As a general contractor, I’ve learned that no matter how perfectly you plan a project, changes are inevitable. Homeowners change their minds, unexpected issues pop up, and sometimes materials or designs just need adjustments.
That’s where change orders come in—and trust me, if you’re not using them, you’re risking your profits, timeline, and even your reputation.
In this article, we'll break down what change orders are, why they matter, and how to use them effectively. I’ll even include an example and a template you can start using today. Let’s dive in.
What Is a Residential Remodeling Change Order?
A change order is a written document that outlines any adjustments to the original scope of work in a project. It could cover changes in materials, additional work requested by the client, or unforeseen conditions that require you to pivot.
For example:
- The homeowner decides they want premium hardwood flooring instead of laminate.
- You uncover water damage during demo that requires additional repairs.
- A design update calls for relocating a light fixture.
Change orders help clarify what’s changing, how much it’ll cost, and how it’ll impact the project timeline. Without them, you’re left with “he said, she said” disputes that can damage relationships and drain your profits. Here’s a simple example:
Why Change Orders Matter for Contractors and Handymen
Let’s be real—if you’re not using change orders, you’re setting yourself up for headaches. Here’s why:
- Protect Your Profits: Change orders ensure you get paid for extra work and materials. Without them, you might eat the costs.
- Avoid Disputes: When everything’s in writing, there’s no room for misunderstandings with clients.
- Stay Organized: They help you track adjustments so you’re not scrambling to remember who requested what.
- Professionalism: Using change orders shows clients you run a tight ship and value transparency.
Key Components of a Residential Construction Change Order
A good change order should include the following:
- Clear Description: Detail what’s changing, why it’s changing, and how it affects the project.
- Cost Breakdown: Include materials, labor, and any other expenses.
- Timeline Adjustment: Note if the change adds days to the schedule.
- Signatures: Both you and the client should sign to agree on the terms.
Here are the key elements on the construction change order example shared earlier:
How to Manage Change Orders Effectively
Here are some tips to make change orders work for you:
Be Proactive
Talk to your clients during the planning phase about how you’ll handle changes. Set expectations upfront.
Document Everything
Even if the client mentions a change in passing, document it. Use email or a project management tool like Handoff to keep track.
Act Quickly
As soon as you identify a change, prepare the change order. Don’t wait—delays can derail the project.
Be Transparent
Walk your client through the change order. Explain why the change costs extra or adds time.
Example of a Change Order
Here’s a simple example:
Scenario: During a bathroom remodel, the homeowner decides to upgrade the vanity to a custom-built piece.
Original Scope: Install pre-fabricated vanity.
Change: Replace pre-fabricated vanity with a custom-built option.
Cost Breakdown:
1. Custom Vanity Materials: $1,200
2. Labor: $500
Timeline Adjustment: Add 2 days for custom fabrication and installation.
Client Acknowledgment: "I, [Client Name], approve the change to upgrade the vanity to a custom-built option at an additional cost of $1,700 and understand the timeline will be extended by 2 days."
Signatures:
Client:________________ Date:____________
Contractor:________________ Date:____________
How to Create a Construction Change Order For Your Home Remodeling Business
Identify the Change
First, confirm the requested change or issue that requires an adjustment to the original scope of work. This could be due to a homeowner’s new request, unforeseen conditions discovered during construction, or a necessary design modification. Once identified, determine whether the change is necessary or simply an upgrade. If there are alternative solutions, discuss them with the client to ensure they understand all available options.
Estimate the Impact
Next, calculate how the change will affect both costs and the project timeline. Be sure to factor in additional materials, labor, permits, and any subcontractor fees. If the change requires extra days, assess how it will impact the overall schedule and inform the client. It’s always better to overestimate slightly rather than undercharge and end up losing profit.
Draft the Document
Now, put everything in writing using a structured change order template. Clearly describe what is changing, why the change is happening, and what the new cost and timeline adjustments will be. Ensure that every detail is included to avoid misunderstandings later. Providing a cost breakdown for materials and labor will help the client understand where the additional charges come from.
Review with the Client
Once the change order is drafted, review it with the client either in person or via email. Walk them through the modifications, explaining how it affects both cost and timeline. Be transparent about why the extra work is necessary and ensure they have no unanswered questions. Before proceeding with any work, obtain their approval and signatures to confirm the agreement.
Execute & Document
After the client signs the change order, update your project schedule, budget, and any relevant work orders. Notify your team or subcontractors so they are aware of the approved changes. Keep a record of the signed change order for your files in case of any disputes later. If applicable, update your invoice to reflect the additional costs and ensure payment terms are clear.
Pro Tip: Avoid verbal approvals—even if a client seems agreeable, always get written confirmation before starting additional work. This protects both parties from misunderstandings.
Change Order Template
Use this Change Order template for your projects:
Project Name: ____________________________
Client Name: _____________________________
Change Description: ______________________
Cost Breakdown: _________________________
Timeline Adjustment: _____________________
Acknowledgment: "I, [Client Name], approve the above change and understand its impact on the project cost and timeline."
Signatures:
- Client: ______________________ Date: __________
- Contractor: __________________ Date: __________
Sample Email Template for Sending a Change Order
Subject: Change Order for [Project Name] – Approval Required
Dear [Client’s Name],
I hope you’re doing well. As we discussed, we have identified a change in the scope of work for your [project type] at [project location]. Below is a summary of the requested modification:
Change Description: [Briefly describe the change, e.g., "Upgrading the kitchen countertops from laminate to quartz."]
Reason for Change: [Explain why the change is necessary or requested, e.g., "You requested an upgrade for a more durable and premium finish."]
Additional Cost: [$X,XXX – includes materials and labor]
Timeline Adjustment: [e.g., "This will extend the project by two additional days."]
Attached is the formal change order document for your review. If everything looks good, please sign and return the document at your earliest convenience. Once we receive your approval, we will proceed with the changes accordingly.
Let me know if you have any questions or if you’d like to discuss any details further. We appreciate your cooperation and look forward to completing your project as smoothly as possible.
Best regards,
[Your Name]
[Your Company Name]
[Your Contact Information]
Avoiding Common Mistakes With Your Construction Change Orders
Change orders can be a lifesaver in remodeling projects, ensuring that any modifications to the original scope are documented and accounted for. However, many contractors make costly mistakes that can lead to disputes, delays, or lost profits. Here are some common pitfalls to avoid:
- Skipping the Paperwork: Always get the change in writing.
- Vague Descriptions: Be as detailed as possible to avoid confusion.
- Not Charging Enough: Don’t underestimate the costs; always add a buffer.
- Delaying Approval: Get client sign-off before starting the extra work.
Smart Contractors Use Change Orders
Change orders might seem like extra work, but they’re essential for running a successful contracting business. They protect your bottom line, keep projects organized, and build trust with clients. Start using them on every job, and you’ll see the difference in how smoothly your projects run.
Need help managing change orders? Tools like Handoff can streamline the process, making it faster and easier to keep everything on track.
