What Is a Change Order in Construction?
A change order in construction is a formal written amendment to the contract that changes the scope, cost, or schedule of the work. It is used when the original agreement no longer matches what must be built, how much it will cost, or how long it will take.
Once approved, the change order becomes part of the official project record. It gives the project team a clear way to document changes and define their impact on the work, budget, and timeline.
Key takeaways
- A change order formally updates the contract scope, cost, or schedule.
- It documents added, removed, or revised work.
- Proper approval helps prevent delays, disputes, and budget issues.
- Clear change order procedures improve project management.
In this guide
Change order definition
A change order is a formal written amendment to the construction contract that records an approved change to scope, price, schedule, or other contract terms. Once signed by the required parties, it becomes a binding part of the project record.
The three elements every change order modifies
A change order usually affects one or more core parts of the original contract. Defining them clearly helps all parties understand what is changing and how it affects the project.
Here are the three elements every change order may modify:
- Scope of work: The tasks, materials, services, or deliverables covered by the contract
- Contract value: The total project price, updated when work is added, removed, or revised
- Schedule: The project timeline, updated when the change affects duration, sequencing, or completion dates
The three-party agreement requirement
A change order is a formal contract amendment, not just a note that the work has changed. It becomes binding only after approval from the required parties, often the owner, contractor, and architect. Each party confirms part of the change, such as scope, cost, schedule, or contract consistency. Without the required signatures, the change order is generally not enforceable.
Types of change orders in construction
Construction change orders can take several forms, including additive, deductive, zero-cost, CCDs, and ASIs. Each type affects scope, cost, schedule, or authority differently, so choosing the right one helps manage changes properly.
Additive change orders
An additive change order is used when work is added beyond the original contract scope. This may include extra square footage, upgraded materials, added systems, or owner-requested changes. Because the contractor performs more work, this type usually increases the contract sum and may extend the schedule. The added work should be clearly described, priced, and approved.
Deductive change orders
A deductive change order is used when work is removed from the original contract scope. This may happen when the owner cuts features, reduces quantities, or simplifies finishes. Because the contractor performs less work, this type reduces the contract value. The change should still be documented clearly so the contract reflects what was removed.
Zero-cost change orders
A zero-cost change order modifies the work without changing the total contract price. This usually applies when the scope changes in method or material, but the cost stays the same. Even without a price change, the change should still be documented if it affects requirements, materials, methods, or sequencing. This helps prevent confusion later.
Construction Change Directives (CCDs)
A Construction Change Directive is used when the owner directs the contractor to proceed with changed work before cost is fully agreed. This usually happens when the work cannot wait, but pricing is still under review. It allows the project to continue while cost is resolved later. Because this creates more risk, the directed work must be documented clearly.
Architect’s Supplemental Instructions (ASIs)
An Architect’s Supplemental Instruction is used for minor clarifications that do not change the contract sum or time. It is often used to clarify details or resolve small coordination issues. An ASI should not be used for changes that affect price or schedule. If cost or time changes, the issue should move to a formal change process.
What causes change orders?
Change orders happen when the original contract no longer reflects actual project conditions, owner decisions, design revisions, or field requirements. These triggers can affect scope, cost, schedule, or contract terms, which is why changes must be documented clearly before the work moves forward.
Design errors and omissions
Design errors and omissions are a common cause of change orders in construction because incomplete drawings, conflicting details, and missing information often do not become clear until work reaches the field. When those issues affect installation, coordination, or compliance, the project team may need a formal change order to correct the contract documents and define the resulting impact on scope, cost, or schedule.
Owner-requested changes
Owner-requested changes are a common reason for change orders after construction begins. These may include layout revisions, upgraded finishes, added features, or material substitutions. Even small requests can affect cost, procurement, coordination, and installation. A formal change order records the request, defines its impact, and confirms approval before work proceeds.
