A change order (CO) is a written, signed amendment to the construction contract. It records an agreed change in scope, contract sum, contract time, or all three. The AIA standard form is G701. Once executed, the CO increases (or decreases) the contract value and is added to the schedule of values so it can be billed.
Why it matters
Unsigned changes are unbilled money. Work done on verbal direction without an executed CO is a classic source of disputes, under billing and margin fade. COs also flow down: the GC’s owner CO usually drives subcontract change orders and budget revisions.
Worked example
On Riverside Medical Center (sample data), RFI-212 reveals missing fire dampers. The GC prices the work from the sub quote, its own labor and the contract markup. The owner signs CO #14 for $86,400. The original contract was $48.2M with $1.1M in previously approved COs, so after CO #14 the revised contract sum is $48,200,000 + $1,100,000 + $86,400 = $49,386,400 (illustrative). The CO becomes a new SOV line and is billed on Pay App #9 as the work is completed.
Common mistakes
- Starting the work before the CO (or a directive) is signed.
- Forgetting the time impact; a CO that lists zero days can waive a later delay claim.
- Not issuing matching subcontract change orders and budget transfers.
How os.construction handles it
We’re building change orders as one record that carries the RFI, the pricing, the owner CO, the sub CO, the budget update and the SOV line, so nobody re-keys it into accounting.