5 Mistakes Contractors Make with Change Orders

Change orders protect your profit margins, but only when done right. Avoid these five common mistakes that cost contractors thousands.

Instant Sheet Templates Editorial Team · 7 min read · 2025-05-05

Change Orders Are Where Margins Live or Die

Experienced contractors know that change orders can make or break a project's profitability. The original contract price gets you the job, but change orders determine whether you actually make money. Here are the five most common mistakes and how to avoid them.

Mistake 1: Starting Work Before Getting Signed Approval

This is the number one change order mistake, and it costs contractors more money than any other. You identify additional work needed, mention it to the homeowner, they say "go ahead," and you proceed without written authorization. Three weeks later, the homeowner disputes the charge because "they did not realize it would cost that much."

The fix: Never start change order work without a signed change order document. No exceptions. Even if the client is standing right there saying "just do it." Take five minutes to write up the change, get a signature, then proceed.

Mistake 2: Not Including Overhead and Profit

Many contractors price change orders at cost — just materials and labor — because the work seems small or they feel awkward charging markup on changes. This is a mistake. Change orders disrupt your planned workflow, require additional supervision, may cause delays, and carry the same overhead costs as original scope work.

The fix: Apply your standard markup to every change order. Your overhead does not shrink just because the work is unplanned. If your standard markup is 25-35%, apply it to change orders too.

Mistake 3: Vague Descriptions

"Additional work per discussion" is not a change order description. Without specific details about what was changed, why, and how much it cost, you have a weak document that will not hold up in a dispute.

The fix: Write specific descriptions: "Remove and replace rotted subfloor in master bathroom (discovered during tile demolition). 4x6 foot area. Remove existing subfloor, treat joists with anti-fungal, install new 3/4-inch plywood subfloor."

Mistake 4: Forgetting Timeline Impact

Every change order affects the project schedule, but many contractors fail to document the timeline impact. When the project runs two weeks late due to accumulated changes, the homeowner blames poor project management instead of recognizing that ten change orders each added one to two days.

The fix: Include a timeline impact section on every change order. Even if the impact is "no change to completion date," document it.

Mistake 5: Not Maintaining a Running Log

Individual change orders are important, but without a running log showing cumulative impact, you lose the big picture. A project with twenty small change orders that each seem minor can collectively add 30% to the project cost and weeks to the timeline.

The fix: Maintain a change order log showing sequential numbering, cumulative cost impact, and cumulative timeline impact. Review the log at every client meeting.

Create Professional Change Orders

Use our free Change Order Form tool to generate properly documented change orders in minutes.

You may also find this useful: Free Change Order Form for Contractors.