Definition
Change order pricing is how you price extra work or scope changes—typically via unit prices from the contract, agreed hourly/daily rates, or a negotiated lump sum. The price should cover your cost (labor, materials, subs, equipment) plus markup and be documented in a signed change order so you get paid.
Why It Matters
Unpriced or poorly priced change orders are a major source of disputes and lost margin. Contract language (e.g., “changes at agreed unit prices or T&M rates”) sets the rules. Contractors must track change order revenue and cost separately and ensure change orders are approved before or as work is done.
Field Example
Contract has drywall at $4.50/SF. Owner adds 300 SF; change order: 300 × $4.50 = $1,350. For work with no unit price, change order might be T&M: 20 hrs × $72/hr + materials at cost + 15% = $1,440 + materials. The change order form is signed; the amount is added to contract value and billed.
Calculation / Formula (if applicable)
If unit price in contract: Change order amount = Quantity × Contract unit price. If T&M: Amount = Hours × Rate + Materials × (1 + Markup) + Subs, etc., per contract. If lump sum: Negotiated amount; should be supported by a quick estimate.
Software Application
Support creating change orders linked to a job with line items (quantity, unit, unit price or rate). Track change order status (pending, approved, rejected). Add approved change order value to contract value for revenue recognition and billing. Report change order revenue and cost vs. original contract.
Tooltip Version
Change order pricing is how you price extra work—usually from contract unit prices or T&M rates—and get it approved in writing so you’re paid for changes.
Related Objects
Related: