A construction change order is a formal document used to make an agreed change to an existing construction contract. It may adjust the project scope, total cost, completion date, or other contract terms. Change orders are often needed when designs change, unexpected site conditions arise, or additional work is requested after a project has started.
In commercial construction, managing these changes carefully helps keep the project budget, schedule, and work requirements clear for everyone involved. Systems West provides commercial construction and project planning services, where clear communication and coordination help teams manage project requirements as work progresses. Documenting changes properly can reduce confusion, prevent disputes, and keep the project moving toward completion.
Why Do Construction Change Orders Happen?
Construction change orders happen when a project needs work, materials, or plans that differ from the original contract. These changes may come from the owner, unexpected site conditions, material availability, or missing design details. A change order documents the agreed adjustments to the project scope, cost, or schedule.
Owner-Requested Design or Scope Changes
An owner may change the project after construction has started. For example, they may request a different room layout, add a new area, change a building feature, or remove part of the planned work. These changes can affect labor, materials, equipment needs, and the project timeline. The contractor should document the requested change and review its cost and schedule impact before the work proceeds under the required approval process.
Unexpected Site Conditions
Some site conditions are difficult to identify before construction begins. Crews may find unsuitable soil, hidden utilities, buried obstacles, or existing structural issues that were not shown in the original plans. These conditions may require extra labor, different equipment, or changes to the construction method. The project team should document the condition, assess its effect on the work, and follow the contract’s procedures for reviewing and approving any changes.
Material and Equipment Substitutions
The specified materials or equipment may become unavailable, have long delivery times, or no longer meet the project’s needs. In these cases, the team may consider an alternative product or system. A substitution can affect the purchase price, installation requirements, building performance, and delivery schedule. The proposed alternative should be reviewed for compliance with the project specifications and approved by the parties responsible for that decision. If the substitution changes the contract requirements, a change order may be needed.
Design Errors or Missing Project Details
Construction drawings and specifications may contain errors, conflicting information, or details that need clarification. For example, a drawing may show dimensions that conflict with another plan, or a required connection may not be fully specified. Resolving these issues can lead to additional work, revised materials, or changes to the construction sequence. The team should first clarify the design issue and determine whether it changes the original contract scope. If it does, the cost and schedule effects should be documented and handled through the contract’s change process.
How Does the Construction Change Order Process Work?
The construction change order process helps the project team review changes before they affect the agreed work, budget, or schedule. The exact steps depend on the construction contract, but most change orders follow a similar process from documenting the request to updating project records.
Identify and Document the Change
The process begins when someone identifies a change to the original plans, specifications, or scope of work. The change may come from the owner, contractor, architect, or another project stakeholder.
Document what needs to change, why it is needed, and which parts of the project it affects. Include relevant drawings, specifications, photos, or written requests so the team can review the issue clearly.
Review the Contract and Proposed Scope
Next, review the original contract to understand how the proposed change should be handled. Check the scope of work, approval requirements, pricing terms, and any notice deadlines that apply.
Define the proposed work clearly, including what will be added, removed, or revised. This helps the project team determine whether the request requires a formal change order or can be addressed through another contract procedure.
Evaluate Cost and Schedule Impacts
Before approving the change, estimate how it will affect the project budget and completion date. Consider additional labor, materials, equipment, subcontractor work, and any related costs.
The team should also review delivery times, work sequencing, and possible delays to other activities. Documenting these effects helps everyone understand the full impact before agreeing to the revised work.
Obtain the Required Review and Approval
The proposed change must go through the review and approval process set out in the contract. Depending on the project, this may involve the owner, contractor, architect, engineer, or other authorized parties.
The change order should clearly state the agreed scope, cost adjustment, and schedule impact. Required approvals should be documented before the changed work begins, unless the contract provides another authorized process for directing the work.
Update Project Documents and Track the Change
After approval, update the relevant project records to reflect the agreed change. This may include the contract value, construction schedule, drawings, specifications, purchase orders, and work instructions.
Share the approved details with the people responsible for carrying out the work. Track the change through completion and keep supporting records together. Clear documentation helps the team work from the same information and reduces confusion about what was approved.
How Much Does a Construction Change Order Cost?
The cost of a construction change order depends on the size of the change, the work involved, and the terms of the construction contract. Minor changes may have a limited cost impact, while major design or structural changes can require a much larger budget. The project team should estimate the costs before approving the change.
Labor, Materials, Equipment and Subcontractor Costs
Change order costs may include additional labor, materials, equipment rental, and subcontractor services. The total depends on the extra work required and any savings from materials or tasks removed from the original scope.
Overhead, Markup and Other Applicable Charges
The contract may allow additional charges for contractor overhead, markup, design revisions, permits, or schedule extensions. These costs vary by project and should follow the pricing terms agreed upon in the construction contract.
How to Calculate the Change in Contract Value
To calculate the change, add the approved costs of the additional work and applicable charges, then subtract credits for removed work. The result shows how much the contract value will increase or decrease. Any change to the project schedule should also be documented.
How Do Change Orders Affect the Construction Schedule?
