The Change Order Fight That Could Have Been Avoided
The project is 60% complete when the client sends a text: "Can we move that wall 4 feet to the left?"
Sure, no problem. Your crew adjusts. The wall gets moved. Two weeks later, you send the invoice.
That's when the fight starts.
"What's this extra $3,200 charge? I thought moving the wall was included!"
You dig through emails, texts, and scribbled notes on job plans. There's no signed change order. No written agreement on the scope change. No documentation of the price you quoted verbally in a parking lot conversation.
Now you're in small claims court over $3,200 that you absolutely deserve—but can't prove you're owed.
This is what happens when change orders are verbal.
Why Construction Projects Live and Die by Change Orders
Nearly every construction project experiences scope changes. The client wants different finishes. The engineer realizes the design won't work. The inspector requires modifications. An owner sees the space taking shape and gets new ideas.
Studies show that 40-60% of construction projects have at least one significant change order. On larger projects, that number approaches 100%.
The contractors who make money on projects? They document every single change with a formal change order. The contractors who fight for payment and lose money? They handle changes with handshake agreements and verbal promises.
It's not about being difficult or inflexible. It's about protecting both parties with clear, written agreements about what's changing, why it's changing, and what it costs.
The Three Types of Change Orders (And When to Use Each)
Not all changes are created equal. Understanding the difference can prevent massive headaches.
Owner-Requested Changes
This is the classic change order: The owner wants something different from what was originally agreed. Different materials, different layout, different finishes, added features.
These should always increase the contract price (or at minimum, stay neutral if you're substituting equal-cost alternatives). Never, ever eat the cost of owner-requested changes to "keep the client happy." That's not customer service—that's subsidizing their indecision with your profit.
Design Errors and Omissions
The plans showed a door where there's supposed to be a structural column. The mechanical drawings conflict with the electrical layout. The specifications call for a product that's been discontinued.
These changes are often contentious because someone made a mistake—and now there's a cost to fix it. Clear contract language about who bears the risk of design errors is critical. If you didn't design it, you shouldn't eat the cost to fix it.
Field Conditions
You open up the wall and find knob-and-tube wiring that needs to be replaced. The concrete slab is 4 inches out of level. There's mold in the ceiling cavity that requires remediation.
These are nobody's fault—but they still cost money. A well-written contract has provisions for handling unforeseen conditions and how change orders will be priced and approved.
What Must Be in Every Change Order
A change order isn't just "we're adding a bathroom, that'll be $8,500 more." It's a contract modification that needs to be precise, complete, and signed by all parties.
Essential elements:
Original contract reference - Reference the original project contract by date and parties so there's no confusion about what's being modified.
Detailed scope description - Describe exactly what's being added, deleted, or modified. "Move wall" isn't enough. "Relocate interior partition wall in master bedroom 4 feet west, requiring relocation of electrical outlets, rerouting of HVAC ductwork, and patching/refinishing 4 feet of ceiling where wall was previously located."
Cost breakdown - Don't just show a lump sum. Break it down: labor, materials, equipment, subcontractors. This transparency prevents disputes and helps clients understand what they're paying for.
Schedule impact - Does this change affect the completion date? If moving that wall adds 3 days to the schedule, document it. Otherwise, you're still on the hook for the original completion date despite added scope.
Payment terms - When is the change order amount due? Is it added to the final invoice, or due before work begins? For large changes, you might require payment before starting.
Signatures and dates - Both parties must sign and date. A change order without signatures isn't worth the paper it's printed on.
Reference to original contract terms - Make it clear that all other terms of the original contract remain in effect.
The $14,000 Lesson in Change Order Timing
A residential contractor learned this the hard way. Mid-project, the homeowners asked to upgrade from laminate to granite countertops. The contractor verbally agreed to $4,000 additional.
But he made a critical mistake: he did the work before getting a signed change order.
By the time he presented the change order for signature, the countertops were installed. The homeowners loved them—but suddenly balked at the price. "We thought you said $3,000, not $4,000."
The contractor insisted it was $4,000. They insisted it was $3,000. Neither could prove their case—it was a parking lot conversation with no documentation.
