How to Get Paid for Change Orders

Most contractors do not lose money on change orders because they price them badly. They lose it because the work was finished before anyone priced it at all.

The pattern is familiar. The owner asks the foreman for "one small thing" on a walkthrough. The crew does it because saying no feels like bad service. Three weeks later the office finds out, sends a change order, and the owner pushes back: nobody agreed to a price, and the work is already done. At that point you are negotiating from the weakest position you will ever have.

Price the change before the work starts

The single most valuable rule is also the simplest: no extra work begins without a written, priced, and approved change.

That does not mean every change needs a formal document and a week of back-and-forth. It means three things are written down and agreed before the crew picks up a tool:

• What is being added or changed
• What it costs, or how the cost will be calculated
• Who approved it, and when

For small changes, a text or email that the owner replies to with "approved" is far better than nothing. For larger ones, use a one-page change-order form your field leads carry with them.

Give the field a script

Foremen do extra work because they do not have a comfortable way to say "not yet." Give them one.

"Happy to do that. Let me get it priced so it's on paper, and we'll get it scheduled."

That sentence keeps the relationship intact and moves the decision to the person who prices work. The foreman's job is to notice the change and report it the same day, not to approve it.

When the price is not known yet

Sometimes the work has to happen before anyone can price it: hidden conditions, an emergency repair, a safety issue. In those cases, agree on the method instead of the number:

• Time and materials at stated labor rates and a stated markup on materials
• A not-to-exceed amount that requires a new approval if it will be passed
• Daily tickets signed by the owner's representative while the work is underway

Signed daily tickets are the difference between a documented claim and an argument about memory.

Track every change in one log

Keep a single change-order log per job: number, description, date requested, price, status, and date approved. Review it in the same meeting where you review job costs.

The log does two jobs. It keeps pending changes from being forgotten at closeout, and it shows patterns: a customer who always asks for extras, an estimator whose scopes leave gaps, a project type where changes are routine and should be carried in the bid.

Bill approved changes right away

An approved change that sits until final billing is cash you have already spent and not yet collected. Add approved changes to the next pay application. Waiting for "a few more" to bundle them only stretches your cash cycle and invites disputes about work that is now months old.

Read your contract's change clause

Many contracts set a notice period and a required format for changes, and some say that work done without written authorization is not compensable. Know what yours says before the job starts, and make your field process match it. If a contract term is unclear or unusual, that is a question for your attorney before you sign, not after the dispute.

The payoff

Change orders are some of the highest-margin work a contractor does, because mobilization and overhead are already covered by the base contract. Losing them is not a small leak. A disciplined process — price first, document in the field, log every change, bill promptly — turns that work back into profit.