Change Orders in Construction: A Comprehensive Guide

Change orders are an inevitable part of managing construction projects. Whether prompted by unforeseen site conditions, design clarifications, or client-driven revisions, these contractual modifications can significantly impact the project's cost, scope, and schedule.

Understanding how construction change orders work is crucial for general contractors, subcontractors, and project owners to ensure transparent, efficient, and accountable project management.

What Is a Change Order?

A change order is a formal amendment to the original construction contract that outlines modifications to the scope of work, contract price, or project timeline. These changes may stem from requests for additional work, omissions in the original plans, evolving site conditions, or regulatory requirements.

Each change order is documented with a unique change order number and typically includes a description of the proposed changes, the revised project scope, the adjusted contract price, and the impact on the project schedule.

Types of Change Orders

There are several types of change orders used in the construction industry, each serving a specific purpose based on the nature of the change:

Additive Change Orders

These occur when new work is added to the original scope. This type typically results in additional costs and extended project timelines. Common examples include client-requested upgrades, scope expansions, or regulatory compliance requirements that weren't initially accounted for.

Deductive Change Orders

These reduce the scope of work, often leading to cost savings and a shortened project schedule. They may be initiated when project budgets are re-evaluated, or certain components of the project are deemed unnecessary.

Zero-Cost Change Orders

These involve changes to the project that do not affect the overall cost. They are often used for clarification of design elements, minor scope adjustments, or sequencing changes that impact the workflow but not the budget or duration.

Construction Change Directives (CCD)

Issued by the project owner or architect, CCDs allow work to proceed immediately without a signed agreement on the revised price or time. This type of change order is particularly useful when time-sensitive decisions must be made, but it requires subsequent negotiation and documentation.

Time-Only Change Orders

These change orders adjust the project timeline without altering the cost or scope. They are typically used in response to external delays, such as adverse weather or supply chain disruptions.

Price-Only Change Orders

In some cases, the project scope remains unchanged, but a price adjustment is needed, perhaps due to material cost fluctuations or updated labor rates. These are categorized as price-only change orders.

Understanding the type of change order being issued is essential for accurate project tracking, financial forecasting, and stakeholder communication.

Common Triggers for Change Orders

Change orders are typically triggered by a variety of factors that can occur throughout the project lifecycle. Understanding these triggers can help project teams anticipate, document, and respond to changes more effectively:

Unforeseen Site Conditions

These include subsurface issues, contamination, or structural anomalies not identified in the original assessment. Discovering buried utilities, unstable soil, or unexpected rock formations often necessitates scope modifications.

Errors or Omissions in Contract Documents

Mistakes or gaps in the drawings, specifications, or scope descriptions can lead to confusion during execution. These discrepancies often prompt change orders to clarify the intended design or correct oversights.

Design Modifications by the Project Owner

Owners may alter aesthetic preferences, upgrade materials, or change functional requirements during construction. While these changes can improve project outcomes, they typically result in additional work and costs.

Regulatory or Code Compliance Changes

New or revised building codes, environmental regulations, or safety requirements can emerge mid-project. Compliance with these mandates may require design alterations, new materials, or changes in construction methods.

Material or Equipment Shortages

Market fluctuations, supply chain disruptions, or vendor issues can delay the availability of specified products. In such cases, substitutions or changes to procurement schedules may be necessary.

RFIs Leading to Clarifications

Requests for Information (RFIs) submitted by subcontractors or field teams often highlight ambiguities in the plans. When responses necessitate changes to the original scope, formal change orders are required.

Coordination Conflicts Among Trades

Misalignment between subcontractors' scopes or sequencing can uncover logistical challenges. Change orders help adjust timelines or tasks to ensure smooth coordination.

Client-Initiated Enhancements

Sometimes, project owners request upgrades or enhancements that go beyond the original contract. These may include higher-end finishes, expanded amenities, or technology upgrades.

Anticipating these triggers and planning for change order contingencies from the outset can minimize disruptions and maintain project momentum.

