A customer asks for “just one more thing,” and it sounds small enough to sort out later. By the time the invoice is due, the extra work has affected materials, labor and the schedule—but nobody wrote down the new agreement.
A change order records that decision while both sides can still choose what happens. It should explain the work, price and time effect in terms the customer can review.
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
Describe the difference from the original scope
Reference the contract, project and original work item. State what is added, removed or replaced and why the change is being proposed. Include the location, quantity or specification needed to identify it.
“Additional work” is rarely enough. A reviewer should be able to tell which original obligation remains and which part is changing. Attach relevant drawings or photos where they make the difference easier to understand.
Include both additions and credits
For an illustrative change, six additional units at 200 add 1,200, additional labor adds 500 and removed work creates a 300 credit. The net change is 1,400 before applicable tax or other agreed adjustments.
Show the calculation rather than presenting only the net amount. Credits matter because the change may replace part of the original work, not simply add to it. Avoid charging for both the old and replacement scope.
| Illustrative change | Amount |
|---|---|
| Six additional units at 200 | 1,200 |
| Additional labor | 500 |
| Credit for removed work | −300 |
| Net change before tax | 1,400 |
Explain the effect on timing and other work
A new material may have a lead time, require another visit or delay a dependent task. State the expected schedule effect and any assumptions. If there is no expected time change, record that as part of the proposal rather than leaving the issue unstated.
Consider whether the change affects permits, subcontractors, procurement or acceptance requirements. Include the relevant consequences without overwhelming the customer with internal detail unrelated to their decision.
Obtain approval from the right person
Follow the contract’s authority and approval process. A site conversation may identify a request without constituting the required authorization. Record the approved version, date and person who can commit the customer to the change.
If urgent safety or protective work is necessary, follow the applicable contract and legal process for that circumstance and document what happened. Do not treat every urgent customer request as an automatic exception to approval.
Carry the change through the project records
Update the relevant scope, budget, schedule, purchase orders and billing records after approval. Identify pending changes separately. A customer invoice should not quietly include a proposed amount as if it has already been accepted.
For progress billing, incorporate the approved change into the appropriate contract value and schedule structure. Keep the link to the change order so the reviewer can follow its effect on the current application.
When there is disagreement, return to the decision
Check what was requested, what was approved and what was delivered. Separate a pricing question from a disagreement about scope or authority. Gather the relevant communications and records rather than relying on a general memory of the site conversation.
Use the contract’s resolution process where necessary. For future work, improve the point at which requests become priced and approved changes; the final invoice should not be the first complete record of the extra work.
Questions you may still have
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.