What Is Change Order?

A change order is a formal, contractually documented modification to the scope, cost, or schedule of a construction contract, agreed to by the owner and contractor after the original contract was signed. Change orders can originate from an owner-requested scope change, an unforeseen field condition, or a design error discovered during construction.

Not all change orders represent the same kind of cost. An owner deciding to upgrade a finish or add scope is a different category from a change order needed to fix a coordination conflict that should have been caught during design. The second category is the one most directly reducible through better pre-construction QA/QC, since it reflects a preventable error rather than a legitimate change in project requirements.

The direct cost shown on a change order, the price for the changed work itself, usually understates the real cost, which also includes negotiation time, schedule impact from resequencing work around the change, and administrative overhead processing the paperwork. Design-error change orders carry an additional cost: disputes over who bears responsibility, the owner, the contractor, or the design team, which can add real time and expense beyond the underlying work.

FAQ

Is this term used consistently across the industry, or does it vary by firm or region? Most of these terms are used fairly consistently across the industry, though exact usage can vary slightly by firm, region, or project delivery method. When in doubt, project-specific contract documents typically define exactly how a term is being used on that project.

How does this connect to AI-assisted drawing review? Structured AI's QA/QC Compliance Checks, Document Chat, and Overlay features are built to catch the kinds of issues and inconsistencies that show up in exactly this part of the design and construction process, with findings tied to the exact page and location involved.

Where can I learn more about related terms? See the related topics below for connected concepts that often come up alongside this one.