The Change Order Process

A well-structured change order process helps streamline project changes and reduce disputes. Here's how a typical process unfolds:

1. Change Order Request: Initiated by a project stakeholder identifying a need for scope changes. This may originate from the field team, subcontractors, the project owner, or the architect.
2. Evaluation: The project management team conducts a comprehensive assessment to determine the change's feasibility and its impact on the project scope, budget, and schedule. This step often includes consultations with key stakeholders and a review of contract documents.
3. Cost Estimation and Schedule Analysis: Detailed estimates are prepared, factoring in labor, materials, equipment, overhead, and markup. Simultaneously, a schedule impact analysis is performed to understand how the change affects the project timeline.
4. Documentation: The change is formalized in a change order form, which includes a change order number, description of the proposed changes, associated costs, and any schedule adjustments. Supporting documents such as RFIs, drawings, or specifications are attached as needed.
5. Approval Workflow: The documented change order enters a multi-step approval workflow. This typically involves reviews by the general contractor, project owner, and possibly financial or legal teams. Subcontractors may also need to review and agree to the revised terms.
6. Authorization and Communication: Once approved, the change order is signed by all relevant parties. Clear communication of the approved change to the entire project team, including updates to the contract documents and project plans, is essential.
7. Implementation: The change is executed on the jobsite. Project management software should be updated to reflect the new scope, timeline, and budget. Ongoing monitoring ensures that the change is completed as specified.
8. Post-Implementation Review: After execution, a follow-up review assesses the effectiveness of the change and ensures that all documentation is complete and properly archived for future reference.

A disciplined and transparent approach to the change order process minimizes delays, reduces rework, and enhances stakeholder confidence.

Managing Change Orders Effectively

Effective change order management requires a proactive and coordinated approach across the entire project team. Key strategies include:

• Clear Communication: Establish open lines of communication between all project stakeholders. Ensure that everyone, from field supervisors to project executives, understands the procedures and protocols for submitting, evaluating, and approving change orders.
• Accurate Documentation: Standardize documentation practices by using a consistent change order form or template. This should include clear descriptions, justification for the change, detailed cost breakdowns, and schedule impacts. Maintaining a centralized document repository helps avoid confusion and supports compliance.
• Integrated Workflows: Utilize project management software to automate and track change order workflows. This includes automatic alerts for pending approvals, digital signatures, and real-time updates to scope, schedule, and budget tracking. Seamless integration reduces manual errors and saves administrative time.
• Cost Controls and Transparency: Closely monitor additional costs related to change orders. Apply agreed-upon markup rates for labor and materials, and validate cost estimates with historical data or benchmarking. Transparent cost reporting builds trust with project owners and helps prevent disputes.
• Schedule Management: Immediately update the project schedule to reflect approved changes. Perform impact analyses to identify critical path shifts and assess downstream effects. Use schedule simulations to forecast the cumulative impact of multiple change orders.
• Training and Accountability: Provide ongoing training for project managers and field staff on how to manage and process change orders efficiently. Assign clear ownership of each change order to ensure accountability and follow-through.
• Regular Review and Audits: Periodically review the status of open and closed change orders. Conduct audits to verify that all approvals, cost allocations, and timeline changes have been properly documented and executed.

Tools and Best Practices

To streamline change order management, construction teams should embrace both technology solutions and procedural best practices:

• Use Digital Change Order Templates: Digital templates help standardize how change orders are created, reviewed, and stored. They reduce paperwork and ensure consistency in documentation.
• Automate Workflows: Project management software can automate notification, routing, and approval processes. Automating workflows minimizes bottlenecks, reduces errors, and ensures timely processing.
• Connect Change Orders to Project Data: Ensure that every change order is linked to its respective project name, contract number, and original scope of work. This integration supports real-time updates and comprehensive tracking.
• Enable Real-Time Collaboration: Use cloud-based tools that allow stakeholders to view, comment on, and approve change orders in real time. This enhances communication and speeds up decision-making.
• Track Changes Across the Project Lifecycle: Implement systems that provide historical insights into change orders, helping identify patterns, causes of delays, or budget overruns.
• Provide Access to a Centralized Document Repository: Storing all change order forms, approvals, and supporting documents in one location improves accessibility and audit readiness.
• Customize Alerts and Reporting: Configure dashboards and reports to highlight pending approvals, cost variances, and schedule impacts. Proactive reporting enables quicker mitigation.

By combining these tools and best practices, construction companies can better manage change orders, reduce risk, and drive project success.

