In Plain English
Quick Answer
A written document that officially changes the project scope, cost, or timeline after the contract is signed.
Definition
Definition
A change order is a written agreement between the owner and contractor that modifies the contract scope, price, or schedule after the original contract is executed. Change orders are required for any work that falls outside the original contract scope. They must be signed by both parties to be binding and enforceable.
Context
Why It Matters in Bidding
Change orders are where bid margin is won or lost after award, because the original estimate rarely anticipates every field condition, and disciplined change-order pricing recovers added cost and time. Owners evaluate change-order history when scoring contractors, and unsigned or back-loaded changes are a leading source of payment disputes, so capturing scope changes in writing protects both the schedule and the bottom line.
Example
Example
The owner issued a change order adding $18,000 to install additional electrical outlets discovered during rough-in inspections.
See Also
Related Terms
FAQ
Questions Contractors Ask
What should a change order include?
A complete change order states the added or deleted scope, the agreed cost adjustment with markups, any schedule extension, and references to the affected drawings or specifications. Both owner and contractor signatures make it binding. Omitting a time extension is a frequent mistake that costs contractors delay damages later in the job.
How is the price of a change order determined?
Pricing methods are usually set by the contract: a lump-sum proposal, unit prices established at bid time, or time-and-materials with stipulated markups for overhead and profit. Estimators build the change-order cost from current labor and material pricing plus equipment, then add the contractually allowed markup before submitting for owner approval.
Can a contractor refuse to do change-order work?
Generally a contractor must perform directed changes within the general scope, but it is not obligated to proceed at a disputed price until the change is resolved. If the owner needs the work immediately without agreement, the owner typically issues a change directive instead, and the cost is settled afterward.
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