Definition
Change order management is the process of documenting, pricing, approving, and executing changes to the original contract scope. It includes written change order forms, pricing (unit price, T&M, or lump sum), owner/architect approval, and updating contract value and schedule. Good process protects both parties and ensures the contractor gets paid for extras.
Why It Matters
Verbal or undocumented changes lead to disputes and unpaid work. A clear process—request, quote, approval, sign-off—creates a paper trail and aligns scope and price. Contractors should never perform extra work without a signed change order (or at least written direction with agreed price).
Field Example
Owner requests an extra bathroom outlet. PM writes a change order: description, 2 hrs labor @ $72, material $45, total $189. Owner signs. Work is performed; $189 is added to contract value and included on the next progress billing. Without the signed change order, the owner might refuse to pay.
Calculation / Formula (if applicable)
No single formula. Change order amount is determined by contract terms (unit prices, T&M rates) or negotiation. Total contract value after changes = Original contract + Sum of approved change orders.
Software Application
Support change order records linked to job: description, pricing (line items or lump sum), status (draft, submitted, approved, rejected). When approved, add amount to job contract value and make it available for billing. Track change order log (number, date, amount, status). Optional: link to RFIs or submittals that triggered the change.
Tooltip Version
Change order management means documenting scope changes in writing, pricing them, getting approval, and updating contract value so you get paid for extras.
Related Objects
Related: