Change Orders - An Overview
  • 4 Minutes to read

    Change Orders - An Overview


      Article Summary

      Change orders are used in a construction project to specify any changes in the proposed work covered by the scope of the contract or any additional work or alterations to the planned work that vary from the scope of the contract. There are two types of change orders:

      • Commitment change order – Commitment change orders represent changes in the agreed cost and/or the timeline for the work covered by the scope of the contract. Contractors use commitment change orders if their deliverables would cost more than the committed cost or could extend the proposed timeline. Useful for budget amendments and schedule revisions.
      • Contract change order– Contract change orders represent any addition to, alteration, or omission of planned work covered by the scope of the contract. These include work that is not covered in the scope of the contract, like deviations in plans and dimensions, changes in designs, materials, and more. There are two types of contract change orders:
        • Prime contract change order – Changes that affect the contract between the general contractor and the owner/developer. Typically prime contract change orders are initiated by the general contractor and approved by the owner.
        • Client contract change order - Changes that affect the contract between the subcontractor and the general contractor. Typically client contract change orders are initiated by the subcontractor and approved by the general contractor and/or the owner. 

      Contract change orders are created for a variety of reasons, including but not limited to requests from the client/owner, improvement in designs, choice of materials used, conflicts between plans and actual site conditions, availability constraints on materials, human resources, and equipment. 

      Commitment change orders are also used to specify variations in the duration and cost estimation of pre-scheduled tasks that affect the overall budget and construction timeline of the project. Once the project budget is finalized and locked, it is set as the baseline. The financial performance of the project is measured using the baseline budget as the reference. Any changes or additions to the locked budget are carried out by creating change orders and adding them to the project schedule. The bid value of the change order automatically adds to the budget.

      Change orders can also arise from responses to RFIs and punch list items that require additional work or rework of already completed or ongoing tasks. These include the work that may impact the schedule and budget of the project.   

      Linarc's change order module lets general contractors and subcontractors generate change orders depending on the situations that arise in their course of work. 

      General ContractorsSubcontractors
      Generate COsGenerate COs, provide their estimates, and submit to GCs
      Add their estimates Respond to bid requests from GCs
      Request bids from the subcontractors Sign awarded change orders
      Review and accept bids  
      Close and get the Owner's Approval    
      Get signatures from the stakeholders
      Add the CO to the master schedule and assign jobs to the subcontractor(s)

      Each change order typically includes the type, serial number, a description of the change, plan markups, photographs, PDF documents, etc., and an estimate. The estimate can include the schedule impact, breakup of material cost, labor required, labor cost, and more. 

      Contract Change Orders:

      For changes that affect the prime contract, the GC can request bids from the appropriate subcontractors. Once the subs accept the change work and submit their estimates: 

      • The GC reviews the bids. 
      • Depending on the nature of the change work, the GC accepts one or more qualifying bids and gets approval from the owner. 
      • The GC gets the signature from the involved parties.
      • The GC then adds the approved CO as a task/deliverable to the master schedule, so the job(s) can be assigned to the respective subcontractors. 
      • The approved estimate of the CO adds to the project budget automatically.

      For changes that affect a client contract, the respective subcontractor submits their bid. Then: 

      • The GC reviews the bid and gets approval from the owner. 
      • The GC gets the signature from the involved parties.
      • The GC then adds the CO to the master schedule and assigns it to the subcontractor.  

      Commitment Change Orders:

      The general contractor or the subcontractors can create commitment change orders. 

      • The creator indicates the schedule and/or cost changes in their estimate/bid and uploads it to the change order. 
      • The GC reviews the estimate and obtains approval from the owner. 
      • The GC gets the signature from the involved parties.
      • The GC then adds the CO to the master schedule and assigns it to the creator. 

      All participants in a change order can obtain a PDF version of it, which contains complete details of the change order.

      • GC - Once the GC adds a change order to the master schedule, the estimates are added to the project budget. 
      • SC - Once the SCs accept the change order work assigned by the GC, the estimates from their bids are added to the project's budgeted estimate and applied to cost tracking.    

      Read the following sections to know more about:

      General contractor

      Subcontractor

      Chat and collaborate


      Was this article helpful?