What Is a Change Order in Construction? A Complete Guide

Change orders are one of the most misunderstood — and most consequential — documents in construction. They can protect your business or expose it to serious financial risk, depending on how well you manage them. This guide covers everything you need to know: what a change order is, why they happen, what they should include, and how to get them signed and approved without slowing your project down.

What Is a Change Order in Construction?

Official Definition of a Construction Change Order

A construction change order is a formal, written amendment to an existing construction contract. It modifies the project's scope of work, cost, schedule, or any combination of those three elements — and it requires agreement from all parties to the original contract: typically the owner, the general contractor, and the architect or engineer.

Once signed, a change order carries the same legal weight as the original contract. It is not a request, a suggestion, or a verbal agreement. It is a binding document that supersedes the relevant portions of the original contract and becomes part of the permanent project record.

The construction industry has standardized this process through forms like the AIA G701 Change Order form, which provides a consistent structure for documenting scope changes, cost adjustments, and schedule impacts across projects of any size.

Change Orders vs. Change Directives: Key Differences

A change order requires mutual agreement before work begins. All parties review the proposed change, negotiate the terms, and sign off before the contractor proceeds.

A change directive — sometimes called a construction change directive (CCD) or unilateral change order — is different. It allows the owner or architect to direct the contractor to proceed with a change even when the parties have not yet agreed on the cost or time impact. The contractor is obligated to perform the work, and the compensation is determined afterward through negotiation or dispute resolution.

The practical difference matters enormously. Change orders protect contractors by locking in agreed pricing before work starts. Change directives expose contractors to pricing risk. Whenever possible, contractors should push for a signed change order before mobilizing on changed work.

Why Change Orders Are a Normal Part of Every Project

No construction project — regardless of how thoroughly it is planned — proceeds exactly as designed. Soil conditions vary. Material availability shifts. Owners change their minds. Inspectors identify code conflicts. Drawings contain errors.

Change orders exist precisely because construction is complex, iterative, and subject to conditions that cannot always be anticipated at the time of contract execution. They are not a sign of poor planning. They are the mechanism that keeps the contract aligned with reality as a project evolves. The goal is not to eliminate change orders — it is to manage them efficiently, document them completely, and resolve them without disputes.

Common Reasons Change Orders Are Issued

Design Errors and Omissions

Drawings and specifications are prepared by humans working under deadline pressure. Errors happen. A structural detail may conflict with a mechanical layout. A specification may reference a product that has been discontinued. A dimension may be incorrect. When the contractor identifies a discrepancy in the field that requires a design solution, the resulting work — if it falls outside the original contract scope — is documented through a change order.

Errors and omissions are among the most contentious sources of change orders because they often involve questions of professional liability. Architects and engineers may resist acknowledging that a change stems from a design error, which can complicate negotiations over who bears the cost.

Owner-Requested Scope Changes

Owners frequently request changes after construction begins. A homeowner decides they want a different tile. A commercial developer wants to add a conference room that was not in the original design. A school district upgrades its HVAC specification mid-project.

These elective changes are the most straightforward category of change orders because the owner is initiating the change and is generally expected to pay for it. The contractor prices the change, the owner reviews and approves, and work proceeds. The challenge is ensuring that every owner-requested change — no matter how small — is documented formally rather than handled through a verbal conversation on the job site.

Unforeseen Site Conditions

Subsurface conditions are among the most common sources of change orders on civil and commercial projects. A contractor may encounter rock where soil was expected, groundwater at a depth that requires dewatering, buried utilities not shown on existing drawings, or contaminated soil requiring remediation.

Most construction contracts include a differing site conditions clause that entitles the contractor to additional compensation when actual conditions differ materially from what was represented in the contract documents. When that clause is triggered, the mechanism for formalizing the additional cost and time is a change order.

Material or Labor Cost Escalations

On longer-duration projects, the cost of materials and labor can shift significantly between the time a contract is signed and the time the work is performed. Steel prices, lumber costs, and labor rates are all subject to market forces that neither party can fully control.

Some contracts include escalation clauses that allow for price adjustments when material costs exceed a defined threshold. When those clauses are triggered, or when a contract is modified to address cost escalation that was not originally anticipated, the adjustment is documented through a change order.

Regulatory and Code Updates

Building codes and regulatory requirements can change during the course of a long project. A jurisdiction may adopt a new energy code, update its fire suppression requirements, or issue a new accessibility standard. When a code change requires work that was not included in the original contract, the contractor is entitled to a change order for the additional scope.

Similarly, a plan check or inspection may identify a code conflict in the original design that requires corrective work. If that work falls outside the original contract scope, it is addressed through a change order.

