Changes during construction are normal. What gets expensive is a change order that’s poorly priced or poorly documented: it holds up payment and sometimes ends up as a claim. Here’s how we build a change order price that holds up, for contractors and owners alike.
1. Define what changed compared to the contract
Before any number: what was in the drawings, specifications and addenda, and what’s new? A change is always measured against the contract scope. Without that baseline, the discussion goes in circles.
2. Measure the quantities
Same as for a bid: quantities added, quantities removed, and work to be undone or redone. A credit for deleted work is also part of a fair price.
3. Direct costs
- labour, at the rate for the sector the project falls under;
- materials, delivery included;
- equipment and rentals;
- subcontractors, each with their own detailed quote.
4. Indirect costs and time
A change can stretch out the project or disrupt the sequence of work. Extended site overhead, lost productivity, cold-weather work: these costs are real, but they have to be backed up with the schedule and site records.
5. Overhead and profit
The contract often sets the percentages that apply. If it doesn’t, they must be reasonable and consistent with the original bid.
6. Document everything
- the change directive or written request;
- photos, daily logs and timesheets;
- quotes from subcontractors and suppliers;
- a clear breakdown: quantities, unit prices, total.
When the parties can’t agree
An independent look often helps break the deadlock: an assessment based on quantities and market prices, with no bias. That’s what we do for lawyers and their clients when a construction file gets complicated, and for project owners who want to validate a change order.
Should a change order be approved before the work is done?
It’s strongly recommended, and often required by the contract. Written approval, even with the price still to be confirmed, prevents a lot of disputes.
Can a change be paid on a time-and-materials basis?
Yes, if the contract allows it. The key then is daily documentation: hours, materials and equipment, signed by both parties.
This article is general in nature and is not legal advice.
