Construction Change Orders and Claims: How to Protect Yourself Before It's Too Late

Change orders are the single most common source of cost overruns on construction projects. They are also the area where owners are most frequently at a disadvantage — because contractors issue them constantly, and most owners don't have the experience to evaluate them critically.

What Is a Change Order?

A change order is a formal modification to the original construction contract. It can add scope, remove scope, or adjust the schedule. Every change order has three components: a description of the change, a price, and a schedule impact.

The problem is that all three of these components are negotiable — and contractors know that better than owners do.

Why Change Orders Are a Risk

Contractors have entire departments dedicated to change order management. They track every potential change from the moment the project starts, and they are skilled at identifying situations where they can legitimately — or sometimes not so legitimately — claim additional compensation.

Common change order triggers include:

Some of these are legitimate. Others are inflated, duplicative, or simply not the owner's responsibility under the contract.

How to Evaluate a Change Order

Before approving any change order, an owner should ask:

**Is this actually a change?** Many change orders are submitted for work that is already included in the contract scope. Contractors sometimes rely on owners not reading the contract carefully enough to catch this.

**Is the pricing reasonable?** Change order pricing is frequently inflated. Labor rates, material markups, and overhead and profit percentages should all be scrutinized against the contract's allowable rates and market conditions.

**What is the real schedule impact?** Contractors often claim schedule extensions for changes that have no actual impact on the critical path. A legitimate schedule impact analysis requires reviewing the project schedule — not just accepting the contractor's assertion.

**Is there a time bar issue?** Most contracts require change order notices within a specific window. If the contractor missed that window, their claim may be barred — but only if the owner knows to raise it.

The Role of an Owner's Representative

An experienced owner's representative reviews every change order before it is approved. They know what to look for, they understand the contract language, and they have the technical background to evaluate whether the pricing and schedule claims are legitimate.

On a large project, a skilled owner's rep will typically save the owner far more in change order management than their entire fee — often many times over.

Contact D Morris Consulting to discuss change order management on your project.