What is a change order in construction?
A change order is a written amendment to a construction contract that changes the scope of work, the contract price, the schedule, or all three, after the contract is signed. Once the owner and contractor sign it, it becomes part of the contract.
On AIA contracts it's usually documented on the AIA G701 form. Subcontractors and suppliers get their own change orders against their subcontracts and purchase orders.
Change order software replaces the paper form and the spreadsheet log. Each change becomes one record tied to the contract it modifies, with its backup attached and a status the whole team can see.
Types of change orders
| Type | What triggers it | Example |
|---|---|---|
| Owner-requested | The owner adds, removes or upgrades scope | Owner switches from vinyl plank to hardwood in the upper units |
| Design error or omission | Drawings or specs are wrong or incomplete | Structural drawings are missing a beam connection detail |
| Unforeseen site condition | Something no one could have known at bid time | Rock or contaminated soil found during excavation |
| Code or regulatory | An inspector or a code change requires different work | Fire marshal requires an additional sprinkler zone |
| Value engineering | The contractor proposes a cheaper equivalent | Substituting a comparable HVAC unit to save cost |
| Schedule | Time is added or the finish date is pulled in | Owner asks to hand over two weeks early |
Change orders are also grouped by how they're priced: lump sum (one fixed price for the change), unit price (a rate per unit, such as per square foot or per cubic yard), time and materials (actual labor and materials plus markup) and cost-plus (actual cost plus an agreed fee).
The change order process, step by step
- Identify the change. It usually starts with an RFI answer, a field condition or an owner request. Document it right away with photos and notes.
- Submit a change order request. Describe the change, the reason and what triggered it. Many teams call this a proposed change order (PCO).
- Price it. Collect subcontractor quotes and add labor, materials, equipment and the markup allowed by the contract. State the schedule impact in calendar days.
- Review and negotiate. The architect and owner review the scope and price. Expect questions, so attach backup up front.
- Approve and sign. Once signed, the contract sum and contract time are officially adjusted.
- Update the contract and your subs. Update the revised contract amount and issue matching change orders to the affected subcontracts.
- Bill and collect. Add approved change orders to your next pay application and track them until they're paid.
If work has to start before the price is agreed, the owner can issue a construction change directive (AIA G714). It authorizes the work now and leaves the price to be settled later.
In SubmittalLink, steps 2 to 7 map to the Draft, Pending and Approved statuses, the revised contract amount and the Invoiced and Paid toggles.
What to include in every change order
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Change order number and date
-
Project and parent contract (purchase order or subcontract)
-
Description of the change and the reason for it
-
Reference to the RFI, submittal, drawing or spec section that
triggered it
-
Cost breakdown: labor, materials, equipment, subcontractor costs
and markup
-
Schedule impact in calendar days, even if it's zero
-
Backup: quotes, photos, marked-up drawings
-
Signatures and dates from everyone who approves it
-
The person responsible for the next step
Common change order mistakes and how to avoid them
- Starting work on a verbal OK. Get the change order signed first, or get a signed change directive. A verbal approval is hard to collect on.
- Leaving out the schedule impact. A change order that says zero days usually closes the door on asking for more time later.
- Sending it without backup. Change orders without quotes, photos or references get questioned, and approvals stall.
- Not passing the change to subs. If the owner's contract changes, the matching subcontract has to change too.
- Forgetting to bill approved changes. Approved and invoiced are two different things. Track both.
- Keeping the log in three places. Email, a spreadsheet and a binder never agree. Use one log that everyone works from.