Guide
Construction change orders: document and track extra work
By Ray · Lode
Construction jobs change: a client calls with a request, a crew finds a hidden problem, or plans shift. A change order records a proposed change to scope, cost or time. Documenting the work, pricing it and seeking written authorization before proceeding can reduce uncertainty and help the team track it to the invoice.
This guide covers the loop: spot the change, document it, price cost and markup, seek written authorization, and track it to the invoice. It gives you a change order form and a change log. In the UK and Australia this may be called a variation. Contract terms, notice requirements, emergencies and applicable US, UK or Australian law can affect authorization and payment. Check the contract and seek qualified local advice when needed; this is an operating guide, not legal advice.
What counts as a change order
A change order can document a change to the original contract scope, price or time. Whether a particular item qualifies depends on the contract. Common situations to review:
- The client asks for an extra outlet, a different fixture, more scope.
- The crew finds rot, a hidden pipe, a structural problem the plans did not show.
- The spec changes, or the architect issues a change that adds work.
- A delay or a rework means a trade has to come back.
Compare the work with the agreed scope and budget. If it may add unpriced cost or time, record it and ask the responsible person to review the contract.
Why changes go unpaid
- The change is done before it is priced. The client expects it to be included.
- The change is agreed by phone and never written down.
- The price is a guess, not the cost plus a marked-up margin.
- There is no signed approval, so the client can dispute it at invoicing.
- The change is not tracked, so it never reaches the invoice.
As a practical control, seek the contractually appropriate written authorization before extra work starts when circumstances allow. If the client wants it done now, explain the proposed scope and price and check who can approve it. Emergency work or other contract procedures may need a different response; record what happened and check the applicable requirements.
The change order loop
1. Spot the change
When work appears outside the original scope, flag it. Do not assume it will be paid later: check the contract, notice and approval process, and document the decision.
2. Document it
Write down what changed, why, and the scope of the extra work. Attach the request: the client's text, the architect's note, the photo of the hidden problem.
3. Price it
Build the price from the actual cost: labor, materials, subs, equipment for the extra work. Then add your markup. Be clear which is cost and which is markup on the change order. A client who sees the split trusts it more.
4. Seek written authorization
When practicable, send the change order to the person authorized under the contract before work starts. Record the response and retain any signed order, written instruction or other evidence. A verbal agreement may be disputed; its effect depends on the contract and applicable law.
5. Track it to the invoice
Once approved, add the change to the job budget and to the invoice. A change that is approved but never invoiced is money left on the table.
Pricing a change: cost and markup
Price the change from its real cost, then add a markup. Do not guess a lump sum. Build it:
- Labor for the extra work, at the crew's cost rate.
- Materials, at the price you will pay, including delivery.
- Subs, at their quote.
- Equipment or rental, if any.
Then add your markup. Markup covers overhead and profit. Say the number plainly on the change order. The margin vs markup calculator shows what your markup earns as a margin, so you price it to earn what you intend.
Common change order mistakes
- Doing the work first, pricing later. By then the client has already decided it was included.
- Approval not recorded. An undocumented conversation can make a later dispute harder to resolve.
- Guessing the price. A guess that is too high loses the client. A guess that is too low loses you the money.
- Hiding the cost and markup. A lump sum invites a fight. A split builds trust.
- Forgetting to invoice it. An approved change can be overlooked in the invoicing process.
- Treating a change as a variance. An approved change is new budget, not an over-run to absorb.
How Lode fits change order management
Lode keeps your existing estimating and accounting tools. It would watch the job for work that falls outside the approved scope, and prepare a change order from the evidence. That evidence is the client's request, the photo of the hidden problem, or the extra labor that was never in the estimate. It would attach the sources, and leave the price and the approval to a person.
Where this guide asks you to price cost and markup, Lode would prepare the cost from the records you keep. It would show the markup against the margin. Where it asks for a signature, Lode would not send it. A person approves and sends the change order. See what Lode runs for the intended workflow.
Templates
Copy these into a spreadsheet or a shared doc.
Change order form
Job: [name]
Scope: [what will be done]
Cost: [$]
Markup: [%]
Price: [$]
Approved: ________
Adapt the form to the contract and seek the appropriate written authorization before work starts when practicable.
Change log
| CO # | Job | Reason | Cost | Markup | Price | Status | Invoiced |
|---|---|---|---|---|---|---|---|
| 001 | Pending | No |
Mark the status as pending, approved, or invoiced. Review approved changes against the contract and invoicing process so eligible work is not overlooked.
Related guides
The construction job costing guide covers the budget and cost loop. The RFI and submittal tracking guide covers the questions that often turn into a change order. The margin vs markup calculator shows what your markup earns.
Book a walkthrough
Book a walkthrough to explore one task around your existing tools. We start with sample records and agree the next step with you.
Sources
These sources describe change-order management software and practices; they do not determine the legal effect of a change under your contract.
- Construction change order software, GetApp: https://www.getapp.com/construction-software/construction-management/f/change-order-management/
- How change order management software reduces disputes, Fieldwire: https://www.fieldwire.com/blog/construction-change-order-management-software/
- Change order management software for GCs and subs, Planroom: https://planroomapp.com/change-order-management-software/