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Contractor glossary

Change order

Updated

Definition

A change order is a written amendment to your contract that changes the scope of work, the price or the schedule, approved by the customer before the changed work starts. It records what changed, the added cost or credit, the new contract total and any new completion date.

When you need one

If the work you're about to do isn't the work the customer signed for, or it will finish on a different date, write a change order first. Changes come from four places:

  • The customer adds or upgrades something.
  • You find a hidden condition once the work is open, such as soft decking or a corroded pipe behind a wall.
  • An inspector or the utility requires work outside your scope.
  • The customer drops or delays part of the job, which means a credit or a new date.

Fixing your own mistake, or doing something your scope of work already includes, isn't a change order. That's your cost.

What goes on it

  • A number and date (1, 2, 3 on each job)
  • The work added, removed or changed, clear enough for another crew to do it
  • The price or credit and how it was figured: fixed, unit price times quantity, or time and materials with a cap
  • The new contract total: original price, earlier changes, this change
  • The schedule effect, even if it's "no change"
  • The customer's approval, by signature or written reply, dated before the work

Example: An electrician is installing an EV charger under a $2,400 contract. The homeowner asks for an exterior outlet by the garage door while the crew is there. Before starting it, the electrician texts change order 1: one exterior outlet on the garage wall, $250 fixed, new contract total $2,650, finish date unchanged, reply YES to approve. The homeowner replies YES, and the final invoice shows the $2,400 contract plus change order 1 for $250 on its own line. Without that text, the same invoice is $250 over the contract with nothing to point to. The numbers are made up for illustration.

How it differs from similar paperwork

Document What it does
Change order Changes your contract with the customer, before the work
New estimate Prices a separate job under its own agreement
Insurance supplement Asks the homeowner's insurer to pay for items its estimate missed; a change to your contract still needs the customer's approval
Punch list Finishes items already in the contract, at no added charge

Common mistakes

  • Starting on a verbal yes. Send the written version and wait for the reply before the crew starts.
  • "We'll settle up at the end." An unpriced change is a dispute waiting for the final invoice.
  • Skipping credits and date changes. Removed work and schedule shifts need change orders too, even at no cost.
  • Using change orders to fix a low bid. They cover changed work, not a price you wish you'd quoted.
  • Lumping changes into one final number. Bill each approved change on its own invoice line with its number, and update any progress billing schedule when the total moves.

Check your state's rules

Home improvement contract rules are set state by state. Ask your contractor licensing board or the attorney general's consumer protection office whether your state has requirements for changes, such as what a change order must include and whether a text approval counts. Have a lawyer review your contract's change-order clause once, then reuse it on every job.

How it connects

The clearer your scope and exclusions, the fewer arguments about what counts as a change. Pricing the surprises you expect ahead of time, such as decking per sheet in the roofing estimate guide, turns a find into a quick count instead of a negotiation. How to handle change orders covers contract wording, pricing and invoicing step by step.

Go deeper

GuideHow to Handle Change OrdersA contractor's process for change orders: the contract clause, what to say on site, what the form must include, how to price changes and how to bill them.Roofing guideHow to Write a Roofing EstimateWhat goes in a roofing estimate: squares with pitch and waste, line items adjusters expect, code items, decking allowances, photos, warranties and payment terms.Electrical guideHow to Write an Electrical EstimateHow to write electrical estimates for service upgrades, EV chargers and circuit work: load basis, scope by circuit, permits, utility steps and exclusions.Plumbing guideHow to Write a Plumbing EstimateHow to write a plumbing estimate: fixture-by-fixture scope, allowances, permits, code items, exclusions, camera findings, repipe options and changes.
Scope of workA scope of work is the written description of exactly what a job includes and what it excludes: the tasks, materials, quantities, locations and standards of finish. It's the part of an estimate or contract that defines what the price buys, so anything outside it needs a change order.EstimateAn estimate is a contractor's expected price for a job, based on the scope as it's understood before work starts. It tells the customer the price could change if the work turns out different, but whether it binds you depends on its wording, the customer's acceptance and your state's law.Time and materialsTime and materials (T&M) is a way of pricing work where the customer pays for the actual labor hours at an agreed hourly rate plus the materials used, at an agreed price. It fits work whose size you can't know until you start.Progress billingProgress billing is invoicing a job in stages as the work is completed, instead of sending one invoice at the end. Each invoice bills the part of the contract earned so far, either for reaching agreed milestones or by percent complete against a schedule of values.Insurance supplementAn insurance supplement is a request, made on the homeowner's claim, asking the insurer to add work or quantities its original estimate missed. On a roof, it usually covers items found at tear-off or measured short, backed by photos, measurements and line-item prices.Punch listA punch list is the written list of small items still to finish or fix at the end of a job, such as touch-ups, missing trim or adjustments, that the contractor completes before the customer signs off on the work and pays the final balance.

See every term in the glossary