Change Orders: How to Cut Them Before They Happen
Short answer
Owners can reduce change orders by defining the scope before construction, resolving design and selection questions early, and requiring written support for every proposed change. When a change is necessary, confirm that it falls outside the original contract and review both its cost and schedule effect before authorizing the work.
By the time a change order reaches your desk it is a negotiation. The work that prevents it happened months earlier.
Where change orders actually come from
In practice, nearly all of them trace to one of five sources:
- Incomplete or uncoordinated documents. Gaps between disciplines become field questions, and field questions become cost.
- Unforeseen conditions. Real, but frequently a diligence failure — undocumented utilities, unexpected soils, hidden structure in a renovation.
- Owner-directed change. Decisions made late, or reversed after they were made.
- Scope gaps between trades. Nobody bought the item because every bidder assumed someone else had it.
- Schedule and escalation. Delay drives extended general conditions and price movement on unbought materials.
Only the second category is genuinely unpredictable, and even that shrinks with better preconstruction.
Prevention before the contract
- Run a constructability review with the builder before the documents are final, and require written responses.
- Produce a scope gap matrix across trades before buyout. Every division of work gets an owner.
- Hold a real bid leveling session and resolve every exclusion in writing before award.
- Close all open allowances you can before signing, and define reconciliation for the ones you cannot.
- Freeze finishes and equipment selections before the drawings go out — late selection is a leading cause of owner change.
- Buy out long lead items early to lock price and delivery.
Governance during construction
- Require written notice within a defined period, with the contract clause cited. No notice, no claim.
- Require full backup: labor hours and rates, material invoices, equipment, and any schedule impact analysis.
- Cap markups in the contract, and separate them for self-performed and subcontracted work.
- Distinguish cost impact from time impact. Approving one is not approving the other.
- Use a proposed change order log with status, dollar value, and days — reviewed weekly, not monthly.
- Never authorize work to proceed on a verbal price.
Negotiating a specific change
Ask three questions in order. Is it actually extra work, or was it in the original scope? Is the pricing consistent with the contract unit rates and markups? Is the schedule impact real, or is it float consumption?
Most disputed change orders fail one of the first two tests. Owners who make that examination routine rather than confrontational get better pricing without damaging the relationship.
Track the pattern, not just the total
A change order log that only shows dollars is a receipt. Categorize each one by root cause and review the distribution monthly. If design gaps dominate, the design team needs attention. If owner-directed change dominates, your decision process is the problem. If unforeseen conditions dominate, diligence needs to improve on the next project.
The takeaway
Change orders are a downstream symptom. Complete documents, a scope gap matrix, early buyout, frozen selections, and a disciplined notice-and-backup process cut them dramatically — and turn the ones that remain into a manageable negotiation instead of a surprise.
What Usually Causes a Change Order
Change orders often begin with incomplete drawings, unresolved selections, hidden site conditions or a difference between what the owner expected and what the contract documents require. Some are unavoidable, especially when existing conditions cannot be confirmed before work begins. Others reflect decisions that should have been settled during design or bidding.
The useful distinction is between owner-requested changes, design coordination issues and unforeseen conditions. Tracking the cause helps the owner decide whether to approve the work, seek a different solution or ask the responsible party for more information.
How to Review a Change Order Before Approval
A change-order request should identify the changed scope, the reason for it, the cost and any effect on the schedule. It should also show relevant credits for work that is being removed. A brief lump-sum description is rarely enough for an owner to understand the full effect.
Compare the request with the drawings, specifications, contract and prior decisions. Confirm that the work is outside the original scope, then ask for labor, material, equipment and subcontractor support where appropriate. Approval should be documented before the changed work proceeds, except when immediate action is necessary to protect people or property.
Set the Project Up for Fewer Changes
Change-order control starts before construction. The owner, architect and consultants should resolve scope gaps, conflicting details and major selections before pricing. A coordinated drawing and specification review can identify questions that would otherwise become field decisions with cost and schedule consequences.
The bid or proposal should state what is included, excluded and assumed. Allowances should identify what they cover, and owner-furnished items should have clear purchasing and delivery responsibilities. When bids are compared on the same scope, omissions are easier to find before a contract is signed.
The construction agreement should define how changes are proposed, priced, reviewed and authorized. It should also address markups, time extensions and emergency work so the parties are not negotiating the process after a problem appears.
