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Acronymsaka: potential change orderaka: change event

PCO (Potential Change Order)

In Plain English

An internal notice that a contractor uses to track a possible extra cost before formally asking the owner to pay for it.

Definition

A Potential Change Order is an internal tracking document used by contractors to identify and quantify a possible change to the contract scope, schedule, or cost before a formal change order request is submitted to the owner. PCOs allow the project team to monitor all open change items, track time-sensitive notice requirements, and ensure no compensable event falls through the cracks. Once the scope and cost are confirmed, the PCO is converted into a formal COR and then a fully executed change order.

Why It Matters in Bidding

A PCO is the early-warning record that protects a contractor's right to recover costs for extra work, so disciplined PCO logging directly affects how much of a change is ultimately reimbursed versus absorbed. In bidding and project controls, tracking potential change orders from the moment an RFI response, field condition, or drawing conflict appears preserves the contractor's notice rights under the contract and feeds the formal change order request before the cost is buried in completed work.

Example

The superintendent opened a PCO the day an RFI response revealed that the specified storefront required structural steel reinforcement not shown on the drawings, capturing the extra cost before it became a disputed back charge.

Related Terms

COR (Change Order Request)RFI (Request for Information)SOV (Schedule of Values)

Frequently Asked Questions

A PCO is an internal flag that a cost-impacting issue exists. A change order request, or COR, is the formal priced proposal the contractor submits to the owner for that issue. A change order is the executed, signed document that amends the contract. The PCO starts the chain, ensuring the issue is documented and priced before formal approval.
A PCO should be opened the moment a potential extra cost surfaces, such as an RFI response revealing missing scope, a differing site condition, an owner directive, or a drawing conflict. Opening it early preserves contractual notice rights and creates a timestamped record, which strengthens the contractor's position if the change later becomes a dispute or claim.
No. A PCO is only an internal tracking entry and does not authorize work or guarantee payment. Performing the extra work generally requires a signed change order or written directive from the owner or architect. Proceeding on a PCO alone risks performing unpaid work, so contractors typically confirm authorization before incurring significant cost on the change.

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