Change Order
What Is a Change Order
A change order is a written agreement between a client and a contractor (or between project parties) that formally authorizes a modification to the original contract scope, cost, schedule, or specifications. Once signed by both parties, the change order becomes a binding amendment to the original agreement.
Change orders are most common in construction, engineering, manufacturing, and professional services where contracts define a specific scope of work and any deviation requires formal documentation. Without a change order, a contractor who performs additional work has no contractual basis for payment, and a client who requests changes has no documentation of what was agreed.
What a Change Order Includes
A properly documented change order contains the change order number (sequential for the project), the original contract reference, a description of the modification, the reason for the change, the cost impact (additional, deductive, or zero), the schedule impact, updated specifications or drawings if applicable, and signatures from both authorized parties.
In construction, the American Institute of Architects (AIA) provides standard change order forms (AIA G701) that are widely accepted across the industry. Other industries use their own formats, but the core elements remain the same.
Change Order vs Change Request
A change request is the proposal. A change order is the approved authorization. The change request initiates the evaluation process: it describes the desired modification and is submitted for review. If approved through the change control process, a change order is issued to formally authorize the work. The change request is the question; the change order is the answer.
Common Causes of Change Orders
In construction, the most frequent triggers are unforeseen site conditions (subsurface problems, existing structure discrepancies), design errors or omissions discovered during construction, client requested scope additions, regulatory changes that require compliance modifications, and material substitutions due to availability or cost.
In software and professional services, change orders are triggered by scope additions that fall outside the original statement of work, timeline adjustments due to dependency changes, and resource substitutions that affect pricing.
Regardless of industry, proactive change order management protects both parties. Clients avoid paying for unauthorized work. Contractors avoid performing work without compensation. And both sides have a documented trail that prevents disputes about what was agreed.
Commonly Confused With
| Term | Key Difference |
|---|---|
| Change Request | A change request is the proposal submitted for review. A change order is the approved, signed document that authorizes the modification. The request asks; the order answers. |
| Variation Order | A variation order is the same concept as a change order, used primarily in UK, Australian, and international construction contracts. The terms are interchangeable. |
Common Questions About Change Order
Who signs a change order?
Both parties to the original contract must sign the change order for it to be binding. In construction, this is typically the project owner (or their authorized representative) and the general contractor. Subcontractor change orders are signed between the general contractor and the subcontractor.
Can a contractor refuse a change order?
A contractor can negotiate the terms of a change order (cost, timeline, conditions) but the contract typically requires them to perform authorized changes. If the parties cannot agree on terms, dispute resolution procedures in the original contract apply. Never perform change order work without a signed authorization.
How do change orders affect project budget?
Each approved change order increases, decreases, or holds the project budget steady. The cumulative total of all change orders is tracked against the original contract value. Industry benchmarks suggest that change orders on construction projects typically add 5% to 15% to the original contract value.