The contractor had two choices: sue for the $4,000 (spending $2,000 in legal fees with uncertain outcome) or eat the difference to preserve the relationship.
He ate it. And then the homeowners requested two more changes, each time negotiating price downward because they knew he'd already committed to the work.
By the end, he'd given away $14,000 in scope changes rather than risk the relationship and his reputation.
The lesson: Never begin change order work until the change order is signed and payment terms are agreed upon. No exceptions.
How to Price Change Orders Without Starting World War III
Pricing change orders is delicate. Price too low, and you lose money. Price too high, and clients feel taken advantage of.
Here's what works:
Use time and materials with a not-to-exceed cap. For unpredictable changes (like field conditions), this protects both parties. You get paid for actual work performed, and the client has a maximum price they won't exceed.
Reference your original pricing. If the original contract priced framing labor at $45/hour, use that same rate for change order framing. Consistency prevents "you're charging me more now!" arguments.
Be transparent about markup. If you markup materials 20% and subcontractors 10%, show that clearly. Hidden markups breed distrust.
Price promptly. When a client requests a change, provide pricing within 24-48 hours. Delays create tension and uncertainty.
Offer options. "We can do granite for $4,000 or quartz for $3,200 or stick with laminate at no additional cost." Giving choices shows you're working with them, not against them.
Document verbal discussions in writing. After every conversation about a potential change, send an email summarizing what was discussed and what you'll be pricing. This creates a paper trail even before the formal change order.
The Psychology of Change Orders
Here's the reality: clients hate change orders. Even when the change was 100% their idea, having to pay more creates negative feelings.
Successful contractors manage this psychology:
Frame changes as opportunities, not problems. "This is a great chance to upgrade the finishes to match your vision" sounds better than "this is going to cost more."
Present pricing before creating attachment. Don't let clients fall in love with an upgraded idea before they know what it costs. That's setting everyone up for conflict.
Separate change order conversations from regular updates. Don't bury "oh, and this will cost $2,500 more" in a casual conversation about project progress. Change orders deserve focused, serious discussions.
Explain the schedule impact honestly. If adding a deck delays completion by two weeks, say so upfront. Clients can handle delays if they're informed. They can't handle surprises.
Make the process easy. The harder you make it to process change orders, the more clients will try to negotiate additional work into the original scope. Make change orders fast, simple, and professional.
The Digital Solution
This is exactly why we built the Free Change Order Template at SiteSignOff. It's a professional template that includes all the essential elements of a comprehensive change order.
The template includes:
- Original contract reference with project details
- Detailed scope change description area
- Cost breakdown by category (labor, materials, subs, equipment)
- Schedule impact documentation
- Payment terms specification
- Signature blocks for all parties
- Professional formatting that looks serious and official
Download it, customize it for your business, and use it every single time scope changes. Protect yourself, protect your client, and prevent disputes before they start.
Best Practices for Change Order Management
Get it in writing before starting work. This is the golden rule. No exceptions. Ever. "I'll get you the paperwork later" is how contractors lose thousands of dollars.
Number your change orders sequentially. Change Order #1, #2, #3. This creates an audit trail and makes it easy to track all modifications to the original contract.
Keep a change order log. Simple spreadsheet: CO number, date, description, amount, status (pending, approved, completed, paid). This prevents changes from falling through the cracks.
Price changes consistently with original contract. Don't use different labor rates, different markups, or different terms. Consistency prevents disputes.
Update the contract price and schedule formally. After each approved change order, update your contract summary showing new total price and new completion date.
Communicate proactively. When you see something that might require a change order, tell the client immediately. "We found an issue that will need a change order. I'm preparing pricing and will have it to you by tomorrow." Proactive communication prevents surprise and builds trust.
The Bottom Line
Change orders are where contractors either make money or lose it. There's no middle ground.
Professional contractors use formal, detailed, signed change orders for every scope change. Struggling contractors handle changes with handshakes and hope.
The difference between these two approaches is thousands of dollars per project—and the difference between a profitable business and one constantly fighting for payment.
The Free Change Order Template at SiteSignOff gives you a professional, comprehensive template you can use immediately. Customize it once, then use it on every project for the rest of your career.
Because the cost of a disputed change order is far more than the 60 seconds it takes to get a signature.