10 Things to Include in a Change Order

To be legally enforceable and practically useful, every change order should contain the following essential components:

1. Change Order Number: A unique identifier that distinguishes each change order for tracking and reference.
2. Project Name and Contract Number: Clearly indicate which project and contract the change order is associated with.
3. Description of Changes: A concise yet detailed summary of what work is being added, modified, or removed from the original scope.
4. Reason for Change: An explanation outlining why the change is necessary, such as unforeseen conditions, design clarifications, or owner requests.
5. Revised Scope of Work: A specific breakdown of the new work to be performed, including tasks, materials, and responsibilities.
6. Cost Impact: An itemized estimate or confirmed value of the cost increase or decrease, including labor, materials, equipment, and markup.
7. Schedule Impact: A clear statement on how the change affects the project timeline—either extending, reducing, or leaving it unchanged.
8. Supporting Documentation: Attach any relevant drawings, RFIs, specifications, or photos that clarify the proposed change.
9. Approval Signatures: Authorization from all required parties, including the project owner, general contractor, and subcontractors as applicable.
10. Date of Execution: The official date the change order is agreed upon and goes into effect.

To streamline compliance and standardization, many construction professionals use industry-recognized forms such as the AIA G701 Change Order and ConsensusDocs 202/795. These forms provide a structured framework that captures the required fields and approvals, ensuring legal sufficiency and alignment with best practices.

Including these elements ensures clarity, reduces risk of disputes, and facilitates smoother execution and tracking of project changes.

Submitting a Change Order

Submitting a change order involves a clear and standardized approach to ensure that project changes are well-documented, approved, and implemented without confusion or delays.

Here's a step-by-step guide to help construction professionals navigate the submission process effectively:

1. Identify the Need for a Change: Determine whether the proposed modification deviates from the original scope of work, contract value, or project timeline. This may result from field conditions, design clarifications, or owner-driven requests.
2. Prepare the Change Order Request: Use a standardized change order template or form. Include all relevant details, such as:

• Change order number
• Project name and contract number
• Description of the change
• Reason for the change
• Revised scope of work
• Cost and schedule impact
• Supporting documentation (e.g., RFIs, sketches, specs)

3. Submit to the Appropriate Party: Typically, subcontractors submit change order requests to the general contractor, who then consolidates and forwards them to the project owner or architect for review. Each party should have designated contacts for managing change requests.
4. Coordinate Internal Reviews: Before sending the request forward, the general contractor or construction manager should internally evaluate the cost estimates, timeline impact, and justification for the change.
5. Track the Approval Workflow: Once submitted, the change order enters the formal approval process. Monitor the request through project management software to ensure timely responses and prevent bottlenecks.
6. Receive Final Authorization: After review and negotiation, the change order must be signed by all required parties to become binding. Only upon full approval should the change be implemented.
7. Update Project Documentation: Reflect the approved change in all relevant project schedules, budgets, and contract records. Notify all affected teams of the modification.

A well-organized submission process ensures clarity, accountability, and timely execution—key elements for maintaining project momentum and minimizing risk.

Why Change Order Management Matters

Poorly managed change orders can derail even the most well-planned construction projects. By proactively addressing scope changes and aligning all parties through transparent processes, construction companies can mitigate risk, control project costs, and maintain schedule integrity. 

Whether using lump sum or time and materials contracts, a disciplined approach to change orders is essential for successful project delivery.

Final Thoughts on Change Order Success

In the construction industry, change is inevitable. Managing those changes efficiently is what separates successful projects from those plagued by delays and overruns. With the right tools and insights, teams can turn potential disruptions into opportunities for smarter execution.

SmartPM empowers construction professionals with real-time analytics and automated workflows to manage change orders proactively. From identifying early schedule impacts to maintaining accurate documentation and transparent cost controls, SmartPM streamlines the entire change order lifecycle.

At Garver, SmartPM helped cut change order disputes by making time impact data clear, accessible, and impossible to argue with, turning a months-long manual process into a fast, visual, and objective one.

Incorporating SmartPM into your change order process not only safeguards the integrity of your project contract, it sets the foundation for a more predictable, profitable, and performance-driven construction operation.

Book a demo today.

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