By Claire Wilson, Siteline

Change orders are a fact of life in construction. If you’ve worked in the industry for any length of time, you know that no project—regardless of how meticulously planned—ever goes exactly as expected. In fact, an analysis by the AIA of over 18,000 construction projects found that 100% of them required at least one change order, with many needing more than ten.

For subcontractors who shoulder much of the project risk, mastering the change order process isn’t optional—it’s essential for protecting profits and minimizing risk. Without a structured approach, change orders can quickly become a source of cash flow problems, strained client relationships, and even legal disputes.

Understanding the Change Order Landscape

Before diving into strategies, let’s clarify what we’re dealing with. A change order is an official amendment to a construction contract that alters the contractor’s scope of work. Unlike a simple invoice addition, a change must:

• Record all details of the change
• Provide evidence for why the change was necessary
• Receive formal approval from all parties involved

Change orders are typically priced or structured in these four main ways:

1. Lump Sum: Used when the change has a definite price that will increase or decrease the project cost.
2. Zero Cost: For scope changes that don’t affect expenses but may impact scheduling.
3. Time and Materials (T&M): For when costs can’t be quantified upfront, usually due to unforeseen circumstances.
4. Unitary Cost: Negotiated before work begins, thus commonly used for anticipated changes.

Understanding what constitutes a change order and recognizing its different structures is key to effectively managing them and protecting your business’s interests.

The Cost of Poor Change Order Management

For many subcontractors, the true cost of inadequate change order processes often goes unnoticed—until it’s too late. Consider these common scenarios:

• Your project manager (PM) authorizes additional labor or orders materials before receiving written approval, and the GC later refuses to pay.
• Communication breakdowns between the field and back office teams lead to failure in billing for change orders or negotiating them effectively.
• Pending change orders create cash flow forecasting problems, affecting your ability to plan for future projects.
• Excessive time spent manually tracking change orders across multiple projects drains productivity.

Any of these sound familiar? You wouldn’t be the only one. The good news is that you can head off each of these challenges with a well-structured change order process.

Six Steps to Change Order Success

Using best practices we’ve gathered from the trade contractors we work with—combined with a little of our own industry knowledge—this framework can help streamline change orders at your company:

1. Identify and document changes immediately.

The moment a potential change is identified in the field, document it thoroughly. This includes:

• Taking photos or videos of the relevant site area(s)
• Recording conversations with GCs or owners about the change, including screenshot texts and emails when possible
• Noting any verbal directives or acknowledgements

Your PMs should be equipped to capture this information on the spot, rather than try to reconstruct it days later. If you aren’t using software to do this, create a folder to store all this information so you don’t have to go digging for it later.

2. Create complete and accurate change order requests.

When finished, a change order request should include:

• A project-specific cover sheet that includes the project name, address, and relevant contact information
• Detailed description of the planned work and proof that it wasn’t included in the contract
• Itemized breakdown of costs
• Schedule impacts
• Supporting documentation as backup

Remember that you’re essentially making a case for why you deserve additional compensation or time. The stronger your documentation, the higher your approval rate.

3. Submit according to contract requirements.

One of the most common mistakes subcontractors make is failing to follow the submission requirements outlined in their contracts. Which brings me to my first rule for managing anything that can affect your cash flow (change orders included): always, always review your contract.

For change orders specifically, pay particular attention to:

• Notification timeframes (many contracts require change order notification within 24-48 hours)
• Required submission formats
• Chain of command for approval
• Documentation requirements

Missing any of these prerequisites can invalidate your otherwise legitimate change orders, holding up the capital you need.

4. Systematically track and follow up.

After submitting, keep tabs on the status of each change order request:

• Log all submitted change orders in a centralized system.
• Set reminders for timely follow-ups.
• Share your change order log with GCs on a monthly basis to ensure alignment.
• Escalate delayed approvals according to your contract terms.

Even though the squeaky wheel gets the grease, persistence works better than complaints.

5. Close the loop with billing.

Once a change order is approved, make sure it’s included in the next billing cycle:

• Update the Schedule of Values right away.
• Immediately notify the back office team.
• Include the change order in the next pay application.
• Maintain documentation of the approval for verification purposes, and even consider including it with your pay app submission to avoid miscommunication on the GC side.

Breakdowns here occur pretty frequently, typically resulting in revenue leakage. Remember that over-communicating and over-documenting never hurt! Consider creating a change order approval checklist that both field and office teams must complete to ensure nothing falls through the cracks.

6. Leverage technology for efficiency and insights.

Many subcontractors still rely on spreadsheets and email to manage change orders. While this approach is alright for smaller operations, it becomes increasingly unsustainable as businesses grow.

Modern change order management tools can offer significant advantages:

• Automated form generation based on GC-specific requirements
• Real-time visibility into change order statuses across projects
• Consistent pricing via built-in rate tables
• Centralized documentation storage for both field and office teams
• Data-driven insights into change order trends and approval rates

The right technology can seriously streamline this process, helping you stay ahead of the curve as change orders become more frequent and complex.

A Final Takeaway

Remember that each approved change order represents revenue you’ve rightfully earned. And while the chaos of change orders may never disappear entirely from construction, there is definitely room for improvement. Tightening your process and investing in tools that bring the field and office together isn’t just good business—it’s essential for long-term survival in an industry where margins are already thin.

About the Author: 

Claire Wilson is the co-founder and COO of Siteline, a billing software for subcontractors. Previously, she was a project manager at Tishman Construction in New York City, where she worked on major projects like Hudson Yards and JP Morgan’s Corporate Headquarters. She is an active CFMA San Francisco member, serves on the Bay Area Subcontractors Association board, and has spoken at numerous regional and national construction conferences. Claire holds a BS in Civil Engineering from Bucknell University.