Change Orders Done Right — Contracts | License Contractor School

Why change orders exist

Even good plans miss things. Conditions change. The owner wants something different. A change order is a written modification to the original contract that documents the change in scope, price, and time. Without one, the change is technically not part of the contract and you may not get paid for it.

What a change order contains

A complete change order describes the change, lists added or deleted work, states the price adjustment and how it was calculated, states the change in completion date, and is signed by both parties before the work starts. Verbal change orders are a recipe for disputes; even short jobs deserve a one-page written change order.

Pricing changes

Common pricing methods are lump sum, unit price, time and materials, and cost plus a fee. Lump sum is best when scope is clear. Time and materials is appropriate when scope is fluid, but the contract must define the labor rates, markup on materials, and how time is tracked. Always disclose the markup in writing.