Change orders

What counts as a change order

Anything that alters the price, the scope or the finish date after the quote was accepted. The usual ones:

• The client asks for extra work that is not on the quote, or for more of something that is.
• Hidden conditions: rot under the tub, an undersized panel, a slab where the drawings showed soil.
• An inspector or a code requirement adds work.
• A material substitution with a price difference, in either direction.
• A delay caused by the client, such as a site that was not ready on the day.
• Work removed from the scope, which is a deductive change order and gets written down for the same reason.

The test is simple. If you would do it differently, charge differently or finish on a different day than the quote says, it is a scope change and it needs a change order.

Write the change order before the work

The moment a change comes up: stop, price it, write it, get approval, then do it. A client who says "just do it" has agreed to a price that exists only in their own head, and it is lower than yours. On a small change, a text message with the amount and a reply that says yes is enough. The signed one-page change order is better, and it is the version that holds up if the job ends in a dispute.

On larger jobs the paperwork has two steps. You send a change order request, sometimes called a COR, that describes the change and proposes the price and the schedule effect. When the client signs it, it becomes the change order. On commercial jobs under AIA contracts the owner can also issue a construction change directive, which orders the change before the price is agreed; the work proceeds and the price is settled after, so track it in your log like an open change order until it is.

The exception is an emergency, such as a leak that has to be stopped now. Do the work that makes the site safe, then write the change order the same day.

What goes on a change order form

A change order template needs seven things, and a plain email with the same seven works as well as a printed form:

1. A change order number and the date.
2. The job and the original quote number.
3. The change in plain words, including anything removed.
4. The price, as an addition or a deduction, itemised where it helps the client see it.
5. The effect on the schedule, in days.
6. The revised contract sum after this change.
7. Who approved it, how, and when.

A change order example, written the short way:

How to price a change order

Price the change the way you priced the quote: labour hours at your rate, materials at cost plus the markup on the quote, and the same allowance for overhead. Do not discount extra work to keep the peace. Changed work is more disruptive than planned work, because it was not on the schedule, not less. The markup calculator shows the difference between the markup you add and the margin you keep, which matters when a client asks you to "just cover your costs" on an extra.

When the scope of the change cannot be pinned down before you open the wall, write it as a time and materials change order: your hourly rate, materials at cost plus your markup, and a cap the client approves in advance. Bill it against the hours and receipts, and stop at the cap unless the client approves more.

A deductive change credits the materials you no longer buy and the labour you no longer do. It does not credit the overhead and margin on the whole job, and the terms on your quote should say so.

Keeping a change order log

From the second change order onwards, keep a change order log: one line per change with its number, a few words of description, the amount, the status (requested, approved, rejected), and the running revised contract sum. It fits on one page of the job file. The log is what lets you answer "how did we get from $18,400 to $19,940?" in ten seconds, and it is what the final invoice is built from.

From change order to invoice

On a job with one invoice at the end, the invoice lists the original scope, then each change order as its own line with its number: "Change order 2: subfloor replacement, $640." The client can match every line to a document they approved. On a job billed in stages, each approved change raises the revised contract sum and the next progress invoice shows the new figure; the progress billing guide has the layout.

The quote generator is the quickest way to write one: a short quote for the changed work with the job number in the reference, sent for acceptance, then Convert to Invoice or add the line to the invoice by hand. Where the change is done on site the same day, a signed work order is the record that the client authorised it.

Change order terms for the quote

Two sentences on every quote remove most arguments before they start:

With that on the accepted quote, a change order is not a renegotiation. It is the process the client already agreed to.

The tools for this

More guides

• Progress billingHow to bill a job in stages: the schedule of values, a worked progress invoice with retainage, pay applications and AIA forms, and the quote wording that gets each stage paid.
• Chasing an unpaid invoiceWhat to do when a client is not paying: the day-one reminder email, the day-seven call, the overdue notice with the late fee, the final demand letter, then liens, small claims and collections.
• Deposit invoicesWhen to ask for a deposit, how much, deposit versus down payment versus retainer, the wording on the quote and the deposit invoice, and how the final invoice shows the balance due.
• Invoice numbersAn invoice numbering system that never repeats or skips, format examples with a year or job prefix, separate series for quotes and credit notes, and where the number goes on the invoice.