5 Must-Haves on Construction Change Orders

A construction project rarely goes according to plan. There are always changes that impact work. To be ready to adapt and fulfill any surprising change, the construction industry uses something called Change Orders. These orders define work that needs to be done in addition to the original agreement, which can include re-doing a job. Hence, for contractors, as well as stakeholders, it is important to understand how to efficiently request (and handle) a construction change order for a project. 

What’s a Construction Change Order?

Change orders are legal documents that amend the contract between the client and the construction company. They contain (and detail) necessary changes required in the scope of work, cost, or schedule for an ongoing project.

Something important to note is that construction change orders are mutual agreements. A client cannot demand alterations after a contract has been signed. In most cases, contracts outline how to process and manage change orders.

When a change order request is approved, it becomes legally binding for the contractor. This often adds to the agreed-upon price, delivery timelines, and payment deadlines.

When Are Change Orders Necessary?

Every construction project goes through changes. It is nearly impossible for a contractor to hand over a project without making amendments to the original plans because the project scope and site conditions often turn out differently when work begins.

The client, for example, can ask the contractor to build another wall or change the original layout, which means more work. In another example, the contractor might realize that the project will not be completed within the agreed-upon price due to site conditions or market fluctuations.

Below are a few common reasons why change orders become necessary:

• When unrealistic budgets are in place.
• When unrealistic timelines are in place.
• When there are gaps in the original contract.
• When the scope of work is ill-defined.
• When conditions affect safety.
• When unpredicted conditions and issues arise.
• When the owner wants to expedite the process.

While necessary, note that change orders can cause problems for contractors if the best business practices are not followed when creating, sending, and recording all change orders.

Things to Include in a Construction Change Order

A construction change order must capture every single detail about the change in work. While change orders can differ from project to project, as well as company to company, they should all have the following details.

1. Get the Change Order in Writing Before the Work Is Done

The most important element to have on a construction change order is to have it in writing. While some change orders are not required to be in writing and often are done verbally to save time, it is good business practice to always get written verification before proceeding. 

Verbal change orders cause problems for both parties when trying to get paid or in the face of legal disputes. On the other hand, written change orders prove that any work done (or not done) was requested and approved by both parties. This entitles the contractor to the agreed-upon compensation and frees them of any legal obligation. 

2. Be Specific

If both parties agree that a change order is necessary, make sure that the additional work or change in the scope of the work is written out clearly and in detail. The change order should include revised costs, schedule, the scope of work, or any other change being implemented. When done, the document should be read (and signed) by both parties. 

3. Use Standardized Change Order Templates

Something often ignored (or taken lightly) is change order templates. These save contractors time and money by not forcing them to create new documents every time a project starts. Having a template that can be customized to fit any business or project need ensures long-term consistency no matter who is issuing the change order.

4. Include Photos

When contractors come across an issue that needs immediate action, they should include a photo with the change order request to get the owner to understand the urgency of the situation. Photographs are a powerful tool that allows one party to better explain the situation to another party who has not experienced the issue first-hand.

5. Go Digital

Digital documents are much easier to create, manage, and store than paper. With the capabilities of construction technology, digital change orders can easily be created, sent back and forth, electronically signed, automatically date/time stamped, and permanently stored in a centralized database. This automation process saves both parties time and money.

Construction Change Order Types

Similar to how there are different elements to write up in a change order, there are different forms a change order can take. The type of change order required for a construction project depends on the situation at hand. Below are some common types of change orders in modern-day construction.

Commitment Change Order
Similar to standard change orders, the only major difference is that Commitment Change Orders are between general contractors and their subcontractors. The project owner (or client) is not involved. For example, a contractor may issue a commitment change order to change materials, reduce labor, or assign additional work. 

Time and Material Change Order
Time and Material Change Orders are used when the cost of proposed changes cannot be estimated. This can be because the scope of work is unknown or it is difficult to estimate how long it will take to finish the job. In such conditions, contractors agree to track the time and cost spent working on completing the added work. 

Lump-Sum Change Order
Also referred to as a stipulated-sum contract, Lump-Sum Change Orders are mostly used in commercial or large-scale construction where the scope of work can be assigned a fixed price. This means the contractor must carry out all the necessary work at a pre-specified rate, which often increases the overall expenses of the project.

Zero Cost Change Order
Unlike the other types, Zero Cost Change Orders do not amend the contracted price. Its purpose is to only change the work scope. For example, changing the color of a room to a different shade.

Owner-Initiated Change Order
During construction, a project owner can consider making changes to the blueprints. For example, a client may want to merge two rooms to create a hallway or break down a wall to create a new window. Such Owner-Initiated Change Orders are fairly common in construction.

Contractor-Initiated Change Order
The opposite of Owner-Initiated Change Orders, site and market conditions can sometimes give new information that warrants important changes in construction. For example, a volatile market may mean a project cannot be completed within the set price. In such cases, contractors will want to initiate a change order to either set a new price or make changes to bring down costs. In another example, a contractor may recommend changing materials to improve the quality of work.

Field Change Order
This construction change order is used to outline (and budget) additional work that may or may not happen. The extra work is already detailed in the contract, but contractors are only obliged to perform it when (if) needed. Since the work is already defined, there is no need to waste time by getting a change order request approved.

Difference Between Field Order and Change Order

The main difference between a Field Order and a Change Order is how each request is initiated. Change Orders, as already defined in the article above, are agreements made during construction to change the work or requirements outlined in the original contract. 

Field Orders, though, come straight from the project engineer or architect to make on-site changes or adjustments without altering the contract. This allows for on-spot decisions without wasting time requesting and getting a standard Change Order approved. 

Often used in large-scale and state-backed projects, contractors are given contracts that already define additional work and their entitlements. If that work is needed, a Field Order will be executed and then later billed. For example, changing the location of electrical outlets, replacing or extending a wall, or hiring additional labor to speed up construction. 

Manage Your Change Orders With eSUB

The traditional change order process comes with several challenges. Handling physical paperwork wastes time, effort, and money, often leading to ineffective communication. A change order going back and forth due to poor management affects the construction company’s long-term relationship with clients. The one thing you do not want is delaying your approvals because that eventually affects the delivery timelines. 

The cloud-based eSUB construction management software removes all those challenges to streamline your change order process. The digital platform makes it easy to create and manage change orders, while remote (and mobile) connectivity ensures seamless communication between all stakeholders from any location. 

In addition, eSUB can provide tailored solutions for commercial contractors to simplify as well as speed up their construction change orders with ease.