Unforeseen site conditions
Unforeseen site conditions can lead to change orders when actual field conditions differ from what the contract documents assumed. These may include unsuitable soil, hidden utilities, obstructions, hazardous materials, water intrusion, or structural damage. When these conditions are discovered, the original scope or approach may no longer work. A change order documents the added work, cost, and schedule impact before the project moves forward.
Value engineering
Value engineering changes can lead to change orders when cost-saving substitutions are approved without fully checking their effect on the rest of the contract documents. If a system or material is changed, the drawings and specifications may no longer match what is being built. These change orders are often avoidable. When proposed substitutions are reviewed for coordination, code compliance, and spec consistency before approval, teams can catch problems before they turn into contract amendments.
Code and regulatory changes
Code and regulatory changes can lead to a change order when updated requirements, permit conditions, inspection comments, or new code interpretations require revisions that affect cost or schedule.
Summary of main change order causes and typical impact:
| Cause category | Primary trigger | Typical impact |
|---|---|---|
| Design errors and omissions | Incomplete, conflicting, or incorrect plans | Rework, coordination issues, schedule delay |
| Owner-requested changes | Scope revisions, upgrades, or layout changes | Cost increase, procurement changes, time extension |
| Unforeseen site conditions | Hidden underground, structural, or environmental issues | Added labor, material changes, schedule disruption |
| Code and regulatory changes | Compliance updates, permit requirements, or interpretation changes | Compliance costs, revised work, schedule adjustment |
The change order process: step by step
The change order process follows a structured path from identifying a contract change to documenting, pricing, approving, and tracking the revised work. When each step is handled in order, the project team can record changes clearly, control cost and schedule impact, and avoid disputes about work that falls outside the original agreement.
Step 1: Identify the change
The process begins when the project team identifies a change that affects the original contract scope, cost, time, or another contract term. This may come from an owner request, design revision, site condition, code issue, or field coordination problem.
Step 2: Notify the relevant parties
Once a potential change is identified, the contractor should notify the owner, architect, and any other required party in writing within the time required by the contract, because rights to added cost, time, or a claim often depend on timely notice. Under AIA A201-2017, claims must be initiated within 21 days after the event giving rise to the claim or after the claimant first recognizes the condition giving rise to the claim.
Step 3: Submit a change order request
After notice is given, the contractor or project manager prepares a formal change order request describing the proposed change and why it is needed. It should clearly reference the affected drawings, specifications, field conditions, or contract terms.
Step 4: Estimate cost and schedule impact
The project team then evaluates how the change will affect the contract price and project schedule. This usually includes labor, materials, equipment, subcontractor costs, and any impact on sequencing or duration.
Step 5: Review and negotiate
The owner, architect, and contractor review the request and negotiate the final terms of the change. This step helps confirm the revised scope, cost, and schedule before the contract is updated.
Step 6: Execute and sign
Once the terms are agreed, the change order is signed by the required parties and becomes a formal contract amendment. The changed work should not be treated as fully authorized until those approvals are in place.
Step 7: Implement and track
After execution, the team proceeds with the changed work and updates the budget, schedule, logs, and related records. Tracking helps ensure the approved change is carried into the field correctly and reflected in the final contract record.
What a change order document must include
A change order document identifies the project, references the contract, defines the scope change, and outlines cost, schedule, and required approvals. The industry-standard AIA G701 form is commonly used to formally record changes to the work, contract sum, and contract time.
Required fields
A change order document must include key details that clearly define the change and link it to the correct project, contract, cost, schedule impact, and approvals.
- Project name and number: Identifies the project the change applies to and ties it to the correct job record.
- Contract reference: Points to the original contract being amended.
- Date: Shows when the change order was prepared, issued, or submitted.
- Description of scope change: Explains what work is being added, removed, revised, or replaced.
- Cost adjustment: Records the financial impact of the change, often broken into labor, materials, overhead, and profit.
- Schedule adjustment: States whether contract time is increased, reduced, or unchanged, including any days added or removed.
