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Change order template: price it, get it signed, then do the work

By the BizDocs Studio team · Updated

Key points
  • •A change order is a signed amendment to the contract that records a change in scope, price and schedule before the extra work is done.
  • •Every change order needs: what changed, why, the price change, the schedule impact, the new contract total and both signatures.
  • •Price changes with the same overhead and profit as the original job; changes are not a discount opportunity.
  • •Never start changed work on a verbal OK. Unsigned extras are the most common source of unpaid invoices.

A change order is the cheapest insurance a contractor can buy. It takes five minutes, and it turns “I thought that was included” into a signed record of what the client asked for and agreed to pay.

Here is when to use one, what it must contain, how to price it, and wording you can copy.

When you need a change order

  • The client adds, removes or upgrades work
  • Hidden conditions appear (rot, mold, out-of-code wiring)
  • An inspector or code change requires extra work
  • Material substitutions change the price
  • The schedule changes for reasons outside your control

What a change order must include

  1. Project name, original contract date and change order number
  2. Description of the change in plain language
  3. Reason: client request, hidden condition, code requirement
  4. Price change: added or credited amount, with tax treatment
  5. Schedule impact in days
  6. Revised contract total: original + approved changes to date + this change
  7. Signatures and date from the client and the contractor

Pricing a change order

Price the change exactly like the original estimate: direct costs at the loaded labor rate, then your overhead and profit percentages. Add a line for the disruption if the change interrupts work already scheduled (remobilization, returning subs). Credits for removed work should be at cost plus overhead only; the profit on the original scope was part of the deal.

Example

Client upgrades shower valve to thermostatic and adds a niche.

Materials $420 · labor 5 hrs × $38.70 = $194 · direct $614

Overhead 15% = $92 · profit 12% = $85 · change order total $791

Schedule impact: +1 day. Revised contract total: $17,102 + $791 = $17,893.

Template · Excel & Google Sheets
Contractor Estimate & Bid Template

From line items to a signed proposal in one file.

See the template · $24

Sample wording

Hidden condition clause

During demolition we found water-damaged subfloor under the existing tub (photos attached). Replacing approximately 24 sq ft of subfloor and two joist sisters is required before tile can be installed. This change adds $1,140 and 1 working day. Work on this area will resume when this change order is signed.

Keep a running log

Number change orders in sequence and keep a running total of approved changes. The final invoice should equal the original contract plus every signed change order, with no surprises. Our estimate template keeps that total for you and carries it into the invoice.

Put the change order process in the original contract

The easiest change order is the one the client already agreed to in principle. Add a short clause to every proposal: changes are priced at the same overhead and profit as the original work, approved in writing before the work starts, and may affect the schedule. When the first change comes, you point to the clause instead of negotiating the method.

Contract clause

Any change to the scope of work, including changes required by hidden conditions or code, will be documented in a written change order stating the price and schedule impact. Work on the change begins after the change order is signed. Changes are priced at our standard rates and markup.

Change orders for hidden conditions

When you open a wall and find a problem, stop that area of work, photograph it, explain the options to the client and write the change order on the spot if you can. Clients accept hidden-condition costs far better when they see the problem the same day than when it appears as a line on the final invoice.

Allowance overages are change orders too

If the proposal included a tile allowance of $5.00 per square foot and the client chooses $9.00 tile, the difference (plus your markup on the overage, if your contract says so) belongs on a change order before you order the material.

Change order mistakes

  • Doing the work first and pricing it later
  • Pricing changes at cost to keep the client happy
  • Forgetting the schedule impact
  • Not updating the revised contract total
  • Letting a subcontractor agree to extras directly with the client

Frequently asked questions

Does a change order need to be signed?

Yes. A signed change order is your evidence that the client approved the extra cost. Many home-improvement statutes require changes to be in writing.

Can I charge for a change order?

You charge for the changed work at your normal rates with overhead and profit. Some contractors add a small administrative fee for each change order; if you do, say so in the original contract.

What if the client refuses to sign?

Do not do the extra work. Explain the options in writing: proceed with the change at the stated price, proceed without it, or pause.

This guide is general information for US small businesses, not legal advice. Rules vary by state and city; have a local attorney review contracts and notices before use.

Template · Excel & Google Sheets
Contractor Estimate & Bid Template

From line items to a signed proposal in one file.

See the template · $24

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