A change order is a formal document that modifies an existing contract, and writing one correctly means including the right details so all parties agree on what’s changing, what it costs, and how it affects the schedule. Whether you’re a contractor, project manager, or owner, a well-written change order protects everyone involved by putting the modification in writing before work begins. Here’s how to put one together from start to finish.
What a Change Order Needs to Include
Every change order should be clear, concise, and explicit. At minimum, your document needs to cover these elements:
- Project identification: The contract number, project name, change order number (sequential, like CO-003), and the sheet number if the document spans multiple pages.
- What is changing: A plain description of the new, added, or removed work. Be specific enough that someone unfamiliar with the project could understand the scope.
- Location and limits: Where on the project site the changed work applies. Reference drawings, floor plans, or station numbers as needed.
- Specification references: Any contract specifications that are being modified, added, or no longer applicable.
- Cost of the change: An itemized breakdown showing how the contract price increases or decreases.
- Schedule impact: Whether the change adds days to the completion date, shortens it, or has no effect.
- Updated contract value: The new total contract amount after the change is applied, so there’s no ambiguity about the running total.
- Supporting documents: Reference any attached drawings, sketches, photos, or correspondence by name and page count (for example, “sheets 1 and 2 of 3”).
- Signature lines: Spaces for both the contractor and the owner (or owner’s representative) to sign and date.
If you’re working from a standard form provided by your organization, trade association, or contract template, these fields are usually built in. If you’re drafting from scratch, treat this list as your checklist.
Describe the Changed Work Clearly
The description is the most important part of the document. Write it so there’s no room for interpretation. Instead of “additional electrical work in the east wing,” specify what’s actually happening: “Install twelve additional 120V duplex receptacles on the second floor of the east wing per revised drawing E-204, dated June 12, 2025.”
If the change involves removing or reducing work, describe that just as precisely. Show the increases and decreases to any affected line items from the original bid or contract. When quantities change, note the percentage change from the original quantity so reviewers can quickly gauge the scale of the modification.
For work that will be paid at an agreed lump sum price, state the price. For work paid on a time-and-materials basis (sometimes called “force account”), describe the work and show the estimated cost. Be explicit about which payment method applies to each piece of the change.
Build the Cost Breakdown
A vague dollar figure invites pushback. Break your pricing into layers so the reviewer can see exactly where the money goes.
Direct Costs
Start with the tangible expenses: labor, materials, equipment, and any directly related expenses. For labor, use the fully loaded rate, which includes not just the hourly wage but also benefits, payroll taxes, safety meetings, supervision, and cleanup time. For materials, account for the actual purchase price at the time of the change, since material costs may differ from what was quoted months earlier. Include delivery charges separately if they apply. For equipment, present rental rates on a daily or monthly basis as appropriate.
Overhead
Overhead covers the business costs that keep the company running but can’t be tied to a single project: office rent, administrative salaries, insurance, legal fees, software, vehicles, and similar expenses. To express overhead as a markup on direct costs, divide your overhead percentage by your direct cost percentage. For example, if overhead represents 19% of your total costs and direct costs represent 81%, the correct markup on direct costs is 0.19 divided by 0.81, which equals roughly 23.5%. Your contract may specify an allowable overhead percentage, so check that before calculating.
Profit
Profit is the margin above all costs. The same conversion applies: if you’re targeting 5% profit, divide 0.05 by 0.95 (the remaining cost percentage) to get a markup of about 5.3% on top of costs plus overhead. Again, many contracts cap the allowable profit markup, so verify your contract terms.
Consequential Costs
Don’t overlook the ripple effects. If the change forces other trades to remobilize, delays other scheduled work, or requires re-sequencing the project, those costs belong in the change order. The time spent analyzing, estimating, and managing the change itself is also a legitimate cost. Additional drawings, revised construction management plans, or updated cost analyses tied to the change should be captured here as well.
Address the Schedule Impact
Every change order should state whether the project completion date is affected. If the change adds time, specify how many calendar or working days and explain why. If it doesn’t affect the schedule, say so explicitly. Leaving this section blank or vague creates disputes later when one party claims the change entitled them to more time.
When the schedule impact isn’t fully known at the time of writing, you can defer the time adjustment by noting that a time extension will be evaluated and documented separately. Just make sure the deferral language is clear so both sides know the issue remains open.
Attach Supporting Evidence
A change order is stronger when it’s backed by documentation that shows why the change is needed and how the costs were determined. Useful attachments include:
- Revised drawings or sketches showing the new scope
- Vendor quotes or proposals supporting material and equipment costs
- Photographs of site conditions that prompted the change
- Daily logs or inspection reports documenting the issue
- Correspondence such as emails or memos between the parties discussing the change
- A written justification memo from the requesting party explaining why the change is necessary
Reference each attachment in the body of the change order by name and page count so it’s formally incorporated into the document.
Follow the Approval Process
Writing the document is only one step. The full change order process typically follows this sequence:
- Identify the change. Any time the scope, specifications, or conditions differ from the original contract, a change order is warranted.
- Provide notice. Most contracts require written notice of a change within a set window, commonly 5 to 10 days, though your contract may specify a different timeframe. Missing this deadline can jeopardize your ability to recover costs.
- Prepare and submit the change order. Complete the form with all the elements described above, sign it, and send it to the owner or owner’s representative.
- Owner evaluates. The owner reviews the change, may request additional documentation or negotiate the price, and either accepts or rejects it. Your contract should specify how much time the owner has to respond.
- Final authorization. Once the owner signs and returns the change order, it becomes a binding modification to the contract, and the contractor can proceed with the changed work.
Do not begin changed work before the change order is signed unless your contract allows it or you’ve received a construction change directive. A change directive is a separate mechanism that lets the owner authorize work immediately in urgent situations, with costs and schedule adjustments negotiated after the fact. Change directives are provisional. A formal change order with agreed-upon terms should still follow.
Sample Change Order Language
Here’s an example of how the core description section might read:
“Change Order No. 004. Project: Riverside Office Building, Contract No. 2025-0382. This change order adds waterproofing membrane installation to the below-grade foundation walls on the north elevation (grid lines A through D, between grid lines 1 and 5) per revised detail S-108, dated May 20, 2025. See attached sheets 1 through 3 for revised structural details and vendor material quote. This change increases the contract price by $14,200 and extends the contract duration by 4 working days. The revised total contract value is $1,842,600.”
This format works because it identifies the project, states exactly what’s changing and where, references the supporting documents, and addresses both cost and schedule in concrete terms. Adapt the structure to your project’s complexity, but always aim for this level of specificity.