Change orders are inevitable. Disputes about change orders are not—if you manage them properly.
Why change orders happen
- Design changes: The client wants something different
- Unforeseen conditions: You discover rot, structural issues, or code violations
- Spec omissions: The plans did not include something required
- Client additions: "While you are here, can you also..."
Change orders are not the problem. Undocumented, underpriced change orders are.
Documenting changes properly
Every change order needs:
- A written description of what is changing
- The reason for the change
- The cost impact (materials, labor, overhead, profit)
- The schedule impact (days added)
- Written client approval—before work begins
No verbal change orders. "The client said to go ahead" is how contractors lose money. Use construction management software that generates professional change order documents with one click.
Pricing change orders
Price change orders the same way you price your original estimate—materials, labor, overhead, and profit. Do not discount change orders to "keep the client happy." A properly priced change order protects your margin and sets expectations. If the client pushes back, show the detailed breakdown.
Preventing disputes
The best dispute prevention is documentation. When every change is written, priced, and signed before work starts, there is nothing to dispute. For disputes that do arise, having RFI documentation and daily reports provides the evidence you need.
Learn more about protecting profit margins through proper documentation.