Change Order
A change order is a written agreement that modifies the original contract terms, scope, or price of a construction project. Essential for managing project changes professionally.
What is a Change Order?
A change order is a written agreement between a contractor and client that modifies the original contract. It documents any changes to the project's scope, materials, timeline, or cost after the original contract has been signed.
Change orders are legally binding amendments to your construction contract and are essential for maintaining clear communication and protecting both parties when project requirements shift.
Why Change Orders Matter
Change orders serve several critical purposes:
- Legal Protection: They document agreed-upon changes to protect both contractor and client
- Scope Management: They prevent scope creep by clearly defining what work is added or removed
- Cost Control: They establish the exact cost impact of changes before work begins
- Timeline Clarity: They document how changes affect project completion dates
- Payment Terms: They specify when and how additional work will be paid
Common Reasons for Change Orders
Client-Initiated Changes
- Upgraded materials or finishes
- Additional rooms or features
- Design modifications
- Code compliance requirements discovered during work
Unforeseen Conditions
- Hidden structural issues
- Utility line discoveries
- Soil or foundation problems
- Weather-related delays
Design Changes
- Architect or engineer revisions
- Permit requirement changes
- Building code updates
What to Include in Every Change Order
A proper change order should document:
- Project Information: Job address, original contract number, and date
- Description of Changes: Detailed explanation of what's being modified
- Cost Impact: Exact dollar amount being added or subtracted
- Timeline Impact: How the change affects the completion date
- Materials: Any new materials or specification changes
- Signatures: Both contractor and client signatures with date
Best Practices for Change Orders
Get Everything in Writing
Never proceed with changes based on verbal agreements. Always document changes before starting the work.
Be Detailed and Specific
Vague descriptions lead to disputes. Clearly explain exactly what work is included and excluded.
Price Changes Upfront
Calculate the full cost impact including materials, labor, and any timeline extensions before presenting the change order.
Use Professional Language
Keep change orders professional and factual. Avoid emotional language or blame.
Keep Detailed Records
Maintain copies of all change orders and related communications for your records.
Managing Change Orders with Software
Modern contractor software makes change order management much easier by:
- Providing professional change order templates
- Calculating cost impacts automatically
- Tracking approval status and signatures
- Storing all change orders with the project file
- Generating reports on change order trends
Red Flags to Avoid
Don't start work without approval: Beginning changed work before getting a signed change order can lead to payment disputes.
Don't underestimate costs: Factor in all costs including materials, labor, overhead, and profit.
Don't ignore timeline impacts: Always consider how changes affect your schedule and other projects.
The Bottom Line
Change orders are a normal part of construction projects. When handled professionally, they protect your business, maintain client relationships, and ensure you're compensated fairly for all work performed.
The key is establishing a clear change order process from the beginning and sticking to it throughout every project.
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