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.
CO #14, from the field to the WIP
- 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.
- 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.
- 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 - 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.
- 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.
- 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 - 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.
- 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.
- 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 - 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.
- 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.
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.
| Step | What happens | Money |
|---|---|---|
| 1. Hidden condition | Super finds missing fire dampers, PM sends RFI-212 | Nothing recorded yet |
| 2. Change event | Logged with a rough order of magnitude | $80,000–$90,000 exposure in the forecast |
| 3. PCO | Priced: sub $68,000, supervision $6,500, fire-stopping $3,600, markup $8,300 | $86,400 pending ($78,100 cost) |
| 4. COR | Package with backup sent to the owner | $86,400 submitted |
| 5. Owner approval | Entitlement and price agreed | $86,400 approved |
| 6. CO executed | CO #14 signed | Contract $49,213,600 → $49,300,000 |
| 7. Budget | Cost budget revised | +$78,100 |
| 8. Commitment | Mechanical subcontract change order | +$68,000 |
| 9. Pay app | SOV line 10 on Pay App #9, 80% complete | $69,120 billed, $6,912 retainage held |
| 10. WIP | Contract and estimated cost both updated | Projected GP +$8,300 |
Where it breaks across six systems
- Phone & text. The photo and first notice sit in a text thread. The notice window runs out.
- PM software. RFI-212 is answered, but no change event is opened. The forecast never hears.
- CO log spreadsheet. The PCO is priced in Excel. Its status lives in someone’s inbox.
- Accounting. Budget and sub CO keyed weeks later. The sub’s invoice beats its commitment.
- Billing spreadsheet. The SOV line is never added. Approved work sits unbilled.
- WIP spreadsheet. Still on last month’s estimate. The change is a surprise at quarter-end.
Keep going
Keep exploring
Related across os.construction
- DocsChange events and potential change ordersHow a possible change is captured as a change event, priced as a potential change order, submitted and approved, and how exposure is tracked before anything is signed.
- ExplainerFrom field question to paid change orderFollow RFI-212 into a change event, a priced PCO, executed CO #14, the budget and a pay app in os.construction, with every link stored on one record.
- GlossaryChange Order (CO)A signed agreement between owner and contractor that changes the contract scope, price, time, or a combination of them.
- BlogChange events vs change orders: tracking exposure before it's signedBy the time a change order is signed, the money is already spent or already lost. The change event is where exposure starts. Here's how to track it, what to put in the forecast, and why the gap between the two is where margin leaks.
- BlogThe real cost of re-keying a change orderWe followed one change order from a ceiling cavity to the pay app and counted every time someone retyped the same facts. The typing is the cheap part.
- ExplainerChange events vs change orders: the full lifecycleWhat a change event is, what a PCO and change order are, and where each one shows up in the budget, the contract and the pay app in os.construction.
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.
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.