Change Orders: When They Must Be in Writing, What They Include, and How to Price Them

How does the change order process work, from request to payment?

A change order moves through five steps, request, price, sign, build, and bill, and the money is safe only when each step happens in that order and leaves a record. Skip the signature and the price becomes an argument. Skip the billing step and a signed change order sits in a folder while the crew moves on.

• 1. Request. The homeowner, the owner’s representative or the field asks for something not in the contract, or the crew finds a hidden condition. Write it down the same day with a change-order number, a one-line description and photos.
• 2. Price. The project manager prices the change: labor, material, any subcontractor, the markup and fee the contract names, and the effect on the schedule. On a California home improvement contract, the change order must state the scope, the cost added or subtracted, and the effect on the progress payments.
• 3. Sign. Both parties sign and date it before the work starts. That is the rule in the state statutes above, and it is the only version of the change nobody can remember differently later.
• 4. Build. The crew does the work the signed page describes. A change to the change gets a new number.
• 5. Bill and collect. The office adds the signed change order to the draw or invoice named on it and tracks it until it is paid. On commercial work billed through pay applications, an approved change order has to reach the schedule of values before it can be billed, which is a step with its own way of failing.

The two ends of the chain have their own guides: the signature a GC or homeowner never gives is covered in the T&M-tag guide linked above, and the approved change order that never reaches the pay application in the schedule-of-values guide. The rest of this page takes the steps one at a time.

Change order vs. change directive, amendment, addendum and RFI: what is the difference?

A change order is a change to the work that both sides have agreed and signed, with its price and its time. The other documents either come before the contract, change something other than the work, direct a change before the price is agreed, or only ask a question. The definitions below follow the American Institute of Architects’ general conditions for construction contracts, AIA A201–2017. A home improvement contract may use only the first term, and the contract in hand always governs.

• Change order — a written instrument signed by the owner, the contractor and the architect, agreeing on three things: the change in the work, the adjustment to the contract sum, and the adjustment to the contract time. On a home improvement job, the homeowner and the contractor sign. The work, the price and the days are settled before anyone builds.
• Change directive (construction change directive) — a written order signed by the owner and the architect that directs a change before the adjustment to price or time is agreed. Under A201 it needs the owner’s and the architect’s agreement and may or may not be agreed to by the contractor. The work goes ahead and the money is settled afterward, so it is the document that most needs a daily record of cost.
• Amendment — a written change to the contract itself, signed by both parties: its terms, payment terms or dates. In A201 it is one of four kinds of modification, alongside the change order, the change directive and the architect’s written order for a minor change.
• Addendum — a written revision or clarification of the drawings or specifications issued before the contract is signed, typically during bidding. It changes what is bid and priced in the contract, not what is built after signing, so it carries no change-order price of its own.
• RFI (request for information) — a question, not a change. Under A201 the contractor reports errors, inconsistencies or omissions it finds in the documents as a request for information. The answer can lead to a change order if it adds cost or time, but an answered RFI does not authorize extra money by itself.
• Minor change — under A201, the architect may order in writing a minor change that is consistent with the intent of the documents and involves no change to the contract sum or time. If the contractor believes it does affect price or time, A201 says to notify the architect and not proceed.

The working rule for any of them: if a document changes the price or the schedule and nobody has signed a change order for it, treat it as an open change order. Number it, price it and get it signed before it reaches the draw.

Why a verbal yes costs the remodeler

The pattern is ordinary. Mid-morning, the homeowner asks the lead carpenter for two more recessed lights in the hallway while the electrician is on site. The carpenter says yes, and the lights go in that afternoon. Nobody writes a price, because the amount feels small. Three weeks later the line shows up on a draw or on the final invoice, and the homeowner remembers a different number, or no number at all.

At that point the contractor holds the cost and the homeowner holds the statute. In California, the notice the contract itself must carry tells the buyer that extra work or a change order is not enforceable against the buyer unless the order identifies, in writing and before the work starts, the scope, the amount added or subtracted, and the effect on the progress payments or the completion date. The same notice adds that a contractor’s failure to comply does not preclude recovery “based upon legal or equitable remedies designed to prevent unjust enrichment.” Connecticut’s statute has a recovery clause of its own. Whether either one helps on a given job is a question for an attorney, argued after the relationship has soured. The signed page before the work avoids the question.

The cost is not only the extra itself. A disputed line on the last bill is where the final payment waits and the punch list grows. An extra priced and signed before the crew builds it is the transparent version; the surprise on the final invoice is what strains the relationship.

What a signed change order should carry

California’s statute names the minimum: the scope, the price added or subtracted, and the effect on the payment schedule, and its homeowner notice adds the completion date. A one-page form that carries all of them, plus a few operating fields, is enough for any state:

• A change-order number from one running sequence per job, so a missing number shows up as a gap
• The date, the job, and the name of the person who asked for the change
• A plain description of the work added, removed or substituted, with the product named wherever a product changes
• The price added or credited, with any change-order fee or markup on its own line, as the contract states it
• The effect on the payment schedule — which draw it is added to — and on the completion date, in days
• Signature lines for the homeowner and the contractor, each with a date
• Photos of the area before the change, filed under the change-order number

Signing does not require a meeting. Wisconsin’s code notes, citing state statute, that where a law requires a record to be in writing, an electronic record satisfies that requirement. Whether an e-signature or an email reply counts as signed in another state, under a given contract, is a question to settle with an attorney once, before the next job. Project software and e-signature apps both send a change order to a phone in a minute.

The same-day routine: priced and signed before the crew builds

The rule fits on one line: no extra starts without a change-order number, and no change-order number turns into work without a signature. Three roles make it hold.