Types of Change Orders in Construction

Additive Change Orders (Scope Additions)

An additive change order increases the scope of work and adds cost to the contract. This is the most common type. The owner wants more work done, or unforeseen conditions require additional work, and the contract price increases accordingly.

Examples include adding a retaining wall that was not in the original design, upgrading finishes at the owner's request, or performing additional excavation to address unexpected soil conditions.

Deductive Change Orders (Scope Reductions)

A deductive change order removes scope from the contract and reduces the contract price. This happens when an owner decides to eliminate a feature, when a value engineering exercise identifies work that can be removed to reduce cost, or when a portion of the project is deferred to a future phase.

Deductive change orders can be a source of friction because contractors may have already mobilized resources, ordered materials, or incurred overhead costs in anticipation of performing the deleted work. Contracts often address how deductive changes are priced to account for these sunk costs.

Zero-Cost Change Orders (Scope Substitutions)

A zero-cost change order modifies the scope without changing the contract price. This typically occurs when one material or method is substituted for another of equivalent value, when a design is revised in a way that adds scope in one area and removes it in another, or when a schedule adjustment is made without a cost impact.

Zero-cost change orders are still important to document. They create a clear record of what changed and why, which protects both parties if questions arise later about what was actually built versus what was originally specified.

What a Change Order Document Should Include

Project and Contract Reference Information

Every change order should begin with clear identification of the project and the contract it amends. This includes the project name and address, the contract number and date, the change order number (sequential, for tracking purposes), and the names and contact information of all parties — owner, contractor, and architect or engineer.

This reference information ensures that the change order can be unambiguously linked to the correct contract and project record, which matters when disputes arise or when auditors review project documentation.

Detailed Description of the Change

The description of the change should be specific enough that someone unfamiliar with the project can understand exactly what work is being added, removed, or modified. Vague descriptions like "additional work per owner request" are not sufficient.

A good description includes what work is being performed, where on the project it applies, what drawings or specifications it references, and why the change is necessary. If the change was triggered by a specific event — a differing site condition, a design revision, an owner directive — that context should be documented here.

Cost Breakdown and Pricing Method

The cost section should itemize the components of the change order price: labor hours and rates, material quantities and unit costs, equipment costs, subcontractor costs, and the contractor's markup for overhead and profit.

The pricing method should also be identified. Change orders are typically priced one of three ways: lump sum (a fixed price for the defined scope), time and materials (actual costs plus markup, used when scope is uncertain), or unit price (a predetermined rate per unit of work, applied to the actual quantity performed).

Schedule Impact and Revised Completion Date

If the change affects the project schedule, the change order should document the number of days added to or removed from the contract duration and the revised substantial completion date. This is critical. Contractors who fail to document schedule impacts in their change orders often find themselves unable to recover delay damages later.

The schedule impact analysis should reference the project's critical path. A change that adds work to a non-critical activity may not extend the overall project duration. A change that affects a critical path activity almost certainly will.

Signature and Approval Lines

A change order is not a change order until it is signed. The document should include signature lines for all required parties — typically the owner, the contractor, and the architect or engineer — along with date fields for each signature.

Some contracts require that change orders be approved within a defined timeframe. The signature section should make it easy to track when each party signed and whether the approval was timely.

The Change Order Process Step by Step

Step 1: Identify and Document the Change

The process begins the moment someone identifies that a condition exists that may require a change to the contract. That could be a superintendent discovering unexpected rock during excavation, an architect issuing a revised drawing, or an owner requesting a scope addition during a site visit.

The first step is to document the condition immediately — with photographs, field notes, and written notice to the appropriate parties. Most contracts require the contractor to provide written notice of a potential change within a defined period, often 7 to 14 days of discovering the condition. Missing that notice deadline can forfeit the right to additional compensation.

Step 2: Submit a Change Order Request (COR)

Once the change is identified and documented, the contractor prepares a formal Change Order Request (COR) — sometimes called a Request for Change (RFC) or Proposed Change Order (PCO). This document describes the change, provides a cost estimate, and identifies the anticipated schedule impact.

The COR is submitted to the architect or owner for review. It is a proposal, not yet a binding agreement. The goal is to initiate the formal review and negotiation process.

Step 3: Review and Negotiate Terms

The architect reviews the COR for legitimacy — confirming that the change is outside the original contract scope and that the pricing is reasonable. The owner reviews the cost and schedule impact and decides whether to approve, reject, or negotiate.

Negotiation is common. The owner may challenge the labor hours, question the markup percentage, or dispute whether the change is actually outside the original scope. This is the stage where clear documentation from Step 1 pays dividends. A well-documented COR with photographs, field notes, and specific contract references is far easier to defend than a vague request submitted weeks after the fact.

