What is a change order in construction?
A change order in construction is a formal request to modify the original contract, adjusting the scope, cost, or timeline of a project. These changes can stem from unforeseen site conditions, design adjustments, client requests, or regulatory requirements. While change orders can be as simple as swapping materials or as complex as adding new structural elements, they always require approval from all parties involved.
Effectively managing change orders is crucial to keeping a project on track. Without clear documentation and communication, they can lead to cost overruns, delays, and disputes. That’s why it is adamant construction teams use detailed planning, real-time data, and advanced scheduling tools to anticipate and minimize the need for changes.
In a fast-paced industry where adaptability is key, change orders are inevitable. But when handled strategically, they don’t have to disrupt progress—they can be opportunities to refine and improve the final outcome.
Construction change order process
A change order process in construction begins with key documents that initiate or clarify modifications to the project scope, cost, or timeline. Here is a step-by-step look at how the process unfolds.
- Proposal Request: The architect generally issues this document to the contractor which requests changes to the original scope of work. This often includes a cost estimate for changes or addressing anticipated challenges in the work as a result of the changes.
- Architect’s Supplemental Instructions (ASI): A directive providing additional information or minor changes to the work that do not impact the cost or time frame listed on the original contract.
- Construction Change Directive (CCD): When immediate action is required but cost or timing adjustments haven’t been settled, this directive allows work to proceed while final terms are negotiated.
- Request for Information (RFI): Contractors submit RFIs to clarify ambiguities in the agreement records.
- Change Order Request: A contractor may submit this in response to an ASI or CCD or to propose independent modifications. A contractor may provide this document to recommend adjustments to the project’s scope, budget, or timeline, whether prompted by an ASI or CCD or as an independent proposal for modification.
After submission, the architect reviews the proposal to verify pricing precision, fairness, and adherence to contractual agreements before granting approval.
What should a construction change order include?
Every change order should include key elements. The original contract may specify the exact change order form that should be utilized, including how to submit the form. If there are no change order forms specified, you may choose to write one using a spreadsheet or word document. The key is to use the information necessary to get the changes approved, here are six things you don’t want to forget.
1. Contact information
Each change order form must include the contract number, along with the contact information for the owner, general contractor and/or architect. In addition, include the project name and address and the change order number, including how many orders you have submitted thus far.
Linking this change to a particular agreement is crucial, especially for large-scale commercial ventures or government contracts, ensuring clarity and proper documentation.
2. Date of modifications
A change order form should clearly state the date it is finalized. Depending on contract terms, other dates may also be relevant, such as when the initial notice of change was given or when the request was officially submitted for approval.
Most construction agreements require changes to be reported within a set timeframe, typically between 5 to 10 days. If a contractor fails to follow the proper notification procedure, the request may be denied, or payment could be withheld.
Even if the change is implemented, skipping the required steps might result in the contractor not receiving compensation for the work. To avoid this risk, it’s essential to carefully review the contract and ensure all change orders are submitted correctly and within the designated period.
3. Work Details
In this section, the contractor must outline modifications to the work in detail. This could involve additional tasks being undertaken or work that is no longer necessary. Clarity is key, as the reader may not have in-depth knowledge of the project.
Justifying the need for the change is essential for approval. The cause might stem from unforeseen site conditions, alterations in design or scope, updated laws or regulations, labor strikes, acts of vandalism, severe weather, or other uncontrollable events, commonly referred to as force majeure. These are circumstances beyond the control of those involved in the project.
To strengthen the request, the contractor should be as precise as possible, supplementing the explanation with supporting documents such as written statements, photographs, or drawings. Since this document could later be reviewed by legal professionals or others unfamiliar with the project, including thorough details helps safeguard the contractor’s position.
4. Revised Timeline
The change order form should clearly outline the updated schedule resulting from the modification. The contractor must specify the additional time required to complete the change and provide the revised completion date.
In certain situations, the project owner may request a comprehensive breakdown of how the change affects the project's critical path. If the adjustment does not alter the critical path, the contractor is generally not granted extra time or an extension. To ensure transparency, it's essential to present a side-by-side comparison of the original and updated schedules, highlighting any shifts in the timeline.
5. Associated Costs
Make sure to include any cost changes, positive or negative, as well as profits, overhead, tax insurance, and so forth. The change order form should maintain the same structure as the original contract.
For unit price agreements, include a detailed itemized breakdown of all expenses, specifying labor, materials, and other relevant costs.
6. Revised contact amount
Ensure that all change orders reflect the most up-to-date contract value. The change order form should clearly outline:
- The initial contract amount
- The total value of previously approved change orders, if applicable
- The cost of the current change order
- The adjusted contract total, accounting for all modifications, whether increases or decreases
Construction change directive vs change order
A Change Order is a mutually agreed-upon modification to the contract, adjusting scope, cost, or timeline. A Construction Change Directive (CCD), however, allows work to proceed without prior agreement on cost or time adjustments, typically used when urgent changes are needed, with final terms negotiated later.
Construction change order example
A construction change order might look something like this:
Project: Commercial Office Building Renovation
Location of work: (input location) Requesting party: (input party) Client: (input client)
Original Contract Value: $1,000,000
Change Order Number: CO-005
Request Date: February 6, 2025
Description of Change:
The project owner requests an upgrade to the flooring material from standard vinyl tiles to high-end hardwood throughout the main lobby and common areas.
Reason for Change:
The owner decided on a higher-quality finish to enhance the building’s aesthetics and long-term durability.
Impact on Cost & Schedule:
- Additional cost for materials and labor: $50,000
- Time extension required: 7 days
- New contract value: $1,050,000
Support and justification documents: This is where you will provide a list of any documents that support the need for requested changes, as well as justify any additional cost or schedule extension.
Approval Signatures:
- Contractor: [Signature]
- Owner: [Signature]
- Architect: [Signature]
Common reasons for construction change orders
Common reasons for construction change orders include design modifications, unforeseen site conditions, material shortages, regulatory updates, client requests, weather delays, scope changes, and coordination issues. These changes can impact project cost, timeline, and overall execution, requiring formal approval to proceed.
How does ALICE help with construction change orders?
ALICE Technologies streamlines the change order process by using AI-driven construction scheduling. It helps contractors quickly assess the impact of changes on cost and timeline, optimizing project plans in real-time. By automating scenario analysis, Alice reduces delays, improves efficiency, and ensures data-driven decision-making for seamless project adjustments.
How does construction change order software work?
Construction change order software automates the process by tracking modifications, generating detailed documentation, and ensuring approvals. It integrates with project management tools, calculates cost and schedule impacts, and maintains compliance. Real-time collaboration and digital records optimize communication, reducing errors and delays while improving project efficiency and accountability.
What are the benefits of construction change order software?
Construction change order management software offers a smoother project, every time, thanks to heightened project management. Some of the many benefits include:
- Automating documentation, approvals, and cost tracking
- Reducing errors
- Preventing disputes
- Improving communication
- Ensuring compliance
- Maintaining real-time updates
- Minimizing delays
- Keeping budgets on track
Does ALICE offer construction change order management software?
Yes! ALICE provides change order management software designed to fit the needs of every business and project - small or big. Learn more about how ALICE can help boost project productivity, while building a sharper bottom line for your business.