Change orders are written orders to make changes to the scope of work outlined in an original project contract. Change orders describe the new work that needs to be done (or omitted), the impact on budget, and the revised schedule for completion. Change orders are common in construction projects, especially larger ones - in fact, there may be over 50 of these orders issued in a single project.
There are many factors that contribute to the need for a change order. In general, they’re used when either the client or the contractor decide changes must be made in order to complete the project, or when the definition of what constitutes a finished project changes.
Change orders, also known as “modification orders,” are governed by contract law. These orders must meet the requirements of the original contract, and the contract must refer back to them. Typically, all parties who signed the contract (the owner, contractor, and subcontractors) must agree on change orders. However, in cases where the changes are in line with the contractor’s changes clause, the owner can simply enforce them.
In this article, we’ll take a closer look at the causes, common strategies, and different types of change orders. Then, we’ll offer several free, downloadable templates that you can use to issue a change order for your next construction or engineering project.
Common Reasons for Issuing Change Orders
As mentioned, there are a variety of circumstances that may necessitate a change order. A few of these include:
- Inaccurate estimates of work or project costs
- Poor planning of the original contract
- An inefficient team that is unable to complete deliverables on time/budget
- Design changes, such as additional features, that are requested after work is underway
- Poorly defined project scope that requires the contractor to add work to meet customer needs
- Weather conditions that cause delays or damage
- Errors or omissions in specs or drawings (e.g., lack of detail, inaccurate representation of environment, or different products called for in specs versus drawings)
- Unexpected site conditions (e.g., issues with the soil require extra work or different equipment)
- Material substitutions (due to unavailability or late shipments) that lead to cost overruns or shortages
- Misinterpretations between the general contractor and subcontractor regarding what work falls within project scope
- Contract waivers that eliminate change orders and lead to disputes between owner, contractor, and/or subcontractors
- Owner accelerating the project schedule
- Contractors/subcontractors in the field taking incorrect verbal instruction from the supervisor/general contractor
- Subcontractors purposefully bidding at a lower price, counting on change orders to provide profit once work is underway
- Equipment failure, which causes delays or stoppages
Why Change Order Forms Are Important
Issuing change order forms properly is crucial, as failure to do so can lead to legal disputes between the owner, contractor, and/or subcontractors. Despite the fact that a correctly issued change order can do more to protect parties from disputes than any other type of documentation, these forms are underused in construction projects.
Change order management processes, which outline how to issue and implement change orders, should be included in the original contract. You should plan these processes with the contractor’s input — especially provisions covering unforeseen conditions or problems, since these can protect contractors from being held responsible for unexpected costs.
It’s best to issue change orders in the early stages of a construction project, since changes during later stages can have a more serious or negative impact on project completion (staying within schedule and on budget). Change orders are crucial for budgeting and forecasting final construction project costs - they may either increase, decrease, or have no effect on the original contract price.
Identifying and Issuing Change Orders Forms
When identifying the changes that need to be made and drafting the corresponding forms, refer back to the original contract and any other change orders they will impact. Changes may be identified from a contractor’s request for information (RFI), from the owner, contractor, architect, or engineer’s meeting notes, from discovering an error or omission in the contract or drawings, or from someone on site.
When creating a change order form, each party must agree to do something they’re not already contractually obligated to do, and aren’t legally prevented from doing. Each side should get something out of the change: For example, if the subcontractor has to raise prices, the owner must get more work done, or work faster. Any party to the contract can propose a change and in general, all parties must agree. If there is a third-party guarantor for one of the parties’ performance, they must sign off on the changes, as well.
There are various documents that the owner, contractor(s), architect, or engineer may create, issue, and receive in the course of change order administration. The nature of field work on construction projects can make recording a challenge, but changes must always be put in writing. Necessary documents typically include:
- The original contract
- Revised drawings, plans, and/or specs
- Meeting minutes
- Correspondence between contract parties
- Construction daily reports
Whenever possible, refer to or attach new design documents, drawings, and/or specs to the change order to clearly illustrate the changes.
What Should a Construction Change Order Form Include?
When creating a change order form, a you need to include a variety of information depending on the project specifications. At a minimum, all forms should identify:
- The project name and address
- The owner’s name
- The name and phone number of the person requesting the change
- A complete description of the planned work
- The cost of labor and necessary materials
- The revised project completion date
- Signatures of all necessary representatives
- Signatures of homeowners (in residential projects) or other third parties
Types of Construction Change Order Forms
There are two main types of change orders:
- Fixed Sum Change Order: This is used when the contractor and/or subcontractors agree to provide specific services or work for a flat fee.
- Time and Materials (T&M) Change Order: The owner agrees to pay the contractor and/or subcontractors based on the time they spend on the project, and the materials they use to complete the work (including the contractor’s markup) — regardless of how much time it requires.
There are also instances when work begins under a T&M agreement but is later re-negotiated as a fixed sum agreement, based on the amount of work the parties discover that needs to be done.
Change Order Form Pricing
Not all change orders result in price changes; some just add clarification or change specifications for the construction process. However, there are many instances where costs are impacted.
Sometimes change orders result from contractors or subcontractors underbidding, underestimating costs, or misunderstanding the project requirements. In some cases, the owner may need to train project estimators in proper change order estimating. There are also instances where crews doing repetitive work get faster over time. In these cases, you may need to adjust costs to account for increased productivity. Other times, materials included in the original estimate are substituted with cheaper or more expensive materials.
When reviewing change order pricing, make sure that the quantities and costs of materials, equipment, and labor only apply to the requested changes, and not to the project as a whole. Change orders should include a record of the estimator’s review and approval of the price. Finally, submit, review, and approve changes affecting pricing in a timely fashion.
Best Practices for Construction Change Orders
While every project will vary, here are some general best practices you can follow when creating and issuing construction change orders:
- Use construction project management software, takeoff and estimating software, or Building Information Modeling (BIM) tools to automate and streamline the change order creation and management process.
- Organize stakeholder meetings at the beginning, end, and throughout the life of the project with the owner/client, general contractor, and subcontractors to make sure everyone is up to speed on the scheduled work.
- Hold peer and/or third-party reviews of drawings, specs, and other important documentation to make sure nothing is missing or incorrect.
- Create and use checklists of the material you need to include in drawings, specs, and contracts.
- Attend workshops and training on document quality and development, so everyone knows what processes to follow and information to include.
- Make sure all software and systems are updated regularly — especially those used to create and manage change orders and contracts.
- Communicate to all stakeholders to request changes in writing before any physical work is done.
- Be as specific as possible when requesting new work. Include drawings/specs, describe changes in detail, provide updated cost estimates and payment terms, and include new deadlines for work and project completion.
- Don’t accept open-ended change orders with no set deadline or fixed sum limit.
- Make sure subcontractors provide clear accounting of hourly rates and material costs and quantities for any extra work. If possible, have them provide photos and video of their work along the way.
Drivers of Engineering Change Orders
The engineer working on a construction project is responsible for requesting engineering change orders. They may issue these change orders for a number of reasons, including:
- Adjustments for Costs of Fuel and Materials: This is a common cause of change orders, but it is hard to control for since market prices determine the costs.
- Errors and Omissions in Contract: This can have serious negative implications for the project - make sure contracts are created and verified by parties with experience.
- Problems With Utilities: Issues with utility design and planning, or conflicts with utility facilities, can cause delays or require adjusting plans.
- Geotechnical Problems: Geotechnical engineering involves investigating ground conditions to determine risks and design adequate foundations. Problems with this planning or with unforeseen soil and rock conditions can cause delays, work stoppages, or redesigns.
