary changes arise, mistakes during preconstruction can lead to estimating-driven change orders that cause profit erosion. Not all change orders are negative, but construction estimating errors can disrupt a project’s flow and profit.
Digital takeoff tools can provide a valuable resource for professionals, empowering them to be proactive in their planning and prevent unnecessary future changes. This guide compiles key strategies to help you avoid estimating-driven change orders to keep your project on track, emphasizing how construction takeoff software can go a long way toward optimizing your pre-construction process.
Understanding Change Orders Through a Margin Lens
A construction change order is a formal amendment to the scope of work or a schedule that has been approved by the owner and contractor. Change orders can be submitted by a contractor to an owner or by a subcontractor to a contractor. Not all change orders are bad, and they may be necessary if unforeseen site conditions, scope changes, material sourcing issues, or design inconsistencies arise at any time after implementation.
While unforeseen factors can influence the need for change orders, such as an owner changing their preference on materials, estimating-driven change orders are often preventable. These changes are often a symptom of a disconnected or disorganized pre-construction estimating process. Understanding the causes of change orders and having the right tools and approach during planning helps you get in front of the risks by covering all your bases the first time.
Common Estimating-Driven Causes of Change Orders
Causes of change orders can range from avoidable errors to unforeseen and necessary pivots to a project, such as a desired material being unavailable or the weather throwing a wrench in plans. However, estimating-driven change orders often are the result of mistakes that could have been caught sooner.
The most common causes of change orders include:
- Design errors – Design errors can change the roadmap you were planning for, leading to stakeholders working from a flawed template.
- Scope gaps – When work required for a project isn’t included specifically in the scope, and is unaccounted for in the project.
- Confusion in specifications – If any specifications or measurements are unclear, an individual working off the wrong estimates could result in misalignment and having to redo aspects of the project.
- Inaccurate takeoffs – Inaccurate takeoffs and estimates can lead to the need to request a higher budget for your order or go back to the project owner for changes.
Of the above causes, inaccurate takeoffs are among the most common culprits. Whether it’s a manual counting mistake or a design flaw that overlooks scaling considerations, failing to plan through the takeoff process can lead to issues later, such as material shortages or unpriced labor that threatens margins. Frontloading the estimation work with accuracy and precision makes all the difference in keeping projects on track and avoiding serious errors.
The Impact of Estimating Errors on Margins
Construction estimating errors can significantly affect project progress and throw off the entire cadence, turning a seemingly small mistake into a critical disruption.
How Errors Affect Project Execution
Errors can quickly disrupt project timelines, disrupting expected completion dates and throwing off your crew’s progress, often creating a ripple effect that puts the entire project into flux. Decisions made using “bad data” are estimated to cost $88.69 billion in rework alone, which accounted for 14% of all rework when measured in 2020.1
Like a domino, a change order that stops work takes all of the next steps along with it; when a material isn’t ordered, the crew can’t install it, and when the crew can’t install it, the next phase of the project can’t continue. Remember that an estimating-driven change order isn’t just a red mark on a piece of paper; it’s an entire team put on standby, waiting for approval to proceed. Getting the math right at the beginning prevents critical disruptions later on.
Financial Implications of Inaccurate Estimates
If a subcontractor presents an inaccurate estimate to a general contractor, then it poses multiple potential financial risks. Either one, the subcontractor eats the cost and experiences “Profit Fade”, or two, they file a change order, which places the costs on and potentially damages the relationship with the general contractor.
Change orders may force premium pricing, costing more than if the work were simply included in the original bid. Remobilization, schedule compression, and premium pricing for quick ordering materials can all have significant financial impacts.
Not only can inaccurate estimates affect the project itself, but they can also have implications that last beyond the scope of the project; significant change orders can erode trust and damage a relationship with an owner or general contractor, affecting future work. Knowing how to estimate construction costs upfront is crucial.
How Digital Takeoff Software Protects Margins
Digital takeoff software simply makes preconstruction more manageable for contractors, taking tedious tasks and ensuring they get handled with precision, reducing the risk of mismeasurement, input mistakes, and other estimating errors. Key benefits of digital takeoff software include:
- Accuracy in quantity calculations – Software tools, like PlanHub, use calibrated scales to measure lengths, areas, and volumes down to the decimal.
- Reduction in oversight and miscalculations – Digital software is designed to overcome key points of human error, with simple features like snap-to-line or auto-count helping to prevent minor mishaps from a misclick.
- Accuracy in pricing and cost: Tools with a cost library can simplify intricate estimations and ensure market costs are considered and logged.
- Efficiency for crafting and submitting more bids: The increased speed and precision with which you’ll be able to submit bids mean that you’ll be able to successfully craft more bids and land more projects.
