Every company sees change orders slightly differently. Some see them as a time and resource vacuum, while others see them as opportunities to make more money. And the fact that there are many different outlooks on the subject makes truly understanding change orders in construction and the impacts they have a challenge. In this guide, we’ll take a look at these important documents, what they are, and how to manage them.

A change order is a document used to modify the original contract on a construction project. These documents detail changes in the scope of work for the contractor as well as any adjustments to the amount of money the contractor will make on a project. They’re essentially miniature contracts (sometimes with not-so-miniature impacts) that steer the project after the original contract is awarded.

For example, let’s say a contractor won a bid to build an apartment building with eight identical apartments inside. At some point during the project, the project owner realizes that the bathrooms could benefit from half-walls alongside the toilets. The project owner will approach the contractor, they’ll discuss the details, and the contractor (or project owner) will draw up a change order that states the contractor will build half-walls in the bathroom for an agreed-upon price. It’s simply a contract within a contract that denotes a change in plan, materials, or pricing. 

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