Change orders in construction: how to price one

Three ways a change gets made

Most construction contracts give the owner the right to change the work without voiding the contract, through some version of these:

• Change order. Owner and contractor agree on the scope, the price and the time, and both sign.
• Construction change directive. The owner orders the work before price or time are agreed, so the job does not stop. The contractor proceeds, keeps detailed records, and the price is settled later by the method the contract sets.
• Minor change. The architect or engineer orders a small change that does not affect price or time, such as moving an outlet a few inches.

The names differ between contract forms, but the idea is the same: separate the order to do the work from the agreement on what it costs.

Where changes come from

Owner requests, design errors and omissions, RFI answers that turn out to add work, differing site conditions, code-driven changes required at plan review or inspection, and owner-caused delays. A change can also be constructive: the owner's conduct, such as insisting on a costlier method than the documents require, changes the work without anyone calling it a change. Contractors protect themselves by giving written notice promptly.

Notice matters

Contracts set a time limit for giving written notice of a change or claim, often counted in days from when the contractor knew or should have known. Missing it can waive the claim, however valid the extra cost. Track every potential change in a log the day it comes up.

Pricing a change

The contract usually says how. Common methods are a lump sum quoted for the change, unit prices already in the contract, or cost plus a stated percentage for overhead and profit. Many contracts cap the markup on changes and say whether the general contractor may mark up its subcontractors' change pricing, and by how much. Deductive changes, where work is removed, produce a credit to the owner, and contracts often limit or exclude profit on a credit.

A worked example with invented numbers

The owner asks for an added door and frame in a corridor wall. The contract allows 15% overhead and profit on the direct cost of changes, and the contractor asks for 2 extra days.

• Labor: 32 hours x $45.00 burdened rate = $1,440
• Material: $2,860
• Equipment rental: $400
• Direct cost: 1,440 + 2,860 + 400 = $4,700
• Overhead and profit: 4,700 x 0.15 = $705
• Change order amount: 4,700 + 705 = $5,405

Check: 4,700 x 1.15 = 5,405.

Updating the contract sum:

Check: 1,250,000 + 18,400 = 1,268,400, and 1,268,400 + 5,405 = 1,273,805. The schedule of values on the next payment application gets a new line for the change, and the contract time moves by the 2 days only if the change order says so.

Common mix-ups

• Treating a change directive as a change order. A directive orders the work. The price and time may still be open.
• Doing the work on a phone call. Without written authority, the contractor may have no right to be paid.
• Pricing time last. Ask for the days in the same change order. Many contracts treat a signed change order with no time as full settlement of the change.
• Marking up as though overhead were free. Use the contract's allowed markup, not your bid markup. See markup vs margin.

On the NASCLA exam

Changes appear in Procurement and Contracting Requirements (the contract side, 31 of 115 questions) and General Requirements (the field paperwork side, 25 of 115). Tab the contracts topic in the NASCLA Contractors Guide to Business, Law and Project Management, and the changes topic in Construction Jobsite Management.

Practice it

Add the change to a pay application in the retainage guide, then see how lump sum vs cost-plus vs GMP contracts treat changes differently. When the change comes from ground that differs from the contract documents, see differing site conditions, and when it adds days, see how time ties to liquidated damages.

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Sources

Show the list

• PSI Candidate Information Bulletin 1458, content outline and reference list, updated 7 Jul 2026. Retrieved 5 Nov 2026.
• NASCLA Commercial Exam, NASCLA. Retrieved 5 Nov 2026.