What’s a Change Order in Construction (Key Information to Know)?

“What is a change order? And what does it involve? Is it going to take a while? And how long?” Tom asked.

“I guess we need to ask our construction project management team,” Dee responded.

Meet Dee and Tom.

They’re two busy professionals who recently came across a change order on their beautiful new penthouse apartment that their contractor submitted. But before Dee and Tom could get the ball rolling on completing the new design changes, they researched what’s involved with reviewing and approving their contractor’s proposed change order.

As contractors and homeowners, change orders can leave you feeling like you’re stuck between two places: you can’t tell if you should overhaul your project and saddle up and tackle the change.

So, the construction schedule, estimates, and contracts proceed without delays, homeowners and contractors always need to do their due diligence in order to keep their eyes on the prize, a beautiful completed construction project.

If you’re like Dee and Tom, looking for answers and information on change orders, you’ve come to the right place.

Scordio Construction here. In this spotlight series, we’ll help you better understand what a change order is, including:

• The 6-step process change orders often follow
• Why change orders are important
• Examples of change orders in construction
• Types of change orders
• Who fills out change orders
• What’s included in a change order
• How to complete a change order
• How to improve the change order process
• How a high-end, luxury construction firm can facilitate the change order process
• Commonly asked questions about change orders

TL;DR Summary

In construction, two broad types of change orders exist:

1. Required changes based on conditions that are found or spaces that must be adjusted based on technical necessity.
2. Requested changes that are design or preference-driven.

You can think of the two change orders in terms of change orders of circumstance versus change orders of choice.

The 6-step change order process in construction contracts

1. Sign the contract 2. Raise potential issues 3. Propose the change order 4. Review the change order 5. Agree on the terms of the change order 6. Amend the original contract

What is a construction change order?

Let’s start with Dee and Tom’s question: What is a construction change order?

In construction, change orders generally fall into two main categories:

1. Unforeseen or required change orders that are necessity-based: Unforeseen change orders occur when something must change to continue the construction process. Examples include hidden conditions that are discovered, such as rotted framing, asbestos, or outdated fixtures that don’t meet code. The architect or engineer issues a revision for compliance or structural reasons. A product or material is discontinued or unavailable, and a substitution is required. These change orders are non-optional. They’re essential to move the project forward safely and legally.
2. Design-driven change orders for aesthetic reasons: These change orders are initiated by the client or design team when both decide to modify the design after construction has begun. Examples include upgrading finishes or fixtures, reconfiguring layouts, or changing materials for aesthetic or functional reasons. These change orders are optional, but often improve the final result or reflect evolving preferences. These orders can affect both cost and schedule of the project.

A construction change order is conducted when work is added or removed from the original scope of the project.

When a builder entered into Dee and Tom’s agreement, both the contractor, Dee, and Tom knew that there would likely be changes from the expected construction plan.

For example, many clients often desire to change their mind on a wall’s location or substitute a custom-built vanity for a pre-fabricated vanity. As such, a general contractor is responsible for drafting a legal agreement related to the changes to the original design and contract so that clients like Dee and Tom can get exactly what they’re looking for in their new home build.

Why is change order management so darn important?

Before Tom and Dee embarked on their project with us, they weren’t aware of what was expected with their next build. Slowly, they began learning that the existing contract would likely need some amending based on variables, like finalizing tile selections and decorative light fixtures, building structure anomalies, and newly proposed design ideas.

For example, before construction began, Dee and Tom’s contractor made probes in the existing walls to expose the structural members. The architect and engineer used the information discovered by the contractor’s probe and pre-construction planning to design the new plans.

Then, Dee and Tom’s architect and designer team’s plan was priced and became the basis for the contract.

When construction began, and demolition was underway on these changes, the contract exposed a structural condition that wasn’t expected or seen during the probes: It was termite damage.

The structural engineer inspected the termite damage and provided a revised design. Finally, the contractor provided and adjusted the price and scheduled additional work in what’s called a change order.

