Construction Contracts
Change Orders Explained
Written and reviewed by Andrew R. Schneidman, Esq. · Last reviewed
A change order is written approval for a change to the scope, price, or schedule of a construction contract after the contract is signed. Almost every project has at least one. Whoever wrote the change order clause controls who pays when the unexpected happens, which is why the clause deserves a careful read before the first shovel goes in the ground.
Schneidman Law drafts and reviews change order procedures for owners and contractors across Middle Tennessee, informed by years of handling these clauses from inside a construction and development company.
When is a change order actually required?
A change order is required any time the work differs from what the contract and plans describe, whether that difference is requested by the owner, discovered in the field, or caused by a design conflict.
Field conditions rarely match the plans exactly. Underground utilities move, existing structures reveal surprises once opened up, and specified materials go out of stock. Any of those situations should trigger a change order before the work continues, not a verbal agreement to sort it out later.
How should change order pricing be set?
The contract should specify the pricing method for changes in advance, whether that is a pre-agreed unit price schedule, a defined markup percentage on cost, or a lump-sum quote requiring approval before work begins.
Contracts that leave pricing open-ended invite disagreement precisely when leverage is most lopsided, mid-project, with the contractor already on site. A pre-agreed markup percentage or unit price list, negotiated when both sides still have equal leverage, removes that friction later.
Andrew’s take
The change orders that turn into real disputes are rarely about the dollar amount. They are about the moment a contractor and owner stop trusting each other's numbers mid-project. A pricing method agreed to at signing is what keeps that trust intact when the inevitable changes come up.
What happens if a change order is never signed?
Work performed without a signed change order creates a dispute about whether it was authorized, what it should cost, and whether it falls inside or outside the original scope, a dispute that is far harder to resolve after the work is already done.
Contractors sometimes proceed on a verbal go-ahead to keep the schedule moving, trusting the paperwork will catch up. It usually does not, and the value of that work becomes a negotiation instead of a contract term. A same-day written confirmation, even a short email, is enough to avoid the problem entirely.
How do change orders affect the project schedule?
A well-drafted change order procedure requires each change order to state its schedule impact, if any, at the time it is approved, rather than leaving schedule disputes to be sorted out at the end of the job.
Additive work almost always adds time. A change order that adjusts price but stays silent on schedule sets up a later argument about whether the contractor is entitled to an extension, an argument that is avoidable by addressing both in the same document.
Who has authority to approve a change order?
The contract should name specifically who on each side can authorize a change order, because a change approved by someone without authority creates the same dispute as no approval at all.
On larger projects, an owner's representative, architect, or construction manager often has day-to-day authority up to a defined dollar threshold, with anything above that requiring the owner's direct sign-off. Naming that threshold in the contract prevents confusion about whose approval actually counts.
Frequently asked questions
Can a contractor refuse to perform a change order?+
It depends on the contract. Most construction contracts give the owner the right to direct changes within the general scope of the project, with the contractor entitled to adjusted price and time in exchange, rather than the right to refuse.
Does every small field adjustment need a formal change order?+
Contracts typically set a minor-change threshold, a dollar amount or type of adjustment, such as a color substitution, that can proceed without the full change order process. Anything above that threshold or affecting price and schedule should go through the formal procedure.
What is a change order log?+
A change order log is a running record of every proposed, approved, and pending change on a project, including price and schedule impact. Keeping one current is the easiest way to avoid a dispute at closeout about how many changes actually happened and what they cost.
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