- Owner/Client Additions: When the owner or client adds things after construction is already underway, engineers may need to redesign plans and specs. Do your best to work all the details out ahead of time so there are no surprises.
- Environmental Problems: Any time changes are requested, it’s imperative to consider the potential impact on the environment. If proposed changes will interfere with environmental regulations or other protective measures, further delays or redesigns may be necessary.
Change Order Log Template
If you’re creating a change order for the first time, or just need to make your existing forms more effective, use our free change order templates to get started. Below you’ll find downloadable forms for a variety of project types and purposes.
When you need to track all change order requests over the construction project life cycle, use this change order log. Describe each change and the timeline of the request, the cost to date, the added time to complete the request, and the final total.
Change Order Request Summary Template
Use this form to describe the requested changes, and to break down the impact of changes on additive and deductive costs in terms of labor, materials, and equipment. Add up the general contractor’s costs, the subcontractor’s costs, and the markup for each, and get final approval before proceeding with changes.
Contract Change Orders Template
Use this all-purpose change order template to request work for any type of project that goes beyond the scope of the original contract. Simply fill in the reason for the change order, details about the location, quantities, and specifications, and the previous and updated prices and times.
Engineering Change Order Template
For changes that will have an engineering impact, use this engineer change order template. It allows you to calculate construction costs, design allocations, and sales tax, detail preliminary and construction engineering, and summarize assumptions and risks. You can also attach a drawing or spec of the change, and get the engineer of record’s name and signature.
Download Engineering Change Order Template
Extra Work Order Template
Use this form to request changes from a contractor to the owner, from the general contractor to a subcontractor, or from a subcontractor to the general contractor. It allows the requestor to describe the scope of the extra work, the required quantities of labor and materials, what payments will be made (and for how much), the impact on the schedule, and who has approved the work.
Download Extra Work Order Template
Facility Planning Change Order Template
Facility planning and construction project managers can use this form to request or approve construction changes. It offers space for the requestor to explain why the change is necessary ( and why it’s not part of the original contract), who is requesting it, how it will be funded, and the impact on the project.
Download Facility Planning Change Order Template
Project Change Order Request Form
Use this change order request form for any type of construction or engineering project. In addition to basic requestor and change information, it captures data on changes for specific project categories including scope, schedule, cost, quality, risk management, communications, priority level, and closeout. You can also enter any recommendations for proposed actions.
Download Project Change Order Request Form
Scope of Work Change Order
When requesting a change to your construction project, use this form to itemize changes that impact the scope of work in the original contract. Specify each work order item and whether it’s an addition, deletion, or change in cost. Note the original cost from the contract and the final cost after changes are implemented. You can also describe what has been removed and modified from the original scope of work, and the impact on the schedule and timeline.
Download Scope of Work Change Order
Simple Change Order Template
Use this basic form to quickly and accurately request construction project changes. Simply enter labor costs and hours, the total of owned and rented equipment, trucking information, the cost and amount of materials, and the subcontractor’s total, and then calculate profit.
Download Simple Change Order Template
Subcontractor Change Order Request Form
Subcontractors can use this template to request changes from the owner or general contractor on a construction project. Enter equipment, materials, and labor totals, add the subcontractor’s direct cost and markup, and determine the total direct cost and markup - you’ll be ready to start work in no time.
Download Subcontractor Change Order Request Form
Easily Manage Change Orders With Smartsheet
Smartsheet is the collaborative work management solution that many of the world’s largest construction and engineering companies rely on to stay productive, communicate among far-flung teams, and document every step of every project.
Smartsheet can improve organization, planning, and document management in your next project. With webforms to intake change requests, built-in Gantt charts to manage timelines, simple file attachments, and automatic notifications, Smartsheet helps businesses focus on what matters most.
- Improve work and project documentation by capturing change requests in real-time.
- Reduce testing and inspection errors with collaborative solutions.
- Increase documentation accuracy during inspections and maintain comprehensive logs.
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