- Reference drawings or specifications: Identifies the sheets, details, specifications, sketches, or exhibits tied to the change.
- Signature lines for all three parties: Provides approval lines for the owner, contractor, and architect, since the change is not binding until the required parties sign.
- Submittal references: Notes which submittals are affected or newly required if the change involves reviewed materials, equipment, or assemblies.
The AIA G701 form
The AIA G701 is the standard change order form used in many construction projects to document changes to the contract scope, cost, and time in a consistent format. It is typically prepared by the architect and helps ensure the change is clearly recorded and properly reviewed by the required parties.
Change order vs RFI: what is the difference?
An RFI asks for clarification when project documents are unclear or conflicting and does not change the contract on its own. A change order is used when a change to scope, cost, schedule, or other contract terms has been approved, and once signed, it becomes a binding contract amendment.
| Aspect | RFI | Change order |
|---|---|---|
| Primary purpose | Requests clarification about unclear, incomplete, or conflicting project information | Approves a change to scope, cost, schedule, or contract terms |
| When it is used | Before work proceeds when more information is needed | After a project change has been reviewed and approved |
| Effect on contract | Does not change the contract on its own | Becomes a binding contract amendment once signed |
| Impact on cost or time | No direct change unless followed by another document | Can formally adjust contract sum and project time |
| Type of document | Question and clarification document | Formal authorization document |
| Relationship to other documents | May lead to a change order if clarification reveals extra work | May be issued after an RFI confirms the need for a contract change |
Change order vs Construction Change Directive
A change order requires agreement on scope, cost, and schedule before the changed work begins and becomes binding once signed. A Construction Change Directive allows the owner to direct the work immediately before final agreement on price is reached, with cost resolved afterward.
| Aspect | Change order | Construction Change Directive |
|---|---|---|
| Primary purpose | Formally approves a change in the work | Directs the contractor to proceed with changed work before full agreement on cost |
| Agreement required | Requires agreement on scope, cost, and schedule before work begins | Does not require full agreement on price before work starts |
| Timing | Used after all parties approve the change | Used when work must proceed immediately |
| Contract effect | Signed amendment to the contract | Direction to proceed, with compensation resolved later |
| Cost handling | Cost and time are agreed in advance | Cost or compensation may be negotiated afterward |
| Typical use case | Standard project changes with mutual approval | Urgent changes where delay is not practical |
The true cost of change orders
Change orders can affect a project far beyond the visible adjustment to contract price. In addition to the direct cost of added or deleted work, they can create schedule pressure, added coordination effort, administrative time, procurement disruption, and cumulative budget impact across the job.
Direct cost impact
Direct cost impact is the clearest part of a change order because it directly affects the contract sum. Scope changes often require more materials, labor, equipment use, or procurement adjustments.
Direct costs usually include the following:
- New materials and equipment purchases: Added or revised work may require items not included in the original contract.
- Extra labor hours: Changed work often needs more installation time, supervision, or specialty trade support.
- Procurement delays and expedited shipping fees: Late changes can increase purchasing and delivery costs.
- Contractor markup: Added work may also include overhead, profit, and related pricing adjustments.
Schedule impact
Schedule impact is another major cost driver because change orders often affect time as well as price. A single change can interrupt sequencing, delay follow-on work, and increase overhead across the project.
Schedule-related costs often include the following:
- Lost productivity during work stoppages: Crews may be delayed or forced to work less efficiently while waiting for direction.
- Equipment rental extensions: Delays can keep rented equipment on site longer than planned.
- Administrative time: Project staff may spend extra time managing delay-related issues.
- Extended project overhead: Longer timelines can increase supervision, site management, temporary facilities, and general conditions costs.
- Liquidated damages risk: If time is not adjusted properly, the project may face added financial exposure.
