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Life of a change order

A super finds missing fire dampers. Eight steps later it's $86,400 of signed contract, a revised budget, a sub change order, a pay app line and a better WIP. Follow the money the whole way.

Visual explainer4 min scrollSample data · Riverside Medical Center

CO #14, from the field to the WIP

  1. Day 1 · in the field · sample data

    A hidden condition

    Opening a ceiling on Riverside Medical Center, the super finds duct penetrations with no fire dampers. He photos it, logs it, and the PM sends RFI-212. No money has moved yet, but cost is already coming.

  2. Change event

    Log it before you know the price

    The architect confirms dampers are required. The PM opens a change event the same day with a rough order of magnitude of $80,000–$90,000, so the forecast carries the exposure now, and the contract's notice deadline is protected.

  3. Potential change order

    Price it

    The mechanical sub quotes the work. The PM adds supervision and fire-stopping, then markup per the contract.

    $68,000 + $6,500 + $3,600 = $78,100 cost
    + $8,300 markup = $86,400
  4. Change order request

    Send it to the owner

    The priced package goes to the owner with backup: the RFI, photos, the sub quote and any time impact. Many teams use PCO and COR interchangeably; where they're separate, the COR is what the owner sees, sometimes bundling several PCOs.

  5. Owner review

    Negotiate and approve

    The owner and architect check entitlement and price. Here it's approved at $86,400. If they had disputed the price but needed the work, a construction change directive could keep the job moving.

  6. Executed

    CO #14 is signed

    Now it's contract. The exposure leaves the forecast and becomes revenue.

    $49,213,600 + $86,400 = $49,300,000
  7. Ripple 1 · budget

    Revise the cost budget

    The cost side goes up by the cost, not the price: $78,100 into the fire protection cost codes. The $8,300 difference is profit.

  8. Ripple 2 · commitment

    Issue the sub change order

    The mechanical subcontract goes up $68,000. Skip this and the sub's next invoice won't match its commitment, and the AP clerk has to chase it.

  9. Ripple 3 · pay app

    Bill it

    CO #14 becomes SOV line 10 on Pay App #9: 80% complete including stored dampers.

    $69,120 billed − $6,912 retainage = $62,208 net

    See the full pay app

  10. Ripple 4 · WIP

    The WIP catches up

    Contract and estimated cost both rise, so projected gross profit rises by the markup: +$8,300. Percent complete and earned revenue recalculate from there.

  11. Where it breaks

    One change, six systems

    On a typical stack, that one CO is typed into six places by different people at different times. Each re-key is where it gets late, or wrong.

    These are common failure points, not statistics. Score your own stack.

Text version

The whole chain, as a table

CO #14 on Riverside Medical Center (sample data). Each row is a step and what changed in the money.

Life of CO #14
StepWhat happensMoney
1. Hidden conditionSuper finds missing fire dampers, PM sends RFI-212Nothing recorded yet
2. Change eventLogged with a rough order of magnitude$80,000–$90,000 exposure in the forecast
3. PCOPriced: sub $68,000, supervision $6,500, fire-stopping $3,600, markup $8,300$86,400 pending ($78,100 cost)
4. CORPackage with backup sent to the owner$86,400 submitted
5. Owner approvalEntitlement and price agreed$86,400 approved
6. CO executedCO #14 signedContract $49,213,600 → $49,300,000
7. BudgetCost budget revised+$78,100
8. CommitmentMechanical subcontract change order+$68,000
9. Pay appSOV line 10 on Pay App #9, 80% complete$69,120 billed, $6,912 retainage held
10. WIPContract and estimated cost both updatedProjected GP +$8,300

Where it breaks across six systems

  1. Phone & text. The photo and first notice sit in a text thread. The notice window runs out.
  2. PM software. RFI-212 is answered, but no change event is opened. The forecast never hears.
  3. CO log spreadsheet. The PCO is priced in Excel. Its status lives in someone’s inbox.
  4. Accounting. Budget and sub CO keyed weeks later. The sub’s invoice beats its commitment.
  5. Billing spreadsheet. The SOV line is never added. Approved work sits unbilled.
  6. WIP spreadsheet. Still on last month’s estimate. The change is a surprise at quarter-end.

Keep going

Sample project included

Try this workflow on the sample project

Every trial workspace includes a sample project with sample data, so you can follow these steps in the app before touching a live job.

Try it on the sample project

Want this on live job data?

Change orders and pay apps are live in os.construction; WIP and AP are planned. On one record, every number on this page is entered once.

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All figures are illustrative sample data, not a real project. Contract terms and state law decide how retainage, stored materials and change orders work on your job. Check both.

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