The Ultimate Guide to Change Orders in Construction
By Scotti Ian Ogden
Owner of Ogden Built.
How to Protect Your Profit, Stay on Schedule, and Improve Client Communication.
What Are Change Orders in Construction?
In construction, unexpected changes happen—often. Whether it’s a surprise underground spring during excavation or a client deciding to move a wall, these changes can derail budgets, extend timelines, and eat into your profits.
That’s why having a solid change order process is essential.
A construction change order is a formal document used to record and approve changes in a project’s scope of work, budget, or timeline. It’s the contractor’s key to ensuring they get paid for any additional work or delays—before they happen.
Why You Need a Change Order System
Let’s say you’re building a million-dollar home. Midway through, your team uncovers a natural water spring under the foundation. You’ll need engineers, new drainage, and weeks of extra labor—costing around $100,000.
If you don’t have a signed change order for that work? That expense is coming straight out of your profit. Changes don’t just impact materials and labor. They delay schedules—and time is money.
If your company has $600,000 in annual overhead and a project is delayed one month due to change requests, that’s $60,000 in overhead lost—unless you bill for it through a proper change order.
How Change Orders Help You Stay Profitable
Change orders allow you to:
- Document unexpected site conditions or client-driven changes
- Quote and approve additional costs before work begins
- Update project timelines and prevent disputes
- Maintain transparency and protect client relationships
- Track and bill for both direct and indirect costs
My Mistake: Waiting Until the End to Bill for Changes
In my early years as a builder, we would tell clients about changes but wait until the end to bill them. This caused:
- Payment delays
- Disputes
- Damaged trust
Now, every change order we issue:
- Has a clear cost breakdown
- Includes an updated completion date
- Is signed and invoiced before the work starts
This one change in our process eliminated disputes and ensured we got paid on time.
What to Include in a Change Order Form (Change Order Template)
A professional change order document should include:
Pro Tip: Never begin work on a change until it’s approved and signed.
How to Communicate Change Orders to Trades
Clear communication with your subcontractors is just as important. If a client asks a painter or framer to “just add this room,” the trade must report the request to the project manager. Work outside of scope must go through your change order process. Your trade agreements should include this clause to protect everyone involved.
Charging for Change Order Requests
Time is money—even when pricing a change. That’s why we charge a $250 change order request fee for:
- Site visits
- Estimating costs
- Coordinating trades
- Admin and documentation
If a request involves more than 3 hours of coordination or affects multiple trades, a second request fee applies. Without this, builders spend hours of unpaid time trying to “be helpful”—at the cost of their bottom line.
Creating a Change Order SOP (Standard Operating Procedure)
Want to protect your margins consistently? Create a change order SOP and use a repeatable template.
Here’s what to include:
- A clear workflow for initiating and approving changes
- A change order template used across all projects
- Training for your PMs and team to enforce the process
- A contract clause outlining change order terms for both clients and trades
Take Action: Implement a Change Order System
Step 1: Identify 3 common scenarios where your team encountered scope changes or surprises
Step 2: Draft a sample change order using the structure above
Step 3: Set up your communication strategy and billing process
Make sure everyone—clients, trades, and team—understands that no change = no work until it’s approved and documented.
Change Orders = Business Protection
A proper change order system isn’t red tape—it’s your safety net. It protects your profit, your schedule, and your reputation.
The most successful builders treat change orders as a standard part of business—not an afterthought.
Need help getting started? DM me for a free change order template, or follow us on Instagram @OgdenContracting for more contractor business tools.
Thank You for Reading. If you found this helpful, leave a reply. Your feedback is valuable to us. If you’re interested in reading more blog posts, follow us on instagram or facebook for weekly updates on new newsletters.
