Instant Sheet Templates Editorial Team · 7 min read · 2025-01-30
A change order is a formal document that modifies the original scope, cost, or timeline of a construction project after the contract has been signed. Change orders are a normal and expected part of construction — homeowners change their minds about finishes, hidden conditions are discovered during demolition, or code requirements necessitate additional work. The key is handling these changes professionally with proper documentation.
Without written change orders, contractors face the dreaded scenario: the job took longer and cost more than the original estimate, but the customer only wants to pay the original price. A properly executed change order process prevents this by getting written agreement on changes before the work is performed.
The most common trigger for a change order is when the customer requests something different from the original scope. This could be a material upgrade, additional work not included in the original contract, or a design modification. No matter how small the change seems, if it affects cost or timeline, document it with a change order.
Construction projects often reveal unexpected conditions: rotted structural members hidden behind walls, inadequate wiring discovered during a renovation, or soil conditions that require additional foundation work. These conditions require scope changes that should be formally documented even though neither party "caused" them.
Building inspectors may require modifications that weren't anticipated in the original scope. While frustrating, these requirements are non-negotiable, and the associated costs need to be documented through the change order process.
Every change order must reference the original contract or work order number, establishing which project and scope is being modified. This linkage is critical for legal and accounting purposes. Include the date of the original contract and a brief description of the original scope for context.
Describe exactly what is changing and why. Be specific: "Replace standard laminate countertop with granite slab (customer upgrade request)" is much stronger than "countertop change." The description should be clear enough that a third party could understand what changed and why.
This is the most critical section. Break down the cost impact of the change into materials, labor, equipment, and any other cost categories. Show both additions and credits — if the change eliminates some original scope, credit that back. Calculate the net cost impact and the new project total. Be transparent about markup — customers expect contractors to mark up change order work just as they do original scope work.
Changes often affect the project schedule. Document whether the change extends the completion date and by how many days. Be honest about timeline impacts — underestimating schedule changes leads to customer frustration later when the project runs long.
Both the contractor and the customer must sign the change order before any additional work begins. This is non-negotiable. Verbal approvals, text messages, and email confirmations are better than nothing but do not provide the same legal protection as signed documents. Include printed names, dates, and signature lines for both parties.
This is the golden rule. No matter how urgent the customer says it is, get the change order signed before you start the additional work. Once the work is done, your negotiating position evaporates.
Maintain a log of all change orders on a project with cumulative cost and timeline impacts. This running total gives you an accurate picture of the project's current status compared to the original contract.
Issue change orders as soon as changes are identified. Waiting until the end of the project to document accumulated changes guarantees disputes. Address each change in real time.
Use our free Change Order Form tool to generate professional change orders in minutes. For a complete change order system with tracking and cumulative logs, check out our Change Order Form template.
More reading: all guides · template library · free tools.
Next, read 5 Mistakes Contractors Make with Change Orders.