• The site lead. When a homeowner asks for anything not on the plans, the answer is “yes, and I’ll get you a price today,” not “sure.” The site lead texts the project manager a photo and one line describing the request.
• The project manager. Prices the change the same day, sends it for signature, and tells the site lead when it comes back signed. A short price list for common small extras — an added outlet, a recessed light, a moved rough-in — lets the PM price those in minutes.
• The office. Adds each signed change order to the draw named on it, and keeps one running list per job: number, amount, date signed, the draw that billed it, and the date it was paid.

Two situations need their own rule. Hidden conditions behind a wall — rot, old wiring, a joist cut by a previous owner — can stop the job, and the routine is the same, only faster: photos, a written description of what was found and the options, a price, a signature, then work. True emergencies come first, and the written record of what was done and why goes to the homeowner the same day.

Is there a script for asking clients to sign change orders?

Yes, and it fits in five short lines, said the same way on every job: one at the moment of the request, one when the price goes out, and three for when the client pushes back or the signature stalls. The point of a script is that the signature becomes part of saying yes, not a favor asked after the crew has built the extra.

In California, one line can point to something the homeowner has already signed: the home improvement contract must carry a note that extra work and change orders become part of the contract once the order is prepared in writing and signed by the parties before the work it covers starts. Other states and contracts differ, so the lines below point to the firm’s own contract rather than to a statute. The wording is an example to adapt.

• At the request, from the site lead, the routine’s answer with the signature built in: “Yes, we can do that. I’ll get you a written price today, and we start it as soon as you sign it.”
• When the price goes out, from the project manager, with the change order attached: “Here is change order 7 for the two hallway lights: the price, the draw it goes on, and any change to the finish date. You can sign it on your phone, and the crew starts once it’s back.”
• When the client says to just do it: “Happy to. Our contract has us put every change in writing first, so you see the price before we build it. You’ll have it today.”
• When the client balks at paperwork for something small: “It’s one page, so neither of us remembers a different number at the end.” If the contract waives the fee on small changes, add: “There’s no charge for this one, and the page says so. We both still sign it.”
• When the signature has not come back: “No problem. We’ll keep going on the rest of the job and pick this piece up as soon as it’s signed.”

How should a contractor price a change order? Markup, minimum fee and a written policy

Price a change order as its direct cost, meaning labor at the firm’s loaded rate, materials, equipment and any subcontractor, plus the markup for overhead and profit and the change-order fee the contract names. Write the markup and the fee into the contract before the job starts, so each change is priced by a rule the homeowner has already signed.

There is no neutral published figure for what remodelers charge for change orders. The ranges that circulate come from software vendors and estimating blogs, not from a count anyone can check. The defensible number is the firm’s own: what it costs to stop, re-price, re-order and re-schedule, written into the contract before the job starts. A contract that names the change-order fee and the markup on changed work turns each later price into arithmetic instead of a negotiation.

The honest objection is the client relationship: nobody wants to hand a homeowner a form for two light fixtures. But the form is what gives the homeowner a choice. A price stated before the work can be accepted or declined; a line added after the work is only a bill. Waiving the fee on small changes as goodwill can be a sound policy — if it is a policy, written down, with the change still on a signed page at no charge, so the scope and the schedule stay in the record.

A written change-order policy, one paragraph in the contract, settles five things before the first change comes up:

• Markup — the percentage added to the direct cost of changed work for overhead and profit, and whether it also applies to subcontractor work.
• Minimum fee — a flat charge per change order that covers stopping, re-pricing, re-ordering and re-scheduling, however small the change.
• Credits — how deleted work is priced, and whether the credit returns the markup or only the direct cost.
• Unknowns — the time-and-materials rates that apply when a hidden condition cannot be priced before work starts, and the dollar point at which the crew stops and gets a new signature.
• Small changes — whether the fee is waived below a stated amount, with the change still written and signed at no charge.

Count it on ten closed jobs

Before changing anything, measure the gap on finished work. Pick the last ten closed jobs and lay three records side by side: the signed contract and every signed change order; each draw and the final invoice; and the field record — daily logs, texts with the homeowner, photos, and the site lead’s memory.

• List every change the field record shows, whether or not it was ever written down.
• For each one, mark five boxes: written, signed before the work started, priced, billed on a draw or invoice, paid.
• Note the dollar amount where it is known, and the days between the work and the bill.
• Total the changes built before any signature, and the ones never billed at all.

Illustrative example: across ten closed kitchen and bath jobs, the field record shows 40 changes. Thirty were written, 22 were signed before the work, 34 were billed and 31 were paid. At an illustrative $600 per change, the six never billed and the three billed but unpaid put about $5,400 of built work outside the bank account. The biggest drop between two boxes shows which hand-off to fix first. Row 03 of the free Friday Ledger asks the weekly version of the same question: work done beyond the original scope, and how much of it was in writing.

When not to hire anyone for this

Skip outside help if every change on the last ten jobs has a number, a signature dated before the work, and a draw that billed it. That firm has already done the work. Skip it, too, for a one-crew remodeler where the owner sells, prices and swings the hammer, and every change already travels from the owner’s head to the next invoice. And anything that has already become a dispute belongs with a construction attorney, not an operations review.

For a firm at $1 million a year and up, where the site lead, the project manager and the office are different people and nobody can say how many changes were built last quarter and how many were billed, the Revenue Review is two weeks of read-only access to the change-order log, selections, draw invoices, daily logs and the books, ending in a written report that puts a monthly dollar figure on each leak the records support. Implementation is scoped and priced separately. Nobody here builds or remodels, and the Review gives no legal advice. A free 20-minute call is enough to tell whether it fits, including when it does not.