- Real-time collaboration: Real-time collaboration capabilities mean you can work with your team on the same set of plans, preventing misalignment and enabling easy peer review.
Margin protection begins during takeoff, not after construction starts. Having accurate quantities established at the time of bid reduces the likelihood of unpriced scope appearing later in the project.
Digital takeoff software helps consider accurate and detailed measurements, materials, and costs upfront to avoid surprises later.
Streamlining Workflow with Construction Takeoff Software
Construction takeoff software makes your pre-construction process remarkably efficient, directly streamlining your workflow and saving you time on projects. The right software can help you perform quick math, visualize measurements and metrics for your project, and transfer data across multiple sources.
Software eliminates the need to look back and forth between a piece of paper and your computer screen, reducing the risk of construction estimating errors.
Takeoff software can offer all the following advantages in your workflow:
- Integration with existing tools: Software like PlanHub allows you to link data directly to your estimation and other tools, so you don’t have to manually type numbers from a blueprint into Excel and can directly export takeoff quantities into a bid proposal or estimate.
- Improved communication with stakeholders: Digital tools allow you to easily share links to files instead of exchanging paper plans and quickly find alignment on scope and contracts to eliminate ambiguity.
Easy navigation from takeoff to estimation: Link takeoff measurements directly to your estimation tools for much faster, simpler workflows with a smaller risk of input errors or miscalculations.
Nail Preconstruction with PlanHub
PlanHub streamlines the preconstruction process, enabling precise estimations and integrated workflows that help you get the numbers right the first time and skip estimating-driven change orders.
Real-Time Updates and Documentation Management
Maintaining real-time data ensures that everyone is pulling from the same source as they make project decisions and plan edits. Little can derail a project quite like the architect looking at V3 drawings while the construction team is estimating for V1 plans.
Importance of Real-Time Data in Protecting Margins
Cloud-based software with real-time collaboration features ensures everyone is viewing the same set of plans, preventing miscommunication and reducing the risk of having to scrap and restart parts of the project.
Digital tools can showcase real-time updates and provide space for simple collaboration so that you’re not only working from the same plans, but also able to see any changes made and are always working from the most recent information.
For example, if the position of a wall needs to change, the GC can upload addenda as soon as they receive them so that project partners can do a side-by-side comparison.
Maintaining and Accessing Updated Plans
PlanHub offers all the following capabilities for smooth collaboration:
- General contractors can upload addenda as separate plan pages or files and manage them alongside original drawings
- Page renaming allows individuals to clearly label original sheets vs. addenda (e.g., “A-101 – Original” and “A-101 – Addendum”)
- Apply colored takeoff measurements and markup tools (text boxes, pencil, rulers) to visually flag changes introduced by addenda
- Keep measurements organized by sheet and project, allowing for adjustments without overwriting original quantities
- Export marked-up plans as PNG files to share changes externally
Legal Protection and Financial Control
While change orders are part of the business, they can create legal risk if stakeholders object to changes made later in the project. A digital takeoff sets accurate expectations with stakeholders and ensures financial accountability and transparency.
Digital takeoffs can provide an accurate scope of work, essentially acting as a contract between the general contractor and subcontractor; later changes are compared against the digital takeoff to serve as a visual record of what was included in the bid.
Using the right tools to effectively plan your project estimates ensures everyone is on the same page from the start. If one party questions the scope later on, the scope of work will provide clear documentation of what was agreed upon.
Setting Accurate Expectations With Stakeholders
Digital tools, like PlanHub’s Shared Takeoffs feature, can offer peace of mind, providing a clear track record of the initially agreed-upon terms and explicitly showing acknowledged addenda to the project.
These tools also record what changes are made and by whom, instilling accountability and transparency over who should be responsible for fixing mistakes.
If questions arise later, contractors can reference the digital takeoff to show exactly what was priced and included with PlanHub’s Shared Takeoffs Feature, which brings the following benefits:
- Estimator handoff: Send a link to your internal estimator for quick quantity checks – no new seats to provision.
- Supplier coordination: Share precise takeoff context with suppliers to tighten quotes and receive quick estimates.
- Client review: Give clients a clean, read-only view to confirm scope before you price, and even include it with your bid.
Implementing Digital Tools in Construction Processes
Digital tools can vastly simplify the process of improving your construction estimation and planning, and implementing them to fit your processes is key.
Key Features to Look for in Software
Be sure to choose digital tools with the specific features to meet your needs. Having software that’s fit for your team’s size and goals is key to optimizing your process for fewer changes.
Consider some of the following beneficial features:
- Cloud-based access: Cloud features support improved collaboration, allowing everyone to work from the same set of plans without confusion or heavy downloads.
- Intuitive user design: An easy-to-use interface ensures that your team buys in and navigates projects with improved efficiency.
