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Change Order Management Procedure

Document Type: Procedure
Version: 1.0
Last Updated: February 2026
Distribute To: Project Managers, Superintendents, Estimating

Purpose​

Establish a consistent process for identifying, documenting, pricing, and managing change orders to protect company interests and maintain positive client relationships.

Change Order Types​

TypeDescriptionTypical Cause
Owner-DirectedClient requests additional workScope additions
Design ChangeArchitect/Engineer changesDrawing revisions
Field ConditionUnexpected site conditionsConcealed conditions
Code ComplianceRequired for code complianceInspector requirements
Value EngineeringCost-saving alternativesContractor proposal
Time ExtensionSchedule impact onlyDelays outside contractor control

Change Order Process Overview​

Identification → Documentation → Pricing → 
Submission → Negotiation → Approval → Execution

Step 1: Identification and Documentation​

Recognize Change Order Conditions​

STOP and document when:

  • Owner requests additional work
  • Drawings are revised (RFI response, ASI, bulletin)
  • Field conditions differ from plans
  • Inspector requires additional work
  • Design error/omission discovered
  • Subcontractor identifies changed work

Initial Documentation (Critical!)​

Immediately document:

  1. Date and time condition identified
  2. Detailed description
  3. Location (specific)
  4. Reference to contract documents
  5. Photos (before any work)
  6. Witnesses/attendees

Notify in Writing:

  • Send written notice to owner/architect
  • Reference contract change order provisions
  • Do NOT begin work until approved (unless emergency)

Potential Change Order (PCO) Log​

Track all potential changes:

PCO #DateDescriptionEst. ValueStatus
PCO-0011/15Added outlets per owner$5,500Pending
PCO-0021/18Rock encounteredTBDPricing

Step 2: Change Order Request​

Written Change Order Request​

Submit to Owner/Architect:

CHANGE ORDER REQUEST

COR Number: COR-2026-001
Date: [Date]
Project: [Project Name]
Project Number: [Number]

Description of Changed Work:
[Detailed description of additional/changed work]

Reason for Change:
☐ Owner Request
☐ Design Change (RFI #___, ASI #___, Bulletin #___)
☐ Concealed Condition
☐ Code Requirement
☐ Other: ________________

Reference Documents:
- Contract Section: _______________
- Drawing Reference: _______________
- RFI/ASI Number: _______________

Cost Impact: $_____________ (estimate, formal pricing to follow)
Schedule Impact: _______ days

Requested By: _______________
Date: _______________

Step 3: Pricing​

Pricing Requirements​

Direct Costs:

  • Labor (hours × rate)
  • Materials (quantity × unit cost)
  • Equipment (hours/days × rate)
  • Subcontractor costs

Indirect Costs:

  • Supervision
  • Small tools
  • Consumables

Markups (per contract):

  • Overhead (typically 10-15%)
  • Profit (typically 10%)
  • Bond (if bonded)

Pricing Format​

CHANGE ORDER PROPOSAL

COP Number: COP-2026-001
COR Reference: COR-2026-001
Date: [Date]
Project: [Project Name]

Description:
[Detailed scope description]

COST BREAKDOWN:

LABOR:
| Description | Hours | Rate | Total |
|-------------|-------|------|-------|
| Foreman | 8 | $65 | $520 |
| Journeyman | 16 | $55 | $880 |
| Labor | 24 | $40 | $960 |
LABOR SUBTOTAL: $2,360

MATERIALS:
| Description | Qty | Unit | Unit Cost | Total |
|-------------|-----|------|-----------|-------|
| [Material 1] | 100 | LF | $2.50 | $250 |
| [Material 2] | 50 | EA | $15.00 | $750 |
MATERIALS SUBTOTAL: $1,000

EQUIPMENT:
| Description | Qty | Rate | Total |
|-------------|-----|------|-------|
| Backhoe | 1 day | $450 | $450 |
EQUIPMENT SUBTOTAL: $450

SUBCONTRACTOR:
| Subcontractor | Scope | Amount |
|---------------|-------|--------|
| ABC Electric | Added circuits | $1,200 |
SUB SUBTOTAL: $1,200