Keep Decisions and Field Conditions Documented
Maintain a decision log for selections, approvals and open questions. Each item should have a responsible party and a needed-by date tied to procurement or field work. This gives the owner an early warning when a delayed decision could affect cost or schedule.
Meeting minutes, requests for information, submittals and site photographs create the record needed to evaluate a change. They help distinguish a new request from work already required by the contract documents. The record should be current enough that the team can act before affected work is covered or delayed.
A pending-change log should show the request date, cause, proposed cost, schedule effect and approval status. Review it regularly with the project team rather than waiting for the monthly payment application.
Start With a Defined Scope
The best time to limit change orders is before the contract is executed. Drawings, specifications, finish selections and site information should be developed far enough for bidders to understand the work. Unresolved items should be identified rather than buried in assumptions.
Ask each bidder to list exclusions, allowances and qualifications. Review those lists against the design documents and other proposals. A lower bid may simply leave out work that another bidder included.
Separate Changes From Original Contract Work
Not every field question justifies added cost. Before approving a change, compare the request with the agreement, drawings, specifications, addenda and accepted proposal. Work that is already required by those documents generally belongs in the original scope.
If the documents conflict or leave room for interpretation, request a written explanation from the designer and contractor. Establishing the basis of the request before discussing price keeps the review focused on responsibility and scope.
Lock the Scope Before You Lock the Price
Start with a coordinated set of drawings, specifications and owner decisions. The architect, engineers and key consultants should resolve conflicts between plans, confirm equipment requirements and identify details that affect structure, waterproofing, utilities and finishes. A contractor can price only what the documents clearly describe.
Before signing the construction contract, review allowances, alternates, exclusions and owner-supplied items line by line. Set deadlines for selections and confirm who is responsible for purchasing, delivery, storage and installation. Unresolved scope does not disappear when work starts; it usually returns as a pricing request, delay or field decision.
Know What Is Driving the Change
Not every change order has the same cause. Owner-requested changes arise when the scope, layout or finish changes after pricing. Design coordination changes come from missing details or conflicts among the documents. Concealed conditions include conditions that could not reasonably be confirmed before demolition or excavation. Contractor corrections are different: work that fails to meet the contract documents should not automatically become an owner cost.
Require each request to state the cause, identify the affected drawing or specification and explain why the work was not included in the original contract. This makes it easier to decide whether the request is valid, whether another party shares responsibility and whether the same issue may affect work elsewhere on the project.
Separate Permit Revisions From Field Conditions
In Charleston and across the South Carolina Lowcountry, the authority having jurisdiction varies by project location and scope. Municipal or county building review, zoning, fire review, utility requirements, floodplain rules and historic district approvals may affect the documents. A comment issued during review may require a design revision, but that does not by itself determine who bears the cost under the contract.
Site conditions should be tracked separately. Existing buildings may conceal deterioration, undocumented framing or prior alterations, while new work may encounter drainage, access, utility or soil issues. Before construction, confirm which investigations have been completed and which risks remain. The contract should state how concealed conditions are documented, priced and approved.
Review Every Change Before Work Proceeds
Require a written proposal that describes the added and deleted work, labor, material, equipment, subcontractor costs, markups, credits and tax treatment where applicable. The proposal should also state the effect on the schedule, including procurement lead times and any extension requested. Ask whether the change affects permits, inspections, warranties or work already installed.
Do not rely on a lump-sum description such as “additional work” when the scope can be itemized. Confirm that quantities and unit prices are reasonable, that credits are included and that the work is not already required by the contract. Approve or reject the change in writing, keep a current change-order log and update the remaining contingency after each decision.
Common questions
- Should a contractor proceed before a change order is signed?
- Ordinarily, the scope, price and schedule effect should be approved in writing before changed work begins. Immediate work may be necessary to protect people or property, but the reason, direction and resulting costs should still be documented promptly.
- Who should pay for a change caused by incomplete drawings?
- Responsibility depends on the contract, the specific documents and the cause of the omission or conflict. The owner should establish whether the work was already required before deciding how the cost will be handled.
- How should allowances be handled when selections are made?
- Compare the documented allowance with the actual cost of the selected work, including any contractually permitted markups. The resulting change should show either an added cost or a credit and identify any schedule effect.