Thanks to their contractor and building team’s foresight, Dee and Tom learned that change orders could be made to keep their home’s style, fix the termite damage, and keep the look the same. Their new build is structurally sound and will last for decades.

Without change orders, both the client and contractor are without a record of needed changes, which can set up both parties to be confused about who is responsible for what. What’s more, change orders provide cover from accusations of work left unperformed by a contractor or from amendments made by clients after construction has begun.

That’s the power of a change order: the ability to be flexible, yet firm with all delivered parts of a construction project.

Common examples of change orders in construction management

All of the below-mentioned examples (and more) constitute change orders. The reason is that each alteration affects the project’s scope and the original contract value.

• Changing the location of the exhaust fan, blower, access panel, carpentry, millwork, and finishes around a kitchen hood in Dee and Tom’s kitchen
• Changing the cost or schedule of the build because of client-proposed design changes.  
• If an amendment to an existing contract is added or change orders require risk mitigation procedures to avoid unsuitable construction conditions (such as working in a construction area where skeleton remains exist — true story)
• Changes by the client to accommodate a new feature or remove features from the design.
• Change orders to accommodate a new building regulation implemented by the construction industry that could affect the terms of the original contract

All of the above examples modify the contract terms, so in order to complete the change order, the construction company must spell out the change in writing.

That’s where different types of change orders come into the picture. Dee and Tom have choices. Let’s see what types of change orders they chose.🧑‍🤝‍🧑

What types of change orders and construction change directives exist?

In general, two types of change orders exist:

1. Additive change orders: the most common type of construction change order. An additive change order is when a client asks you to provide them with a price to supplement the original contract with extra tasks. When Dee and Tom asked for new cabinetry to be added to their kitchen pantry, we made an additive change order and fixed their original cabinetry.
2. Deductive change orders: Address minor reductions in the overall scope of the work. If the contract allows for deductive change orders, the client and the contractor will determine the value of the contract based on what was removed or “deducted” from the scope of the original construction contract. Dee and Tom decided they no longer wanted the family room TV set into a wall of custom millwork. Instead, they chose to mount the TV in a framed recess and apply a specialty plaster finish to the wall. The contractor prepared a change order for review, which provided a credit for the millwork included in the original contract, and a charge for the revised framing detail and specialty plaster finish. This change resulted in an overall cost credit to the original contract but no change in the construction duration.

Whether an unforeseen condition or a design change creates a potential change to the original contract cost, schedule, or terms, hiring an experienced contractor who can provide sound options and a clear breakdown of additions and credits will allow the client to make the necessary decisions to improve their home.

These choices may impact the overall budget and schedule, yet the clarity and transparency allow the client to feel comfortable throughout the process.✍🏼✅

Who fills out a change order request?

Speaking of writing change orders, when change orders are proposed, the contractor and/or subcontractor are responsible for preparing and filling out the change orders.

For example, with Dee and Tom, a change to the contract terms was required for their proposed design changes. The architect and engineer then provided a sketch or a description of the new scope of work.

Then, the contractor prepares and submits detailed pricing for the architect and engineer’s proposed work, work which may include any credits to the original scope of work and to any changes to the original building schedule.

Next, the architect and Dee and Tom reviewed the change orders and approved or denied them. If the change orders are approved, the contractor performs the work, but if they’re denied, the original scope of work and contract remain unchanged.

Without effective communication between all parties, the different phases of construction may not be coordinated, and project delays can occur. Dee and Tom were able to make their changes with ease thanks to transparent communication between their entire team.🫱🏼‍🫲🏽

What do you include when you create a change order?

So, what did we include in Dee and Tom’s change order? Every construction project where we use change orders, including Dee and Tom’s project, includes the following five stipulations:

1. Project and contract information: information like the project name and address, contract number, project owner’s name and address, change order number, main contractor’s name and contact information, and the name and contact information of the team responsible for change order management are included..
2. Description of the changes requested: which includes the proposed changes, the reasons, and the details of the changes.
3. An updated timeline and schedule: the changes, number of days, and date when the proposed changes will be complete should be noted.
4. Cost of changes: The cost of the changes to the scope of the project should be written in the change order.
5. An update with the total value of the contract: The change order should include the original value and the newly proposed contract value. If multiple change orders exist, every change order in the project should include the updated value of the contract at that point in the project.

