The Change Order Process for General Contractor Projects

Change orders are formal amendments to a signed construction contract that document modifications to the project scope, cost, or schedule. This page covers the mechanics of the change order process as it applies to general contractor projects — from initial identification of a scope deviation through execution, pricing, and approval. Understanding how change orders function protects all parties contractually and prevents cost and schedule disputes that are among the most common sources of construction litigation in the United States.

Definition and scope

A change order is a written instrument that modifies an existing construction contract once work is underway. It alters one or more of three contract elements: the scope of work, the contract sum, or the contract time. Under the American Institute of Architects (AIA) A201 General Conditions of the Contract for Construction — the most widely adopted standard general conditions document in the US — a change order is defined as a written order signed by the owner, architect, and contractor that amends the contract (AIA A201-2017, §7.2).

Change orders apply across residential general contractor services, commercial general contractor services, and industrial general contractor services. Their scope is limited strictly to modifications arising after contract execution; pre-contract scope adjustments are handled through bid revision, not change orders. The change order process sits within the broader framework of general contractor contract terms and directly affects lien exposure, bonding sufficiency, and insurance coverage thresholds.

A related but distinct instrument is the Construction Change Directive (CCD), also defined under AIA A201 §7.3. A CCD is issued when the owner and contractor cannot yet agree on the adjustment amount but the owner directs the work to proceed anyway. The CCD is unilateral from the owner's side; a change order requires mutual agreement from all parties.

How it works

The change order process follows a defined sequence:

1. Identification — A scope deviation is identified by the general contractor, owner, architect, or engineer. Sources include unforeseen site conditions, design revisions, owner-requested additions, or errors in contract documents.
2. Request for Information (RFI) — The general contractor issues an RFI to the design team if clarification is needed before pricing. RFI response times are typically defined in the project specifications, often 7–14 calendar days.
3. Pricing / Cost Proposal — The contractor prepares a Change Order Request (COR) with a detailed cost breakdown. Subcontractor quotes, material pricing, labor hours, overhead, and markup are itemized. Standard markup structures on subcontractor costs are negotiated at contract execution; markups on self-performed work typically range from 10% to 15% for overhead and profit, though contract language governs the exact ceiling.
4. Review and Negotiation — The owner and architect review the COR against contract unit prices, allowances, and schedule impacts. Disagreements are resolved through negotiation or, if unresolved, escalate to the dispute resolution provisions outlined in the contract. The general contractor dispute resolution page covers those mechanisms.
5. Execution — All parties execute the change order document. The contract sum and substantial completion date are formally amended. No change order is contractually binding until all required signatures are obtained.
6. Documentation and Filing — The executed change order is logged in the project change order register, distributed to accounting, and filed with the project record. Changes affecting permitted work may require an amendment to the building permit, a responsibility that falls under general contractor permit-pulling responsibilities.

Common scenarios

Change orders arise from a predictable set of conditions on most projects:

• Differing site conditions — Encountering subsurface materials, utilities, or environmental conditions not disclosed in the contract documents. Federal contracts define two types under FAR 52.236-2: Type I (conditions materially different from those indicated) and Type II (unusual conditions differing from those ordinarily encountered). Many private contracts adopt the same framework.
• Owner-directed scope additions — Additions to finishes, square footage, or equipment specifications requested after contract execution.
• Design errors and omissions (E&O) — Conflicts between architectural and structural drawings, or omitted details that require field resolution. Depending on contract structure, the cost of correcting E&O may be absorbed by the design professional's errors and omissions insurance rather than charged as a change order.
• Code and regulatory changes — Amendments to applicable building codes or fire codes between design completion and construction that require scope modifications.
• Schedule acceleration — An owner request to compress the schedule, requiring premium-time labor and revised subcontractor sequencing.

Decision boundaries

Several threshold questions govern whether a change order is appropriate or required:

Contract scope interpretation — If a proposed change is arguably within the original scope of work, the owner may dispute that a change order is warranted. Resolving this depends on the general contractor scope of work documentation and specification language at contract execution.

Time-sensitivity vs. agreement — When work is time-critical, a Construction Change Directive may be issued rather than waiting for pricing agreement. The contractor must submit cost documentation within the period specified in the contract (AIA A201 §7.3.7 sets a 30-day window for submission of supporting data).

Lump sum vs. unit price vs. time-and-material — Pricing method determines how change order costs are calculated. Lump-sum changes require full repricing; unit-price contracts apply pre-agreed rates to measured quantities; time-and-material changes are tracked daily with field tickets signed by the owner's representative. The comparison between these pricing methods is addressed further under general contractor cost estimating methods.

Authorization levels — On large projects, the owner may designate a construction manager or owner's representative with authority to approve change orders up to a defined dollar threshold (commonly $25,000–$50,000 on commercial projects) without executive sign-off.

Impact on bonded contract value — A substantial cumulative increase in contract value may trigger requirements to increase the penal sum of the performance and payment bond. General contractor bonding requirements set the baseline obligation, and surety consent is typically required for aggregate change orders exceeding 10% of the original contract sum, depending on bond form language.

References

• AIA A201-2017 General Conditions of the Contract for Construction — American Institute of Architects
• FAR 52.236-2 Differing Site Conditions — Federal Acquisition Regulation, General Services Administration
• FAR 52.243-1 Changes — Fixed Price — Federal Acquisition Regulation, General Services Administration
• Construction Industry Institute (CII) — Change Management Best Practices — University of Texas at Austin
• Associated General Contractors of America (AGC) — Contract Documents — AGC of America