Step 4: Obtain Signatures and Formal Approval

Once the parties reach agreement on scope, cost, and schedule, the change order document is prepared and circulated for signature. All required parties must sign before the change order is considered executed.

This is the step where delays most commonly occur. A change order sitting unsigned on someone's desk is a change order that has not been approved — and work performed without an approved change order is work performed at the contractor's risk. Getting signatures quickly is not just an administrative preference; it is a financial imperative.

Step 5: Update Project Records and Schedule

Once the change order is fully executed, the project records must be updated. The contract value is adjusted to reflect the new price. The project schedule is updated to reflect any time extensions. The change order log is updated to reflect the executed status.

All team members who need to know about the change — project managers, superintendents, subcontractors, procurement teams — should be notified promptly so that the work can be incorporated into the project plan without delay.

How Change Orders Affect Project Cost and Schedule

Direct Cost Impacts: Labor, Materials, and Equipment

The most visible impact of a change order is the direct cost: the additional labor hours required to perform the changed work, the materials that need to be procured, and any equipment that needs to be mobilized. These costs are typically straightforward to quantify and are the primary subject of change order negotiations.

What is less obvious is that direct costs on change orders are often higher than the same work would have cost if it had been included in the original contract. Change order work is frequently performed out of sequence, in areas that have already been partially completed, or under time pressure that reduces efficiency. These productivity impacts are real and should be reflected in the change order pricing.

Indirect Cost Impacts: Overhead and Delay Claims

Beyond direct costs, change orders can generate significant indirect costs. Extended project duration means extended general conditions — the ongoing costs of site supervision, temporary facilities, insurance, and bonding that accumulate every day the project continues. If a change order extends the project schedule, the contractor is entitled to recover these extended general conditions costs.

Change orders can also trigger delay claims if they disrupt the planned sequence of work, force other trades to stand by, or push the project into a different season with different labor availability or weather conditions. These impacts are harder to quantify but can be substantial on large projects.

How Cumulative Change Orders Can Derail a Budget

Individual change orders are often manageable. The cumulative effect of many change orders — each one seemingly minor — can be devastating to a project budget and schedule.

This phenomenon, sometimes called scope creep, occurs when the aggregate impact of multiple changes exceeds what any single change order would have suggested. Each change adds a little cost, a little time, a little disruption. The sum of those impacts can be far greater than the arithmetic total of the individual change orders, particularly when the changes affect the same work areas or the same critical path activities.

Owners and project managers who track change orders only at the individual level — without monitoring cumulative cost and schedule impact — often find themselves surprised by how far the project has drifted from the original budget and timeline.

Best Practices for Managing Construction Change Orders

Establish a Clear Change Order Clause in the Original Contract

The best time to define how change orders will be handled is before the project starts. The original contract should specify the process for submitting change order requests, the timeframe for owner review and response, the markup rates for overhead and profit, the method for pricing time and materials work, and the notice requirements for potential changes.

A well-drafted change order clause eliminates ambiguity and reduces the friction that leads to disputes. When the process is defined in advance, both parties know what to expect and can focus on resolving the substance of the change rather than arguing about procedure.

Use a Standardized Change Order Template

Consistency matters. Using a standardized change order template — whether the AIA G701 or a company-specific form — ensures that every change order contains the same essential information in the same format. This makes review faster, reduces the risk of missing critical details, and creates a uniform project record.

A good template includes all the elements described in the previous section: project identification, description of the change, cost breakdown, schedule impact, and signature lines. It should be easy to complete in the field and easy to review in the office.

Set Approval Thresholds and Escalation Paths

Not every change order needs to go to the owner's board of directors for approval. Establishing clear approval thresholds — for example, changes under a defined dollar amount can be approved by the project manager, while larger changes require executive sign-off — keeps the process moving without creating bottlenecks.

Escalation paths should also be defined. If a change order is not approved within the required timeframe, who follows up? What happens if the parties cannot reach agreement? Having these paths defined in advance prevents change orders from stalling indefinitely.

Track All Changes in a Change Order Log

A change order log is a running record of every change order on the project: its number, description, status, cost impact, and schedule impact. It is one of the most important project management tools available to a construction team.

The log provides a real-time view of where the project stands relative to the original contract. It identifies which change orders are pending, which are approved, and which are in dispute. It makes it possible to monitor cumulative cost and schedule impact before those impacts become unmanageable.

