Skip to main content
Back to Glossary
Estimating & Biddingaka: CO

Change Order

In Plain English

A written document that officially changes the project scope, cost, or timeline after the contract is signed.

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.

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

The owner issued a change order adding $18,000 to install additional electrical outlets discovered during rough-in inspections.

Related Terms

Scope of WorkGeneral ConditionsModificationProposal

Frequently Asked Questions

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.
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.
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.

Need more than definitions?

Get AI-powered bid alerts, automated form filling, and proposal drafting.

Start Free Trial

© 2026 ConstructionBids.ai — A LaderaLabs Product