On a typical commercial project, the contract you negotiated hard is not where you lose money. You lose it in the change orders: the one-page documents that arrive mid-project, priced by the contractor, justified by the contractor, and signed by an owner who has a business to run and a project he wants finished. Each one amends your contract. Sign enough of them carelessly and the contract you negotiated no longer exists.
Here is the discipline, in the order a professional applies it.
First question: is this change order even valid?
Before you look at the price, look at the paperwork. Three checks take sixty seconds:
- Is it in writing, on the contract's change-order form, with a price? Verbal changes and "we'll true it up later" tickets are how disputes are born. If work already happened on a verbal say-so, that is a separate problem to manage; do not reward it by signing whatever number arrives afterward.
- Did it follow the contract's notice requirements? Most contracts require the contractor to give notice of a claimed change within a set number of days of discovering it. A change order for work done six weeks ago, noticed never, often is not owed at all.
- Is the scope described specifically enough to check? "Additional electrical work per field conditions: $14,300" is not a scope, it is an invoice with a wish attached. You are entitled to know exactly what you are buying.
Second question: who actually owes for this?
This is the entitlement question, and it is the one owners skip most. A change order is only owed when the contract says the risk belongs to you. Sort every CO into one of four buckets:
- Owner change: you asked for something different. You owe it. The only question is price.
- Genuinely unforeseen condition: something no one could reasonably have known (buried debris, concealed conditions behind existing walls). Usually compensable, but read your contract's differing-site-conditions clause; it decides.
- Design gap: the drawings missed something. Compensable to the contractor, but possibly recoverable from the design side; flag it and keep a record rather than eating it silently.
- Contractor error or omission: they missed it in their bid, built it wrong, or failed to coordinate their subs. Not compensable. A surprising share of change orders live quietly in this bucket, priced as if they lived in the second one.
Ask one question of every CO: what contract clause entitles you to this money? A contractor with a real claim answers instantly. Hesitation is information.
Third: audit the price like a line-item skeptic
- Labor: are the hourly rates the ones in the contract or the bid, or new numbers invented for this CO? Are the hours plausible for the scope described?
- Materials: ask for supplier quotes or invoices on anything significant. Round numbers are estimates; estimates are negotiable.
- Markup stacking: your contract almost certainly caps overhead and profit on changes (often 10 to 15 percent combined). Check that the general contractor is not applying markup on top of a subcontractor's already-marked-up price beyond what the contract allows.
- Credits: if the change deletes work as well as adds it, the deleted work must appear as a credit at fair value, not vanish. Deleted work priced at cost while added work is priced with full markup is the oldest trick in the book.
- Schedule: does the CO claim extra time? Time is money on both sides. Do not grant days by default; make the schedule impact a stated, justified number, even if that number is zero.
Then respond in writing, one of three ways
- Approve: entitlement is real and the price checks out. Sign it and keep the project moving; speed on legitimate COs buys you credibility for the fights that matter.
- Approve with corrections: entitlement is real, the price is not. Return it with your line-item corrections and the contract clauses that support them.
- Request substantiation: you cannot verify entitlement or price from what was sent. Ask, in writing, for the missing pieces: the clause claimed, the quotes, the hours. A CO that cannot survive a substantiation request was not a CO, it was a probe.
Never let a change order age unanswered. Silence reads as acceptance in the field even when it does not in court, and the work often proceeds while you sit. Answer every CO inside the contract's response window, even if the answer is "substantiate."
The pattern matters more than any single CO
One padded change order is a negotiation. A stream of them is a strategy, and it usually means the contractor bid low intending to make it back in changes. When you see the pattern, stop treating COs individually: bring the log to a sit-down, with your approval statistics in hand, and reset expectations while there is still project left to protect.
Want this as a fillable worksheet?
The Change-Order Review Worksheet turns this method into a worksheet you run on every CO, with pricing checks and ready-to-adapt response letters. It is arriving in our Documents collection shortly; ask us to tell you when it lands. And if you would rather someone did this for you: reviewing change orders is literally our job.
Talk to us about your project →Published by Umbra Enterprises LLC. This guide is educational material for building owners and is not legal advice; contract terms vary, and your contract governs. Consult a construction attorney for disputes.