Why change orders always cost more than getting it right
Change orders almost always cost more than resolving the issue before the contract is signed. Once work begins, any change can disrupt labor, materials, coordination, and sequencing, which increases cost beyond the value of the change itself. That is why early design coordination, clear scope definition, and strong preconstruction review are usually far less expensive than fixing the same issue during construction.
Change order management best practices
Successful change order management depends on clear communication, strong documentation, and organized processes throughout construction. Every project may face changes, but solid systems help protect the budget, schedule, and overall project control.
Define the process in the contract before construction starts
The best time to address change management is before work begins. The construction change order process should be clearly defined in the contract. This should explain how changes will be requested, reviewed, and approved so all teams follow the same process and disputes are reduced.
Your construction contract must include:
- Who has authority to request changes
- How to submit a change order form
- Timeline for approval decisions
- Cost and schedule impact procedures
Never start work without a signed change order
Do not begin changed work until the change order is reviewed and signed by the required parties. The signed document confirms the revised scope, cost, and schedule. Without it, the contractor may perform extra work without clear approval, and payment may be disputed. Unless another formal process applies, the safest approach is to wait for the signed change order.
Track notification deadlines
Notification deadlines can determine whether a contractor gets paid for change order work or absorbs the cost. Many contracts require written notice within a short period, often 5 to 14 days. Each change should be tracked from the moment it is identified. A clear change order log helps protect payment rights and reduce disputes later.
Document everything
Documentation creates protection. A comprehensive change order is a document that includes a description of the change, associated costs, and schedule impacts. Use change order management software to maintain detailed records and ensure nothing gets lost.
| Documentation type | Purpose | Required information |
|---|---|---|
| Change order form | Official request for work modifications | Description of the change, costs, timeline |
| Change order log | Centralized tracking system | Status, dates, approvals, budget impact |
| Supporting documentation | Evidence backing the change request | Photos, emails, design drawings, estimates |
| Approval records | Proof of authorization | Signed signatures, approval dates |
Change orders effectively managed through consistent documentation prevent misunderstandings and disputes.
How to reduce change orders from design errors
Design errors are one of the most preventable causes of construction disruption. Finding issues in drawings and specifications early helps avoid costly rework and keeps the project on track.
Why design errors are the most preventable cause
Design errors are a common reason change orders become necessary on job sites. Unlike unforeseen site conditions or regulatory shifts, these issues usually come from missed conflicts, incomplete details, or coordination gaps during planning.
The impact goes beyond a simple fix. When design errors are not caught early:
- Work crews may need to stop and wait for revised plans
- Materials may need replacement or repositioning
- Subcontractors can face scheduling delays
- Project budgets can increase
- Team morale can decline with repeated interruptions
Most of these issues can be reduced through better review before construction begins.
How AI plan review catches issues before they become change orders
Artificial intelligence now offers powerful solutions for construction change order management. AI-powered plan review technology analyzes designs automatically, spotting conflicts and inconsistencies that human reviewers might miss. This technology can identify design errors early, reducing the need for change orders by up to 80%.
Advanced change order management software equipped with AI capabilities works by:
- Scanning architectural and engineering drawings for conflicts
- Cross-referencing specifications with building code requirements
- Checking for dimensional inconsistencies across disciplines
- Flagging material specification issues
- Identifying coordination problems before construction begins
This early review helps teams manage changes more proactively and protect project timelines and budgets.
Frequently asked questions
Who submits a change order in construction?
A change order is usually prepared by the contractor, architect, project manager, or owner’s representative and becomes official after review and approval.
Do contractors charge for change orders?
Yes, contractors often charge for change orders when the change affects labor, materials, equipment, time, overhead, or profit.
What is the difference between a change order and an RFI?
A change order formally changes scope, cost, or schedule, while an RFI only asks for clarification and does not change the contract by itself.
What is a Construction Change Directive?
A Construction Change Directive allows the owner to direct changed work before pricing or time adjustments are fully agreed.
How long does a change order take to process?
Simple change orders may be processed in a few days, while complex ones can take two weeks or longer depending on review and approvals.
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