Waiving Contractor Change Order

[Alex Mulcahy]

Hi BiggerPockets Community,

I am a new investor and have purchase my first fix and flip property. I have been finalizing the contracts for my general contractor to sign and the general contractor wants the waive the change order policy so he does not need to notify me about increase in scope. I understand the potential benefit is that I don't have to be bothered with every update to my scope of work that is required in the project however the potential downside is that if the scope creep is too large it may make my deal no longer profitable. If you have waived the change order policy what have you put in place to avoid going over budget? Is it a bad idea to agree to waiving the change order policy in general?

Also on a related note to contractor's contracts. I have asked my general contractor to sign a Independent Contractor Agreement (I started with J Scott's example) and he has also expressed that he has reservations about signing that document. Are there circumstances where the ICA isn't required/overkill?

Thanks in advance for you help for this new investor!

[Collin Bryston Adams]

As someone who has never taken on a big construction/flip project like this my advice may be no good. But if it was me I would tell this contractor that any changes exceeding X amount of money either in one aspect or total need to be signed off on. One problem with a lot of contractors is they get caught up in doing the fancy expensive stuff that is not needed for a rental or even a flip. I would check out MeetKevin on youtube also and see some of his tips (incase you have not seen him) as he gives good ways to do stuff more efficient and less expensive. 

I would just overall keep a tight leash on your contractor. Not that he is a bad guy or trying to screw you but just because its easy to spend someone else's money and that can come back to bite you.