How do you manage change orders?

To begin the change order process, the clients must ask the contractor and/or have at least one major change to the overall project that they’d like to make. Then, the contractor and the client will follow a six step process.

As such, Dee and Tom asked us to make a handful of changes to their kitchen. Here’s the six steps to making changes via change orders.🔨

• Step 1: The client and the contractor will sign a construction contract that outlines the budget, schedule, and scope of work.
• Step 2: Issues are raised by the client, project owner, or the contractor. The changes may come from a variety of sources. Regardless of the source, the issues are raised and discussed as a team.
• Step 3: Changes are proposed. Subcontractors estimate how the change will impact the timing, scope of work, and cost of the project.
• Step 4: To keep the project moving, the change is reviewed, and the client is given time to accept or reject the terms of the construction change order.
• Step 5: The contractor and client come to an agreement on the proposed changes, and the future changes are discussed. A change order is a written amendment, and it’s in step five that this amendment is created.
• Step 6: all parties involved in signing and amending the document then amend the original contract. All workers are briefed on the updates, and the new scope of work and its accompanying timelines are made visible to all stakeholders so the change order can commence.

The Scordio Scoop on change orders

✨This beautifully modern West Side residence is a study in elegance.✨

From the tailored kitchen and inviting living spaces to the serene bedroom retreat, these pictures are a testament to the successful change orders that were enacted on this home.

Clean lines, layered textures, and architectural details transform everyday living into an art form. To see more pictures of what’s involved with our construction management solutions, visit our Instagram page here.🌟

Every change order begins with a reputable construction firm

Change orders typically take anywhere from a few days to a few months to complete. With Dee and Tom, we were able to finish up their kitchen and change orders in a matter of weeks.

An experienced contractor can provide you with clear and transparent information about the most efficient solution to unforeseen conditions regarding design changes.

Their guidance can help clients make informed decisions about their new build.

Why? Because luxury construction firms handle change orders with proven processes and efficient project management.

They use the latest contract lifecycle management technology to manage change order workflows, deadlines, and communication, so that project scopes aren’t affected.

While the causes of change orders are numerous, high-end firms use time-tested practices to keep in communication with architects, builders, and above all, clients like Dee and Tom.

In fact, Dee and Tom reached back out to us to let us know they wanted to contract us out for another project — building their very own high-end restaurant franchise in downtown New York.💖

Big changes are in store for Dee and Tom. And we’ll be right there to help them along the way.

If you’re like Dee and Tom and are thinking about building a new project, can we help? Since 1983, we’ve been building luxury residences and commercial projects in the heart of the Big Apple.

Architects, homeowners, and businesses: if you’re looking for a luxury construction firm who can handle change orders with skill, look no further. 📞Contact us today to learn more about our construction services and change-order process.🏗️

Frequently asked questions (FAQ) about change orders

1. What are change orders most often used for?

Change orders are often used for these reasons:

• To add new features or concepts to a build
• To remove features from a build
• To amend the types of materials used
• To correct any mistakes with original construction
• To mitigate any unforeseen site conditions or circumstances
• To address changes and avoid delays

2. How do change orders affect construction timelines?

The answer depends on how involved the changes are. Some changes can speed up the project schedule by eliminating work that isn’t needed. Other changes can extend the timeline given the scope of the proposed changes.

3. How is a change order different from a contract addendum?

A construction change order changes the existing contract, while a contract addendum adds new information to the original agreement.

4. Are change orders ever refused?

If a change order can be conducted safely and with quality, we’ll never refuse to provide pricing for a change order.

The change order is first provided for review, and then the client makes the decision if they want to proceed with the changes.

Scordio Construction: Simplifying Change Orders for More than 40 Years