DIRECT COST TOTAL: $5,010

MARKUPS:
Overhead (10%): $501
Profit (10%): $551
TOTAL CHANGE ORDER: $6,062

SCHEDULE IMPACT: [X] days extension requested

Supporting Documentation Attached:
☐ Labor breakdown
☐ Material quotes
☐ Sub quotes
☐ Drawings/sketches
☐ Photos

Subcontractor Change Orders​

Process for Sub Changes:

  1. Sub submits PCO to GC
  2. PM reviews for validity
  3. Verify scope and pricing
  4. Add GC markup (per contract)
  5. Include in GC change order to owner
  6. Do NOT approve sub CO until owner approves

Step 4: Submission and Negotiation​

Submit to Owner/Architect​

Include:

  • Change Order Proposal (detailed pricing)
  • Supporting documentation
  • Schedule impact analysis
  • Drawings/sketches if needed
  • Reference to contract provisions

Follow Up​

Track response time:

  • Per contract terms (typically 14-30 days)
  • Send reminder if no response
  • Document all communication

Negotiation​

If owner disputes:

  • Meet to discuss
  • Be prepared to justify costs
  • Review comparable work costs
  • Consider value engineering
  • Document negotiation results
  • Do not agree to lose money

Step 5: Approval​

Before Work Begins​

Ideal: Written approval before starting changed work

Reality: Sometimes work must proceed. If so:

  • Get verbal approval
  • Document with confirming email
  • Note "work proceeding at owner direction"
  • Continue pursuing written approval

Change Order Execution​

Standard Change Order Format:

CHANGE ORDER

Change Order Number: CO-001
Date: [Date]
Project: [Project Name]
Owner: [Owner Name]
Contractor: [Your Company]

DESCRIPTION OF CHANGE:
[Detailed description]

CONTRACT ADJUSTMENT:
Original Contract Sum: $_______________
Previous Change Orders: $_______________
This Change Order: $_______________
New Contract Sum: $_______________

SCHEDULE ADJUSTMENT:
Contract Time Previously Authorized: ___ days
Time Added This Change Order: ___ days
New Contract Time: ___ days

The above changes are approved and agreed to by:

OWNER:
Signature: _______________ Date: ___
Printed Name: _______________
Title: _______________

CONTRACTOR:
Signature: _______________ Date: ___
Printed Name: _______________
Title: _______________

ARCHITECT:
Signature: _______________ Date: ___
Printed Name: _______________
Title: _______________

Step 6: Execution and Tracking​

After Approval​

  1. Issue work authorization to field
  2. Notify affected subcontractors
  3. Update budget (add to job cost)
  4. Update schedule (if time granted)
  5. Update billing (add to SOV)
  6. Execute sub change orders
  7. Document completed work

Change Order Log​

Maintain running log:

CO #DescriptionAmountStatusApproved
CO-001Added outlets$6,062Approved2/15/26
CO-002Rock removal$12,500Pending-

Critical Change Order Practices​

DO:​

✅ Document everything immediately
✅ Send written notice before proceeding
✅ Reference contract provisions
✅ Include detailed cost breakdown
✅ Get written approval before work
✅ Track all changes in log
✅ Update budget and billing

DON'T:​

❌ Perform changed work without notice
❌ Accept verbal-only approval for large changes
❌ Wait to document conditions
❌ Under-price to avoid conflict
❌ Forget to include time extension
❌ Bundle multiple changes into one

Time Impact Analysis​

When Schedule Impact Exists​

  1. Document delay cause

    • What triggered the delay
    • Critical path impact

  2. Quantify impact

    • Days of delay
    • Affected activities
    • Ripple effects

  3. Request time extension

    • With change order if cost involved
    • Separate request if no cost impact

Time Extension Considerations​

  • Weather delays (check contract)
  • Owner-caused delays
  • Design delays
  • Force majeure
  • Concurrent delays
  • Change Order Request Template
  • Change Order Proposal Template
  • Change Order Log
  • Time Impact Analysis Template
  • Subcontractor Change Order Process

Template provided by support.construction. Customize with your company information.

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