Every construction project involves some degree of change. A structural engineer updates a detail after the foundation is poured. An owner requests a finish upgrade during the framing stage. A subcontractor uncovers unexpected site conditions that require a different approach than the original drawings specified. When any of these things happen, a construction change order is the formal mechanism that documents the change, establishes how it affects cost and schedule, and records the owner’s authorization before work proceeds. Understanding how change orders work – and how to manage them effectively – is one of the most practical pieces of knowledge a developer or property owner can have before breaking ground.
What Is a Construction Change Order?
A construction change order is a written amendment to an existing construction contract. It describes the change in scope, sets out the revised cost, and records any adjustment to the project timeline that results from the change. Once both parties sign the change order, it becomes part of the contract and formally updates the budget and schedule that the project is being managed against.
Change orders are distinct from informal verbal instructions or field directives. While those tools exist for minor, time-sensitive adjustments, any change that affects contract price or completion date should be captured in a formal change order. This protects the owner by creating a documented record and ensures the construction team has a clear, authorized scope to work from.
Why Construction Change Orders Happen
Change orders arise from a wide range of circumstances, but they generally fall into one of three categories: design changes, unforeseen conditions, or owner-directed modifications.
Design changes occur when construction documents are incomplete or require updating as the project develops. On complex commercial or multi-family projects in BC, design teams often issue drawings in packages rather than all at once, and each revision creates the potential for a scope change at the trade level. This is one reason that the role of a construction manager includes rigorous document tracking and early identification of design gaps before they become costly field problems.
Unforeseen conditions – including subsurface soil inconsistencies, undisclosed existing conditions in renovation work, or utility conflicts not shown on municipal drawings – represent another frequent source of change orders. These are conditions that could not reasonably have been anticipated or priced into the original tender documents. Owner-directed modifications, the third category, are choices made during construction to alter materials, finishes, or design elements. While legitimate, they carry the highest cost impact per change because the project is already in motion and trade coordination is underway.
How Change Orders Are Priced
Pricing a change order requires the construction manager or general contractor to obtain updated pricing from affected subtrades, factor in materials, labour, and any premium for out-of-sequence work, and apply the overhead and fee markup set out in the contract. On a well-structured project, the markup rate for change orders is agreed upon at tender and included in the contract documents, which removes ambiguity when a change order needs to be processed quickly.
The timing of a change order significantly affects its cost. Changes requested before work begins in an affected area are relatively straightforward to price and absorb. Changes requested after work is partially complete – requiring demolition, rework, or re-sequencing – carry compounding costs that can far exceed the apparent value of the modification itself. This cost escalation is one of the strongest arguments for resolving design decisions before construction starts rather than deferring them into the field.
Change Orders and Your Construction Schedule
Cost is not the only consequence of a change order. Depending on the scope of the change, a change order can extend the project completion date, compress the sequence of other trades, or create idle time that generates delay claims. Schedule impacts are most acute when a change affects work on the critical path – the chain of activities that directly controls when the project can be handed over to the owner.
A competent construction management team tracks change order impacts against the master schedule in real time, which allows owners to make informed decisions about whether a change is worth the schedule consequences before authorizing it. For a closer look at how project timelines are structured and protected, see the guide to what a construction schedule is and why it matters.
Reducing Change Order Exposure Before Construction Starts
The most effective way to manage change order risk is to invest in a thorough pre-construction phase. This means advancing design development to a high level of completeness before issuing tender documents, conducting a rigorous constructability review, coordinating all design disciplines, and identifying long-lead procurement items and potential scope gaps early. The more resolved the drawings at tender, the fewer surprises arise during construction to generate unplanned changes.
Value engineering is also a meaningful tool in this context. By reviewing design alternatives and material specifications during pre-construction, the team can identify cost-effective substitutions that reduce the base contract value and preserve contingency for genuine unforeseen conditions rather than owner-directed changes. For more on this approach, see the guide to value engineering in construction and how it protects your budget.
How Team Construction Approaches Change Orders
At Team Construction Management, every change order is reviewed, costed, and presented to the owner before any work proceeds – with full schedule impact analysis so you understand the complete consequence of each decision. If you are planning a commercial or multi-family project in the Okanagan and want a construction management partner who keeps your budget and timeline honest, contact our team to discuss your project.
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