Construction change orders can extend or shorten a project’s timeline, depending on the type of change and the work involved. Additional work may require more labor, new materials, equipment, or subcontractor coordination. Some changes can be completed without affecting the completion date, while others may delay key project activities.
The project team should review material lead times, work sequencing, and any effects on the critical path. If the change affects the agreed completion date, the schedule adjustment should be documented in the change order and approved according to the contract terms.
What Should a Construction Change Order Include?
The American Institute of Architects (AIA) provides G701–2017 as a standard form for documenting agreed construction changes. Its instructions cover the description of the change, adjustments to the contract sum, and changes to the contract time. These details help the parties record the agreed scope, financial impact, and schedule adjustment in one document. Actual requirements depend on the contract used for the project.
A construction change order should clearly explain what is changing, why the change is needed, and how it affects the project cost and schedule. While the exact requirements depend on the construction contract, most change orders include these details:
- Project details: Project name, location, contract number, and date.
- Description of the change: A clear explanation of the work being added, removed, or revised.
- Reason for the change: The request or issue that led to the proposed adjustment.
- Supporting documents: Revised drawings, specifications, photos, or other relevant records.
- Cost adjustment: Itemized costs, applicable charges, credits, and the revised contract value.
- Schedule impact: Any change to the project timeline or completion date.
- Required approvals: Signatures or other documented authorization from the parties required under the contract.
Change Order vs. Change Request vs. Construction Change Directive
A change request proposes a change, a change order formally documents an agreed contract change, and a construction change directive may authorize work before the parties agree on its final cost or time adjustment. The exact process depends on the construction contract and the documents used for the project.
| Document | Purpose | Does it formally change the contract? | Approval or authorization | When it may be used |
|---|---|---|---|---|
| Change Request | Proposes a change to the original scope, design, cost, or schedule. | No, not by itself. | Reviewed by the relevant project parties. | When someone requests a change that needs evaluation. |
| Change Order | Records an agreed change to the contract. | Yes, once approved or executed as required by the contract. | Requires approval from the authorized parties. | When the scope, price, or schedule change has been agreed upon. |
| Construction Change Directive (CCD) | Directs a change in the work when the contract allows it, even if the parties have not agreed on the final cost or time adjustment. | It authorizes a change through a formal contract procedure, but the final price or time may remain unresolved. | Issued by the party authorized under the contract. | When work needs to proceed before the cost or schedule adjustment is fully settled. |
How Is an RFI Different?
A Request for Information (RFI) asks for clarification about drawings, specifications, or other project details. It does not automatically change the contract or authorize extra work. If the clarification leads to a change in scope, cost, or schedule, the project team may need a change request and formal change documentation under the contract.
Common Construction Change Order Mistakes
Construction change orders can cause delays, budget problems, and disagreements when important details are missed. Avoiding these common mistakes helps keep project requirements clear and records up to date.
- Starting changed work without required authorization: Beginning work before receiving the required approval can lead to payment disputes. Prevention tip: Follow the contract’s approval process and document authorization before proceeding, unless another authorized procedure applies.
- Vague descriptions of the work: Unclear descriptions can cause confusion about what is included in the change. Prevention tip: Specify the work being added, removed, or revised, and include relevant drawings or specifications.
- Missing contract notice deadlines: Late notice may affect the project’s ability to claim additional costs or time, depending on the contract. Prevention tip: Check notice requirements and submit written notices within the stated deadlines.
- Incomplete cost or schedule details: Missing estimates or timeline impacts can lead to disagreements about the revised contract. Prevention tip: Document the expected costs, applicable credits, and any changes to the completion date.
- Failure to update drawings and project records: Outdated documents can lead to mistakes during construction. Prevention tip: Update relevant drawings, schedules, specifications, and contract records after the change is approved.
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Conclusion
Construction change orders help document changes to a project’s scope, cost, and schedule. When handled properly, they keep the owner, contractor, and other project stakeholders informed about revised work and expectations.
Clear descriptions, accurate cost estimates, timely approvals, and updated project records can help reduce confusion and avoid disputes. For commercial construction projects, careful planning and communication make it easier to manage changes while keeping the work on track.
Frequently Asked Questions
Can a construction change order be rejected?
Yes. An authorized party may reject a proposed change if it does not meet project requirements, falls outside the agreed terms, or lacks the necessary information. The next steps depend on the construction contract and the reason for rejection.
Who is responsible for paying for a construction change?
Payment responsibility depends on why the change is needed and what the contract says. Owner-requested changes may add costs to the owner’s budget, while other changes may involve different responsibilities depending on the circumstances and contract terms.
Can multiple changes be included in one change order?
Yes, multiple related changes may be grouped into one change order if the contract and project procedures allow it. Each change should be described clearly, with its costs and schedule effects documented so the parties can review the full impact.
How are emergency changes handled during construction?
Emergency changes may require a faster response to protect people, property, or the construction site. The team should follow the contract’s emergency procedures, document the work and decisions, and obtain the required authorization as soon as the applicable process allows.