What a change order includes
- a number and date
- a clear description of the change, with drawings or selections if needed
- the price change, positive for added work or negative for a credit, and the tax
- the effect on the schedule, in days
- the revised contract total
- signatures or a recorded approval from both parties
Approval should come before the work is done. Changes priced after the fact are the ones most often disputed.
Worked example
| Item | Price (before tax) | Days |
|---|---|---|
| Original contract | $250,000 | |
| CO 1: add 12 pot lights in the living room | + $6,500 | +2 |
| CO 2: owner supplies their own light fixtures (credit) | - $1,200 | 0 |
| CO 3: upgrade kitchen counters to quartz | + $4,000 | +3 |
| Revised contract | $259,300 | +5 |
$250,000 + $6,500 - $1,200 + $4,000 = $259,300, and the finish date moves five days.
Common mistakes
- Verbal changes. "Go ahead" on site is not a price. Write it down before the work starts.
- Leaving out the schedule impact. The added days matter as much as the dollars when the finish date slips.
- Not updating the schedule of values and draws, so billing no longer matches the contract.
- Bundling many changes into one. One change per order makes each easy to approve or decline.
Related terms
- Schedule of values (SOV): A schedule of values (SOV) is a breakdown of a construction contract or loan budget into line items, each with a dollar value, that together add up to the contract sum.
- Draw request: A draw request is a request to be paid for construction work completed during a period, sent to a construction lender or to the project owner.
- Retainage (holdback): Retainage is a percentage of each progress payment that the owner or contractor holds back until the work is complete, to protect against unfinished work and unpaid subcontractors.
Further reading
- A weekly project update template for homeowners
- Getting started with Homeowner Project Portal
- Homeowner Project Portal: the nvisin tool built around this