Communicate Changes to All Stakeholders Promptly

A change order that is approved but not communicated is a change order that will cause problems. Subcontractors who are not notified of a scope change may perform work based on the original design. Procurement teams who are not notified may order the wrong materials. Superintendents who are not notified may schedule work in the wrong sequence.

As soon as a change order is executed, the relevant information should be distributed to everyone who needs it. This is not just good practice — it is a basic requirement of effective project management.

Common Change Order Disputes and How to Avoid Them

Verbal Agreements Without Written Documentation

The single most common source of change order disputes is work performed based on a verbal agreement that was never reduced to writing. An owner says "go ahead and do it" during a site visit. A superintendent proceeds. The work gets done. Then the invoice arrives and the owner says they never agreed to pay for it.

The solution is simple but requires discipline: nothing is a change order until it is in writing. No matter how clear the verbal agreement seems, no matter how trusted the relationship, the contractor should not perform changed work without a written change order or, at minimum, a written directive from the owner.

Disputes Over Scope Interpretation

Many change order disputes arise not from bad faith but from genuine disagreement about what the original contract required. The contractor believes the work is outside the original scope. The owner believes it was always included. Both parties may be reading the same contract documents and reaching different conclusions.

The best defense against scope interpretation disputes is thorough contract review before the project starts, clear specification language, and a robust RFI process that resolves ambiguities in writing before work begins. When a scope question arises in the field, it should be resolved through a written RFI response — not through a superintendent's judgment call.

Disagreements on Pricing and Markup

Even when both parties agree that a change order is warranted, they may disagree on the price. The owner may challenge the labor hours, question the material costs, or dispute the markup percentage for overhead and profit.

Establishing markup rates in the original contract — and maintaining detailed cost records for time and materials work — reduces the surface area for these disputes. When the contractor can show actual invoices, certified payroll records, and equipment logs, pricing disputes are much easier to resolve.

Unsigned or Partially Executed Change Orders

A change order signed by the contractor but not by the owner is not an executed change order. Work performed under a partially executed change order is work performed without formal approval — and recovering payment for that work can be difficult.

Contractors should track the signature status of every change order and follow up aggressively on any that are pending owner or architect signature. The longer a change order sits unsigned, the harder it becomes to get it executed — and the more likely it is to become a dispute.

How Digital Signatures Streamline Change Order Approvals

Why Paper-Based Approvals Slow Down Projects

Paper-based change order approvals are slow by design. A change order gets printed, signed by the contractor, scanned, emailed to the owner, printed again, signed, scanned again, and emailed back. If the owner is traveling, the process stalls. If the email gets buried, the process stalls. If the scan is illegible, the process stalls.

On a fast-moving construction project, a change order that takes two weeks to get signed is a change order that may be delaying work, creating cash flow problems, or generating additional costs. The administrative friction of paper approvals is not just an inconvenience — it has real project cost implications.

Legal Validity of Electronically Signed Change Orders

Electronic signatures are legally valid for construction change orders in the United States under the Electronic Signatures in Global and National Commerce Act (ESIGN) and the Uniform Electronic Transactions Act (UETA), which has been adopted in some form by the vast majority of states. An electronically signed change order carries the same legal weight as a wet ink signature for most construction contracts.

The key requirements are that all parties consent to electronic signing and that the signature can be attributed to the signer. A reputable electronic signature platform satisfies both requirements and generates an audit trail that documents who signed, when they signed, and from what location — creating a more complete record than a paper signature ever could.

How GoSign Makes Change Order Signing Fast and Secure

GoSign is built for exactly this kind of workflow. You upload your change order as a PDF, add signature and date fields for each required signer, set the signing order so the document routes from contractor to architect to owner in the correct sequence, and send it — all in a few minutes.

Each signer receives an email with a secure signing link. They review the document, sign it, and the next signer is automatically notified. You can see in real time whether the document has been sent, viewed, signed, or declined. If a signer has not completed their signature within your required timeframe, GoSign sends automated reminders so you do not have to chase people manually.

Every signed change order generates a downloadable audit trail with timestamps and signing activity — a complete record of who approved what and when. That record is available whenever you need it, whether for project documentation, dispute resolution, or owner reporting.

GoSign's Free Forever plan includes unlimited document sending, unlimited users, reusable templates, bulk send, sequential signing order, automated reminders, expiration controls, and audit trails — with no credit card required. For construction teams that need API access to embed signing into their project management workflows, the Pro plan is $499 per year flat, with no per-envelope or per-user fees.

