What is a change order? #
A change order, when signed, is a formal amendment to a contract specifying a change to the scope of work. A change order can either increase or decrease the scope of work, and so can either add or subtract from the total cost of the project. Typically, change orders are fixed-price; when a contractor wants to do additional work on a time and materials basis, that work is usually performed under an approved change ticket, then turned into a change order once complete when the final costs are known.
Also known as: Variation, Variation order
How does it work? #
Basic change order #
The original contract specifies a total cost of $10,000 for the Smith family’s new pool. Mr. Smith decides that he wants to add a built-in hot tub, which was not provided for in the original scope of work. The contractor presents the Smith family with a change order for $4,000 increasing the scope of the contract to now include the hot tub. Once the change order is signed, the newly-added hot tub becomes a part of the scope of work the contractor has agreed to perform, and the total contract value becomes $14,000.
Complicated commercial change order #
A subcontractor submits three change orders based on requests from their GC. The GC approves the change orders, but demands that the subcontractor bill them together on their payment application using the GC’s reference number. As a result, the subcontractor has to perform a careful reconciliation each month, tracking progress against each of the three change orders on their end, then consolidating the three on the invoice.
Change order management in Knowify #
Knowify offers powerful change order management tools, including an e-signature system and GC reconciliation features. Never again perform work not knowing the status of the change order, and no matter how easy/complicated your change orders are, Knowify will have you covered.
See how it works: