A change order is the formal, executed document that modifies the original construction contract adjusting price, schedule, or scope, and sometimes all three at once. Once signed by both owner and contractor, it becomes part of the contract itself, not a side agreement or a promise.
There are generally three flavors worth knowing. A unilateral change order gets issued (and can be enforced) by the owner even without contractor agreement on price, typically reserved for situations where work needs to proceed and pricing will be settled later. A bilateral change order requires mutual agreement before it’s executed this is the most common type on private commercial work. And a no-cost change order only needs to be filled out to document a design change that does not affect the overall quantity.
A regular change order starts in response to something else entirely: an RFI shows a contradiction, a bulletin shows a design revision, and a contractor requests a price quote. Once price is agreed upon, that change order is signed. So a change order log showing only the last signed documents is showing you next to nothing; the significant events occur on the RFIs and bulletins that caused each order to be requested.
Do change orders always mean something went wrong? Not necessarily. Owner-driven scope additions and value engineering credits both flow through change orders too, and neither implies a design or coordination failure. What does tend to signal trouble is volume and pattern: a steady stream of change orders tied to one discipline’s drawings, for instance, usually points to a coordination issue that should have been caught earlier.
Cumulative change order value as a percentage of original contract sum is a metric most owners track closely, and it’s often written into the contract as a threshold that triggers additional oversight if exceeded.
Pricing methodology for change orders varies by contract and can shape negotiation dynamics considerably. Some contracts specify unit pricing agreed in advance for common change categories, which speeds negotiation but requires the original contract to have anticipated the right categories. Others rely on time-and-materials pricing with markup caps, or on a full cost breakdown submitted for owner review, and disputes over change order value often trace back less to disagreement about the work itself than to disagreement about which pricing methodology actually governs a specific situation.
