Change Orders: How to Keep Them Honest

Why change orders exist, and why they get abused

A change order modifies the contract: it adds, removes, or alters scope, and it adjusts the price, the schedule, or both. Legitimate changes are unavoidable. Conditions are discovered underground, an owner elects an upgrade, a code interpretation shifts, a design gap surfaces in the field. None of that is dishonest.

The abuse comes from how changes are processed, not from their existence. Under schedule pressure, owners approve changes that are loosely described, priced without challenge, or already underway. A contractor working in good faith still benefits from an owner who does not scrutinize, and a contractor working in bad faith treats weak change-order discipline as a profit center. Either way, the fix is the same: a consistent process that every change must pass through.

The four questions every change order must answer

1. What is the cause? Is this a genuine unforeseen condition, an owner-requested change, or something that should have been in the original scope? If the cause is a design error or an omission the contractor should have caught, the owner should not be paying full freight for it. Naming the cause honestly is the first filter.
2. Is it priced fairly? Demand a breakdown: labor hours and rates, material quantities and unit costs, equipment, and the contractually allowed markup, not a single lump sum. A lump-sum "extra" with no backup is an invitation to overpay. Compare the markup to the contract's stated change-order markup.
3. What is the schedule impact? A change can add cost and time. Both need to be stated explicitly. A change that quietly extends the schedule without being acknowledged becomes a delay claim later.
4. Is it documented before the work starts? This is the one owners break most often.

Never approve work that has already started

The most expensive habit in change management is verbal authorization. A field problem appears, the superintendent says it needs to be fixed today, and the owner says "go ahead, we'll paper it later." Once the work is done, the owner has lost all negotiating leverage on the price, because the cost is already sunk and the contractor knows it.

The rule is simple and worth enforcing even when it feels rigid: no change proceeds without a written, priced, signed change order, except for genuine emergencies affecting life-safety, which still get documented in writing the same day. If a contractor pressures you to approve verbally and price later, treat that as a warning sign about how the rest of the project will be run.

Watch for these patterns

• Scope that was always required. Items being sold as "extras" that the original contract or drawings already obligated the contractor to provide.
• Stacked small changes. A series of minor changes that individually escape scrutiny but collectively move real money. Track the running total of change orders against the original contract sum.
• Vague descriptions. "Additional labor as required" is not a scope. Insist on specific, measurable descriptions.
• Inconsistent markup. A markup higher than the contract allows, applied quietly because nobody checked the original terms.

Build the log, not just the approvals

Maintain a single change-order log that lists every request, its cause, its status, its cost and time impact, and its running effect on the contract sum and completion date. The log is what tells you, at any moment, how far the project has drifted from the deal you signed. Without it, change orders are processed one at a time and the cumulative picture stays invisible until it is a problem.

The bottom line

Honest change orders share four traits: a clearly named cause, a transparent price with backup, an explicit schedule impact, and written approval before the work begins. Hold every change to that standard, log them all, and the change-order process stops being where projects bleed money and becomes just another controlled part of the job.