What is a change order and how do you manage one?

What a change order holds

• A clear description of the changed work.
• The reason for the change and who asked for it.
• The price change, with the build-up behind it.
• The time change to the completion date.
• The contract clause that allows the change.
• Signatures from both parties.

Checklist for each change order

• Raise the change in writing on the day it appears.
• Price it before the work starts, where you can.
• Send it to the person with authority to approve it.
• Wait for the signed order or a written instruction.
• Enter it in the change register with its status and date.
• Read the notice time limit in the contract on day one.

Do not start work on a verbal go-ahead alone. If the price is disputed later, the signed order shows what was agreed.

Each state and territory also has its own security of payment law that sets time limits for payment claims. For example, Queensland uses the Building Industry Fairness (Security of Payment) Act 2017 (BIF Act). A payment claim is usually made within 6 months of the work, or the contract time if that is shorter.

A worked example

Say a fit-out job has a client who asks for six extra power points in a meeting room. The electrician says it is half a day of work.

The site manager writes the change order that afternoon: the six points, who asked for them, a price for labour and parts, and half a day on the programme. The client signs it the next morning. It goes into the register as approved, and the electrician starts.

At month end the change goes into the payment claim with the signed order attached. Nobody has to remember who asked for what. If the client had said no, the refusal and its date would go in the register instead.

Related answers

• How do we protect our margin when a customer keeps changing the order?
• How do we know a change affects our delivery date?
• How do I record every variation as it happens?
• How do I stop missing notice deadlines?