Change Orders
Understanding Change Orders in Construction Projects
In construction, a Change Order is an adjustment to the original contract between a client and their contractor. It typically involves changes to the scope of work, project timeline, or total cost. These changes can occur for various reasons, often as a result of new client requests or unforeseen circumstances that require additional work.
One common reason for a Change Order is a request by the client to add or modify aspects of the project. Clients may have new ideas or desires as the work progresses, leading to adjustments in the original plan. These types of changes are usually mutually beneficial, as they allow the client’s vision to evolve while the contractor adapts to accommodate these updates.
Another reason for a Change Order is the discovery of unforeseen tasks that are necessary to keep the project on track and compliant with building codes or industry standards. Hidden or unexpected issues—such as outdated plumbing, faulty wiring, dry rot, or the discovery of toxic materials like asbestos—may emerge during the course of the project. While it is unreasonable to expect a contractor to anticipate every potential hidden issue, such as structural damage or environmental hazards, contractors should make every effort to account for foreseeable work during the planning phase. Thorough inspections and risk assessments can significantly reduce the likelihood of encountering unforeseen challenges.
Unfortunately, some contractors, whether due to inexperience, poor management, or dishonesty, fail to provide a comprehensive scope of work from the outset. In the worst cases, they may intentionally leave out critical tasks or details in their bid to present a lower initial price. Later, these contractors may surprise clients with additional costs after completing extra work without prior approval, leading to disputes and dissatisfaction.
This is where the value of working with a reputable contractor becomes apparent. A reliable contractor will carefully consider the entire project scope from the beginning, ensuring detailed planning and a realistic assessment of potential challenges. This approach helps avoid unnecessary Change Orders and ensures that the initial bid is both realistic and transparent. While some bids may appear higher upfront, this is often a sign of a contractor’s commitment to fully understanding and addressing the work required. By planning ahead and considering all foreseeable issues, these contractors help clients avoid the unexpected expenses and frustrations that can arise from working with less experienced or less ethical professionals.
Even with the best planning, however, unforeseen issues can still arise. Change Orders should not be viewed as a profit center but as a necessary part of the process. A responsible contractor will prioritize minimizing these adjustments. Extra work should never begin without first presenting an updated price and scope, and a signed Change Order Contract must always be obtained before proceeding with any work beyond the original agreement. This ensures both the client and contractor are fully aligned on any changes and the associated costs.
To help clients prepare for any unexpected changes, it is recommended to set aside an additional 10-15% of the total project budget as a contingency fund. This reserve can be used to accommodate unforeseen complications or upgrades that may arise during the project. While the goal should always be to minimize the use of this buffer, having it in place provides peace of mind and financial flexibility. This ensures that the project can proceed smoothly without financial strain, and helps prevent delays caused by unexpected changes.
Ultimately, the goal of managing Change Orders effectively is to complete the project on time, within budget, and to the client’s satisfaction. By ensuring that both the client and contractor are on the same page about any changes, a successful, stress-free project can be achieved with minimal surprises or delays.