- A wide toolkit: Find a platform with the proper features to meet the needs unique to your industry and sector, whether that be a material cost library or line-drawing and measurement tools.
An all-in-one platform like PlanHub makes it easy for contractors to stay on top of their game and handle all the tasks involved in creating an accurate estimate at once.
With a single-packaged digital plan room, takeoff tools, and bidding features, you’ll be able to consolidate all of your necessary functions into one platform rather than spread tasks across disparate tools. To truly maximize efficiency, look for platforms that offer robust capabilities such as the ones PlanHub offers:
- Advanced Takeoff Tools: Go beyond simple lines with specialized tools for:
- Wall Area
- For calculating drywall, studs, and masonry instantly
- Volume and Slopes
- Features like 2-Point Calibration and Multi-Scale Sheets ensure every measurement is precise, regardless of the drawing format.
- Wall Area
- Integrated Estimation Logic: We offer Assembly capabilities that allow you to roll up materials, labor, and formulas into composite items.
- Our platform includes a Formula Builder and Cost-Item Libraries that allow you to automate complex math on quantities and constants.
- Smart Automation: Save hours on document management with AI features like AutoNaming
- It uses OCR to automatically rename project pages based on sheet numbers.
- Seamless Workflows: The real power of digital tools lies in integration.
- PlanHub features like One-Click Send from Takeoff to Estimation and Auto-Generated Legends eliminate manual data entry errors and keep your bid packages consistent.
Training and Adoption Strategies for Teams
Moving from paper to a digital format can be a challenge for some veteran estimators who are locked into their routines, so software adoption must coincide with adequate training.
When adopting new software, start implementing it on smaller projects, choose a software with good US-based customer support, and explore the software’s resource library for the best outcomes.
PlanHub customers can even book 1-hour sessions with our trainers at any time during their subscription for their team to get trained, streamlining adoption for quick implementation.
Success Stories of Digital Takeoff Adoption
At PlanHub, we have a full bookshelf of success stories that highlight the benefits of digital takeoff software. Our takeoff tool revolutionizes workflows and empowers construction organizations to create digital takeoffs in half the time, delivering tangible results for contractors who use it.
Southern Environmental Services
Southern Environmental Services, Inc., a Georgia-based abatement and demolition company, struggled with disconnected bid management tools and takeoff tools that resulted in wasted time and a limited ability to handle new work. After switching to PlanHub, they went from taking two and a half days to create a bid to just four hours. PlanHub’s takeoff tools streamlined the process, simplifying measurements, allowing for faster proposals, and driving double the revenue.
Bright Idea Electric
Bright Idea Electric found success by switching from juggling multiple tools and manual takeoff, which was causing things to get overlooked, damaging their bottom line, and harming their client relationships. Switching to PlanHub cut time in half, while allowing them to increase their ability to connect with new contractors. Altogether, the company reduced estimation errors by 40% and increased its revenue by 50% with PlanHub’s digital takeoff tools.
Bright Idea Electric’s Success with PlanHub
New South Specialty
New South Specialty, a Tennessee-based window solutions company, switched to PlanHub to keep up with industry standards and stay up-to-date with bid opportunities, facing slowing work.
After switching to PlanHub, the company benefited from using the intuitive interface for a centralized hub for project documents, real-time updates, and client communication to improve bidding and takeoff creation. Within just 6 months of adopting the platform, owner Chase Daniels highlighted the takeoff tool’s ability to quickly scale drawings and streamline his workflow.
I appreciate using Takeoff for the technology offered through PlanHub, which simplifies my estimates. Instead of searching through 2,000 pages for just one, I can scale drawings with the Takeoff tool in 30 seconds or less,
Chase Daniels
New South Specialty
Converting a manual process to a digital tool significantly reduces the margin for error and fosters better takeoff results. Any experienced professional in the construction industry will tell you that the saying “Measure twice, cut once” applies to the backend estimation and pre-construction process just as much as actually working with materials. With digital takeoff tools to support the process, estimation and calibration ahead of time couldn’t be easier.
Prevent Estimating-Driven Change Orders with PlanHub
While not every change order is entirely avoidable and may be beneficial, you can prevent a significant number of change orders and avoid profit fade by being upfront and proactive in project planning and estimation. Digital takeoff tools equip you to improve your planning and estimation so you can avoid the headaches of disruptions later and protect subcontractor margins.
For reliable estimation and takeoff coordination, turn to PlanHub. With the ability to perform real-time estimation and access a digital plan room, you can be confident in reliable, accurate estimates that cover the bases of the project and minimize future changes.
From a material suppliers directory to cloud collaboration features, PlanHub gives you the resources you need for a seamless pre-construction process through project implementation.
Book a demo today.