Change Order Templates and Tools to Use in 2026

Free Change Order Template Checklist

A complete change order document should include the following elements:

• Project name and address
• Contract number and original contract date
• Change order number (sequential)
• Date of the change order
• Owner name and contact information
• Contractor name and contact information
• Architect or engineer name and contact information
• Detailed description of the change in scope
• Reference to applicable drawings, specifications, or RFIs
• Reason for the change (owner request, unforeseen condition, design revision, etc.)
• Itemized cost breakdown: labor, materials, equipment, subcontractor costs, markup
• Pricing method: lump sum, time and materials, or unit price
• Schedule impact: number of days added or removed
• Revised substantial completion date
• Cumulative contract value after this change order
• Signature lines for all required parties with date fields

Using this checklist as the basis for your change order template ensures that no critical element is omitted and that every change order in your project record is complete and defensible.

Construction Management Software Integrations

Construction management platforms like Procore, Autodesk Construction Cloud, and Buildertrend include change order management modules that allow teams to create, track, and route change orders within a centralized project environment. These tools are valuable for managing the workflow and maintaining the change order log.

Where these platforms often fall short is in the final approval step — getting legally valid signatures from all parties quickly and without friction. Many construction teams use a dedicated electronic signature tool alongside their project management software to handle the signing workflow, then upload the executed document back into the project record.

Why GoSign Is Built for Construction Document Workflows

Construction teams deal with a high volume of documents that require signatures from multiple parties in a defined sequence: change orders, subcontractor agreements, lien waivers, site access authorizations, and more. GoSign is designed for exactly this kind of workflow.

Reusable templates mean you set up your change order format once and reuse it for every project. Sequential signing order ensures the document routes through your approval chain in the correct sequence — contractor signs first, then architect, then owner — without manual coordination. Automated reminders keep the process moving without requiring someone to chase signers by phone or email. And the audit trail gives you a complete, timestamped record of every approval.

For construction companies managing multiple projects simultaneously, GoSign's Free Forever plan covers the full signing workflow at no cost. There are no envelope limits, no user limits, and no credit card required to get started. Teams that need to embed signing into their own project management tools or automate document workflows programmatically can upgrade to the Pro plan at $499 per year — a flat annual fee with no per-envelope or per-seat charges.

FAQ

Who has the authority to approve a change order in construction?

Authority to approve a change order depends on the contract and the organizational structure of the project. Typically, the owner or the owner's authorized representative has final approval authority. On projects with an architect or construction manager, those parties often review and recommend approval before the owner signs. Many organizations establish internal approval thresholds — project managers may approve changes below a certain dollar amount, while larger changes require executive or board approval. The original contract should define who has authority to execute change orders on behalf of each party.

Can work begin before a change order is signed?

Technically, yes — but it is a significant financial risk for the contractor. Work performed before a change order is signed is work performed without formal authorization. If the parties later disagree on scope or price, the contractor may have difficulty recovering payment. In practice, owners sometimes issue a written directive to proceed — a construction change directive — when time is critical and the parties have not yet agreed on pricing. This protects the contractor's right to additional compensation while allowing work to proceed. Whenever possible, contractors should obtain a signed change order before mobilizing on changed work.

How long does a contractor have to submit a change order request?

Most construction contracts specify a notice period within which the contractor must notify the owner of a potential change. This period is commonly 7 to 14 days from the date the contractor discovers the condition giving rise to the change. Failing to provide timely notice can forfeit the contractor's right to additional compensation, even if the change is legitimate. Always review your contract's notice requirements carefully and document the date you first became aware of any condition that may require a change order.

Is a change order legally binding?

Yes. A fully executed change order — signed by all required parties — is a legally binding amendment to the original construction contract. It carries the same legal weight as the original contract and supersedes the relevant provisions of that contract with respect to the changed work. An unsigned or partially executed change order is not binding. This is why obtaining all required signatures before proceeding with changed work is so important.

What is the difference between a change order and a work order?

A change order is a formal amendment to an existing construction contract that modifies scope, cost, or schedule and requires agreement from all contract parties. A work order is typically an internal document used to direct a crew or subcontractor to perform a specific task — it does not amend the contract and does not require owner approval. Work orders are operational tools; change orders are contractual documents. On a construction project, a change order might authorize additional work, and a work order might then be issued internally to direct the crew performing that work.

How can I reduce the number of change orders on my construction project?

The most effective way to reduce change orders is to invest in thorough pre-construction planning. Complete and coordinated construction documents — drawings and specifications that have been carefully reviewed for conflicts, errors, and omissions — are the single biggest driver of change order reduction. Conducting a thorough site investigation before contract execution reduces the risk of unforeseen condition claims. Clearly defining the project scope in the contract, with explicit language about what is and is not included, reduces scope interpretation disputes. And establishing a robust RFI process that resolves ambiguities in writing before work begins prevents field decisions that later become change order disputes.