Change Orders

What it is

A change order is when the scope changes mid-project — new work, new cost, new timeline. Real change orders come from two places: you change your mind, or the job exposes hidden conditions once walls open up. Both are legitimate.

The change order is not the same as an audible. An audible is moving an existing job to a different phase for efficiency — same work, different timing. A change order adds new work, new cost, or new time. Audibles stay inside the original scope. Change orders expand it.

Why it matters

Here’s the contractor scam I call the loss leader. The contractor bids the job honestly on paper. Low number, gets in the door. But the scope doesn’t actually cover the full job. Mid-project, the “discoveries” start, each one with a fat change order markup. You agreed to a price up front, you’re going to finish way higher, and technically you approved every line along the way. That’s not malice every time — but it is a pattern.

There’s also what I call the fear tax. Every change order usually has it. When the contractor comes and says there’s termites in the wall or rot in the sill, he knows you don’t know what that costs, so he adds a special markup for the unknown. Fear tax. The way you combat it: break the job down into tasks. Not “termite problem” — that’s a job name with a hefty fear tax. Instead: demo, cleanup, reframing, drywall, paint. Those are five tasks with regular prices. No fear tax on top. When you ask the contractor to walk through each task and what it takes, the $10,000 change order usually becomes $3,000 pretty fast.

If they stand strong, you bring in a second contractor for that specific scope. “I’ve got a crew that’s specifically set up for this kind of thing, great prices on this. Let me call them.” That opens the door. Hard to argue with that.

How it shows up

Before any contractor starts: signed scope of work, pay schedule and completion date, COI naming you as additional insured, W-9, license verification. That paperwork is what makes the scope binding and makes change orders real instead of assumed.

When a change order comes in, I do three things: make sure the people who need to know, know; make sure the money is right and documented; make sure the systems (ledger, schedule, next phase) are updated. If those three things aren’t true, I’m not approving it.

Real change orders are inevitable. Open walls, find rot, real problem — you handle it honestly. The operator mistake is refusing to pay for real work. The rookie mistake is paying for work that was already inside the original scope but the contractor forgot to price.

Related

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