What Is a Change Order?

A change order is a formal document used to modify the terms of a construction contract by altering the scope of work, cost, and schedule. It plays a critical role in construction operations management by ensuring scope adjustments are documented, approved, and aligned across field and office teams. It serves as a legally binding amendment to the original contract, providing a structured process for reviewing, negotiating, and documenting changes. 

Change orders are essential in construction projects as they help manage unforeseen changes or modifications requested by clients, ensuring that all parties are aligned on the scope, costs, and schedule impacts.

Key Features of Change Orders

Formal Process: Change orders involve a detailed procedure, including documentation, review, negotiation, and agreement between the owner and contractor. Many contractors now use digital workflows through construction management tools like Workyard’s forms to standardize documentation and approvals. This ensures that the impact of the change on the project’s cost, schedule, and scope is fully understood.

Contractual Modifications: Once a change order is agreed upon, it becomes a legally binding modification to the original contract, providing legal protection for both parties. In some cases, work may proceed under a construction change directive (CCD) before full agreement is reached.

Change Evaluation: Change orders involve a thorough evaluation of the proposed change, considering factors such as project costs, schedule impacts, quality, and other relevant considerations[6]. Contractors often reference construction daily reports to validate labor hours, site conditions, and productivity impacts tied to the change. Supporting documentation from field reports provides real-time site evidence during negotiations.

Managing change orders effectively is a core part of structured construction change management across active job sites.

Types of Change Orders

Change orders can be either additive or deductive:

Additive Change Orders: These add work, materials, or expenses to the project, potentially increasing the contract price and extending the timeline. Examples include adding a window or changing the finish of floors. Scope adjustments may also require updates to as-built drawings to reflect the final installed conditions. Any revisions must align with the project’s construction specification documents.

Deductive Change Orders: These reduce or eliminate work, materials, or costs, which can decrease the contract price and shorten the project duration.

Importance in Construction Projects

Change orders are indispensable in construction due to the dynamic nature of projects. They help manage unexpected site conditions, design changes, client requests, or the discovery of a latent defect that was not visible during initial inspections, ensuring that projects remain on track while maintaining legal and financial clarity for all stakeholders. Syncing approved change orders with payroll systems like ADP Workforce Now helps ensure labor cost updates reflect accurate job costing and time tracking.

For example, TR3 Group improved how it tracked scope adjustments and field documentation by digitizing reporting and approval workflows.

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