Change Orders: What They Are & Why They Can Be So Costly
- Lou DeAngelis
- Jul 23
- 4 min read
There is a popular meme in the construction industry showing a small dinghy tied behind a massive yacht. The dinghy is named "Original Contract" and the yacht is named "Change Order." The implication of the photo is that while General Contractors (GCs) earn money from the original contract, the real opportunity for profit comes from change orders.
Although this meme paints honest contractors in an unfair light, it highlights an important truth:
Change orders can become one of the largest sources of unplanned costs on any construction project, regardless of how reputable or experienced your contractor may be.
Understanding how to minimize the occurrence of change orders before your project begins, as well as knowing how to mitigate their impact when they do happen, will not only help keep your budget and schedule intact, but will also spare you, the Owner, from unnecessary stress.
What is a Change Order?
A change order is a written modification to the original construction contract that documents changes to the scope of work, contract price, and/or project schedule. The most common triggers that result in change orders are:
Added Scope: The Owner adds work to the GC’s previously agreed-upon contract.
Example: A GC is building an addition. The property Owner asks the GC to also demolish a load-bearing wall in the existing house and replace it with a structural beam.
Inspection Results/Code Regulations: Building officials identify elements in the construction documents that do not comply with applicable building codes, requiring corrections before construction can proceed.
Example: An Electrical Inspector determines that some of the conventional electrical outlets shown on the Architect’s drawings need to be changed to GFCI outlets.
Errors and/or Omissions in Plans: Architects or Engineers have made errors or omissions in their drawings that need to be rectified.
Example: The handrail design in an Architect’s plans is too low and need to be raised to meet building code.
Unforeseen Site Conditions: Conditions are encountered during construction that were not apparent during contract bidding or discovered during a pre-construction site investigation.
Example: While excavating for a new home, the GC discovers unsuitable soils that cannot support the proposed foundation, requiring deeper foundations and additional structural engineering.
Force Majeure Events: Severe weather or other events beyond anyone’s control result in delays that extend the GC’s schedule.
Example: Heavy snowfall prevents subcontractors from reaching a job site, delays material deliveries, and requires snow removal before work can resume.
Why Are Change Orders Expensive?
What many Owners do not realize about change orders is that work added to a contract via change order is almost always more expensive than it would be if it were in the original contract—but why?
Every construction project requires extensive planning on behalf of all parties involved—the Owner, Architect, Engineers, and especially the GC. From ordering materials to sequencing project phases to arranging subcontractor work, the GC must carefully plan each aspect of the project so that it can be completed as efficiently and cost-effectively as possible. When additional work is added to a contract after the project is already underway, the GC’s careful planning is disrupted:
Work may need to be completed out of sequence.
Subcontractors and other professionals who have already completed their work may be required to return to the job site.
Additional materials must be purchased in smaller quantities rather than as part of a bulk order, resulting in higher unit costs.
The GC must devote additional time to project scheduling, coordination, and administration.
The GC is less able to price the work competitively, because subcontractors have already been awarded work under the original contract.
Example: A contractor is framing a new house. During the course of construction, the Owner decides to add a window to a previously blank wall. The GC now has to:
While the actual window may cost $1,000, the resulting disruption may now cost several thousand dollars. |
How to Manage Change Orders
DeAngelis Group manages change orders at every stage of the project, minimizing their occurrence before construction begins and effectively managing those that cannot be avoided during construction.
Proactive Change Order Prevention
DeAngelis Group understands that the most effective way to manage change orders is to prevent them from occurring in the first place. Before construction begins, we complete the following assessments to minimize the likelihood of change orders derailing your project:
Review design and construction documents to identify any ambiguities and/or errors.
Verify all planned project scope is reflected in the construction documents to reduce the risk that important items are overlooked during the bidding process.
Review contractor bids to confirm that all required project scope is included in each bid, helping identify scope that may have been omitted through misinterpretation of the construction documents, inadvertent oversight, or, in some cases, intentional exclusion to reduce the initial bid price.
Change Order Management During Construction
Even with thorough planning, some change orders are unavoidable. When they arise, DeAngelis Group serves as the Owner's advocate by:
Evaluating each proposed change order for legitimacy, completeness, accuracy, and cost reasonableness.
Advising the Owner on the most appropriate course of action when change orders arise and, when necessary, negotiating directly with the GC to resolve contested items.
Managing change orders is only one of DeAngelis Group's many responsibilities as an OPM, but it is one that can have a substantial impact on a project's budget, schedule, and overall success. Through proactive planning, diligent oversight, and experienced representation, we help Owners reduce unnecessary costs, minimize disputes, and keep their projects moving forward with confidence.
