A construction change order turns an approved change into a controlled contract record. It identifies what is added, removed, or revised; how the contract sum changes; whether contract time changes; which documents support the decision; and whose signatures or authorization make it effective.
A proposed change, field instruction, construction change directive, and fully executed change order may have different effects under a contract. Do not begin extra work based only on an informal conversation unless the agreement and applicable law provide a documented emergency or directed-work process.
Change-order calculation
How does a change order update contract price and time?
Add priced work, subtract omitted scope, and connect the net change with the prior contract value and stated schedule effect.
| Change component | Calculation | Effect |
|---|---|---|
| Added work | $4,800 + $9,200 + $6,400 + $1,600 | +$22,000 |
| Omitted allowance | Credit for removed finish allowance | −$3,000 |
| Net current change | $22,000 − $3,000 | +$19,000 |
| Contract before change | $180,000 + $12,000 prior changes | $192,000 |
| New contract sum | $192,000 + $19,000 | $211,000 |
| Contract time | Approved schedule adjustment | +5 calendar days |
Which details belong in a change order?
Identify the project, original contract, change-order number, issue date, affected drawings or specifications, and reason for the change. Describe the revised work precisely enough to distinguish it from the original scope. Attach sketches, field reports, quotations, or other exhibits rather than relying on an ambiguous one-line description.
Show the original contract sum, net change from prior approved orders, contract sum before the current change, amount added or deducted now, and new contract sum. State any increase or decrease in contract time and the revised completion date. Record the approvals required by the actual agreement.
- Project, contract, change number, date, and reason
- Detailed added, omitted, or revised scope
- Current and revised contract sum
- Schedule adjustment, exhibits, and approvals
Worked change-order example
Assume an original contract sum of $180,000 and $12,000 of previously approved changes, producing a $192,000 contract before the current order. The proposed work includes $4,800 demolition, $9,200 materials, $6,400 labor, and $1,600 equipment, for $22,000 of additions. Omitting an original $3,000 finish allowance produces a net current increase of $19,000.
The new contract sum is $211,000: $180,000 original plus $12,000 prior changes plus $19,000 current change. If the revised work adds five calendar days and the agreement approves that effect, record both the five-day increase and the new completion date. The example excludes tax, markup rules, bonds, insurance, and other project-specific cost treatment.
- Additions: $4,800 + $9,200 + $6,400 + $1,600 = $22,000
- Net change: $22,000 − $3,000 omitted allowance = $19,000
- New contract: $180,000 + $12,000 + $19,000 = $211,000
- Time change: +5 calendar days with a revised completion date
How should cost and time be supported?
Price the change with the method required by the contract, such as an agreed lump sum, verified unit prices, time and materials, or another defined basis. Separate labor hours and rates, material quantities and quotations, equipment, subcontractor costs, credits, overhead, and permitted markup so the reviewer can see how the net figure was reached.
Schedule impact needs more than an arbitrary number of days. Identify the activity affected, when information or access was received, whether the work changes the critical path, and how mitigation was considered. A zero-dollar change can still require a time adjustment, and a priced change does not automatically justify extra time.
- Contractual pricing method and cost breakdown
- Credits for work or allowances removed
- Affected schedule activity and supporting dates
- Separate price and time conclusions
How does a change reach progress billing?
Keep pending changes separate from the approved contract value. Once the required parties execute or otherwise authorize the change under the agreement, update the approved change-order log and revised contract sum. Add the work to the schedule of values or continuation sheet in the method required for the project.
Do not bill the same change inside an original line and again as a separate change-order line. Link the approved order, supporting documents, updated schedule, payment application, invoice, and payment. This record shows why the amount entered the contract and how much has been earned.
- Pending changes remain outside approved contract value
- Executed change updates the approved change log
- Schedule of values records the changed work once
- Billing links back to scope, price, time, and approval
Put the guide into practice
Templates and tools for this workflow
Use the resource that matches the work you need to estimate, document, or invoice.
Free concrete calculator
Recalculate slab volume, cubic yards, bag quantities, waste and material cost when the concrete scope changes.
Open resource Free online toolFree estimate generator
Prepare the revised labor, material, equipment, tax and total as a separate customer estimate.
Open resource Invoice templateConstruction invoice template
Use a construction-ready invoice after the revised work reaches the agreed billing point.
Open resourceOfficial sources
These references support the regulatory information in this guide. Check the current page before making a decision.
- AIA Contract Documents: Construction Change Order FundamentalsExplains the AIA change-order process and how approved changes modify contract scope, price, or time.
- Federal Acquisition Regulation Part 43: Contract ModificationsDefines bilateral and unilateral contract modifications and the federal process for issuing and documenting changes.
Frequently asked questions
Questions about what is a construction change order?
Is a change order the same as an estimate?
No. An estimate forecasts likely cost. A change order records a contract modification when the parties or authorized process have approved the change under the agreement.
Can a construction change order reduce the price?
Yes. It can add, deduct, or leave the contract sum unchanged. Credits and omitted work should be described and calculated as clearly as additions.
Should pending change work appear in progress billing?
Only as the contract permits. Keep pending and approved values distinct so the revised contract sum and payment request do not imply approval that has not occurred.