Change order
In construction it is normal for the scope to change during execution: the owner asks for something different, unforeseen field conditions appear, a design error is corrected, or a material is substituted. The change order is the instrument that records that adjustment in an orderly way, describing what is being modified, why, how much it adds or subtracts in cost, and how many days it adds to or trims from the schedule. Without it, extra work gets done on a verbal basis and ends up in payment disputes.
A change order can be additive — it increases quantities or adds new line items, raising the amount — or deductive — it removes or reduces work, lowering the amount. When the line item already exists in the schedule of values, it is priced with its agreed unit price; when it is new work, an extra unit price is developed that must be reconciled and approved. Beyond cost, there is almost always a time impact: additional work can extend the critical path and justify a time extension.
The sum of all approved change orders adjusts the contracted budget: the current contract value is the original contract plus additive change orders minus deductive change orders. That is why it pays to number them, have both parties sign them, and formalize them in a contract amendment before executing them. On public works this is especially strict: amendments to price or duration are subject to limits and requirements set by public procurement law and its regulations.
Formula
Example
A construction contract is worth $5,000,000. During execution the owner asks to reinforce a slab (an additive of $180,000 and 5 extra days) and decides to remove a garden wall (a deductive of $60,000). With both change orders approved, the current contract value becomes 5,000,000 + 180,000 − 60,000 = $5,120,000, and the schedule is extended by 5 days.
| Change | Amount | Time | Status |
|---|---|---|---|
| Bathroom finish change | +$84,000 | +3 days | Approved by client |
| Additional rooftop wall | +$42,000 | +2 days | Sent to client |
| Outlet relocation | +$20,000 | +1 day | Under review |
Frequently asked questions
What is a change order in a construction project?
It is the document that formalizes a modification to the scope, price, or schedule of a project already under contract. It can add work (additive) or remove it (deductive), and it records the impact on cost and time so the work is paid for and scheduled correctly.
What is the difference between an additive and a deductive change order?
An additive change order increases the scope — it adds line items or quantities — and raises the contract amount. A deductive change order reduces or removes work and lowers the amount. The current project value is the original contract plus additive change orders minus deductive ones.
How is a change order formalized?
You describe the change, price it (with unit prices from the schedule of values or with reconciled extra prices), define its impact on the schedule, and have both parties sign it, normally through a contract amendment, before the work is executed. On public works it must also comply with the limits and requirements of public procurement law.