Change Orders & Claims

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Alright, Change Orders & Claims. Don't let the plain title fool you. Here's the part that actually matters on the job: No signed change order, no money — price changes fully (incl. overhead/profit and time), give written notice within the contract deadline, and document everything; claims live or die on the paper trail. Learn it well and you'll stop giving away work the owner would have paid for if you had asked the right way, on paper.

Extra work without a signed change order is the number one way contractors lose money, and it rarely happens in one big bite. It happens as a dozen "while you're here" requests, RFI answers that quietly add scope, and a site condition nobody priced, all done on a handshake and never billed.

What a change order actually is

A change order is a written amendment to the contract, signed by the owner and the contractor (and often the architect), that changes the scope, the contract sum, the contract time, or all three. On AIA-based projects it is typically documented on AIA G701; many owners and GCs use their own form. Either way, once signed it is as binding as the original agreement.

Two related documents matter. A Construction Change Directive (CCD), AIA G714 on AIA contracts, lets the owner and architect direct a change before price and time are agreed; you must proceed, so track costs daily. A field directive or work authorization signed on site by the owner's representative lets work start the same day with the formal change order to follow. Most contracts say that only a signed change order can modify the contract; believe that clause.

The change-order workflow

The pros run every change through the same steps:

• Identify it — the super or foreman recognizes the work is outside the contract scope.
• Notify in writing — a short email the same week stating what changed, who directed it, and that you consider it a change in cost and time.
• Price it — a change order proposal (often called a PCO or COR) with a breakdown the owner can review.
• Get it signed before performing, whenever the schedule allows.
• Perform and track — code labor and materials to the change so actual cost is provable.
• Bill it — add the approved change to the schedule of values on your pay application (AIA G702/G703 on many jobs).

Price the change completely

Underpricing changes is almost as common as not pricing them. A complete change includes:

• Labor with full burden (payroll taxes, workers' comp, benefits), not just the hourly wage.
• Materials including delivery, waste, and sales tax where it applies.
• Equipment — owned or rented, including mobilization.
• Subcontractor quotes, each with their own markup.
• Overhead and profit at the percentage the contract allows; many contracts set one markup on self-performed work and a smaller one on sub work.
• Time — if the change pushes the critical path, ask for added days and for the general conditions cost of staying on site longer (supervision, trailer, toilets, fencing, temporary utilities).

Leaving out time is the most expensive mistake here. A change order that adds money but says "no change to contract time" can hand the owner a liquidated damages claim later.

Constructive changes and the notice clock

A constructive change is extra work the owner directs without calling it a change: an RFI answer that adds a detail, an inspector who demands something the drawings never showed, a field instruction to "just make it work." You are usually entitled to payment, but only if you gave notice within the contract's deadline.

Notice clauses are strict. Many contracts require written notice within 7, 10, 14, or 21 days of the event, and courts in many states enforce those deadlines even when the owner clearly knew about the problem. Miss it and you can waive a valid claim. A notice is a business letter, not an accusation.

Claims and the paper trail

When a change cannot be agreed, it becomes a claim. The main categories:

• Directed changes — the owner ordered it and now disputes the price.
• Constructive changes — described above.
• Differing site conditions — conditions that differ materially from what the contract documents showed, or from what is normally encountered in that kind of work. Stop, notify, and let the owner inspect before disturbing the condition.
• Delay and acceleration — the owner caused delay, or ordered you to recover time at your own expense.

Every one of these is won or lost on documents: the daily log, dated photos, RFIs and their answers, time-and-material tickets signed daily by the owner's representative, meeting minutes, and schedule updates. A claim with a clean record settles; one built from memory does not.

Going Deeper (Intermediate)

Watch for the clauses that quietly take your claim away. Unconditional lien waivers and pay application certifications often state you have no outstanding claims through that date; list your pending changes as exceptions. No-damages-for-delay clauses limit you to time, not money, for owner delay in many states. If you are a subcontractor, the GC has its own notice deadline to the owner, so your notice must reach the GC fast enough to be passed along. When you must proceed without agreement, work under protest in writing, reserving all rights to cost and time.

Advanced / Pro-Level

A professional claim is a narrative with three parts: entitlement (which clause gives you the right), causation (how the event caused the cost and delay), and quantum (the dollars and days, proven). Delay is proven with a schedule analysis against the baseline, not with a story, and productivity loss is strongest when shown with a measured mile comparing impacted and unimpacted periods.

Keep a change order log reviewed weekly: number, description, date noticed, status, days open, dollars pending. Track cumulative impact too; thirty small changes can disrupt a job more than their prices suggest, and that disruption can be a claim of its own if documented as you go. Most claims settle in negotiation if the file is good; mediation, arbitration, or litigation follow per the contract.

Practice Challenge

An RFI answer tells your electrical sub to reroute conduit around a beam the drawings did not show. The sub does it to keep the schedule, mentions it at a meeting, and sends a priced change request five weeks later; the contract requires written notice within ten days, and the owner refuses to pay. What went wrong? (Answer: the sub performed a constructive change without written notice and missed the deadline, so the claim may be waived even though the work was clearly extra; they should have sent written notice within ten days reserving rights to cost and time, tracked the work on signed T&M tickets, and priced it promptly, with the GC passing notice to the owner within its own deadline.)

In Practice

A project manager who treats every RFI answer and field instruction as a possible change, notices it the same week, and keeps a change log the owner sees monthly rarely argues about money at closeout. One who "works it out at the end" finishes with a stack of unpaid extras and no notices.

Common Mistakes to Avoid

• Performing extra work on a verbal okay and pricing it after the fact
• Pricing labor and material but forgetting overhead, profit, and schedule time
• Treating RFI answers and inspector directions as free because nobody called them a change
• Missing the written notice deadline and waiving a valid claim
• Signing pay applications and lien waivers that release pending claims without listing exceptions

Takeaway: No signed change order, no money — price changes fully (incl. overhead/profit and time), give written notice within the contract deadline, and document everything; claims live or die on the paper trail.

Educational content — not legal, accounting, or contractual advice. Construction law varies by state and by contract; consult a licensed construction attorney for your situation.