How To: Construction Change Order Forms with Free Template

by Alexander Fraser

In the construction industry a very important part of a project is the planning. But sometimes even with the best planning, you can run into issues that were unforeseeable. So what happens when you come across an unforeseen condition?

You get yourself a change order.

The reason for a change order can come in many different forms in a job. As a project manager it’s important to understand when you are entitled for a change.

Let’s dive into the details of a change order and how it affects a construction project.

I want to make sure this is also understood, that a change order is a legal binding document. Please consult a law firm should you choose to use this template. This way they can assist you to include everything you need to cover you from legal consequences.

A lawyer can help you to develop some contract terms if required on the change order form.

What is a change order in construction?

Simply put, a change order is an alteration to work that was agreed upon in a contractual agreement.

Let’s break this down.

When a contractor or subcontractor is hired onto a project, there’s an agreement to complete the work that’s required in a job. To learn more about subcontract agreements, clink here.

This will be in the form of a contract.

In the contract there’s a section that describes the scope of work for the contractor. The scope is set by the design/contract plans and specifications. You’ll also hear terms like contract drawings and specs thrown around for this as well.

Once the original scope of work has been agreed upon, this will finalize the agreement. So, what happens when there’s something that changes from the original agreement?

Well, that’s where change orders come into play.

For example, let’s say that the contract has been finalized but the owner decides to work with the engineer to develop a revision to the contract drawings. Since you can’t predict what the owner is going to want to do you’ll need to adjust your cost. To do this, you need to put together a change order request.

Keep in mind, a change order does not always mean more money. There’s also times where some of the work gets removed from the project or descoped. This is where the owner will request a credit back.

If this happens, it doesn’t mean you’ll need to pay the project owner or hiring contractor back. It’s just a reduction in the total cost of the job for your team. So, to make it fair a deductive change order would be required.

An alteration in the project drawings is probably the easiest way to identify a change order. But you need to be able to identify other change order opportunities. Let’s go over that now.

How to identify a change order?

Another common occurrence in construction is something called an unforeseen conditions. While most common in retrofit or renovation projects, they can occur in new construction as well.

In a retrofit job that’s also design-bid-build, the owner will hire an engineering team that will develop the original plan. This team will do their best to identify all the existing conditions to be included in the request for proposal (RFP). The RFP will then be issued to contractor to allow them to submit proposals to work on the job.

To learn more about design-bid-build vs. design-build projects, I recommend checking out this site for more information.

Back to the topic on hand.

The engineering team will do their best to identify all the potential risks of the project. Unfortunately, they can’t catch everything and some things get missed in the RFP documents.

The catch with this is you likely won’t know that they missed something until construction starts. If you’re very familiar with the work that your company performs, then you might be able to identify mistakes in the contract drawings. If you think that there’s a mistake then you can issue a request for information (RFI) to the design team.

It’s not the scope of this article to discuss the details of an RFI. Just know that the RFI can begin the entire change order process. This will depend on the response that you receive from the engineer or owner.

When you submit the RFI, you’ll need to mention your findings and identify how this was not clear in the RFP. It’s important to include that your findings could result in additional work. More work means more cost.

If you’re clear enough about your findings, then the engineer and owner will have no choice but to issue a change. If they want the work to be completed, then they need to understand that additional work is not free.

Sometimes the owner will still disagree and think the contractor is liable for these costs. Make sure that you document everything so you have a paper trail in place. This way you will have a form of backup to your argument for the additional cost.

Also, it’s critical that you DO NOT proceed with any work without a formal change order or written approval. This can really come back to bite your should the contractor lie about ever telling you to proceed with the work. You can still fight to get the requested change, but it will be a lot harder to recover that cost.

Sorry, went on a bit of a tangent but I really feel this is important information for anyone in construction.

Now, let’s say you got your RFI response and the owner and engineer agree you’re entitled to the requested change. You’ll now be required to fill out a change request form to be submitted.

It’s a good idea to have a change order template that you can quickly fill out when the time comes. Whether you’re a general contractor, subcontractor, independent contractor, etc.. There’s a chance you’ll come across a change in your projects.

By having the construction change order forms ready you’ll be slightly better equipped to take on a project.

The Template

Luckily, I’ve created a free change order template that you can use for your projects. Feel free to save this file to your own personal computer or google drive to modify to fit your company’s needs.

Click here for a link to the free change order template on google sheets.

Microsoft Excel Change Order Template Download

I’ll be using this template as an example of a change order that you could use for your jobs.

What should you include in a change order request/proposal?

Some of the sections are a bit self explanatory. Like the project name, job #, contractor name, phone number, and your company info. I’ll cover some of the parts that are not quite as obvious, such as what to include in the scope section.

Scope of Work Change Order

When you fill out the scope section, it’s a good idea to include the issue discovered and the solution. Make it clear to the owner/contractor what is going to be accomplished with the change.

You can also include if the work will require additional time to complete. Mention how much time you need to complete the additional work and the new completion date. You only need to mention a new completion date should the original date be pushed out.

Also, reference any documents that might prove that you’re entitled to the change order costs. Basically, you’re trying to eliminate any chance for questions when this gets into the owners hands.

Lastly, is the change cost. The change order template that I provided will generate the change amount based on the estimate that you fill out on the second sheet.

The Estimate

Estimating is a craft in itself when it comes figuring out how to price out work. If you don’t understand what is fully required to complete an activity, consider reaching out to a coworker or even consultant.

The last thing you want is to miscalculate the price for the change order. If you’re off and the price is not enough to cover the work, then there will be some financial hardships.

You are never required to provide your estimate to a customer that displays your costs, overhead, and profit. If the customer asks that you break down the change order, then you should consider using a separate template.

The breakdown should have all of your indirect costs distributed into the individual tasks/activities. This way they can’t question or ask you to reduce your markup or profit margin. Any experienced person in construction knows this exists, but you don’t need the owner/contractor to know the rate.

In this template, I have made it easy to calculate how much the work will cost.

For this example, I’ve filled out a portion of the estimating section.

Here’s a specific example for when a change order would be required.

Your crew was working on redoing a large concrete pad because there was heavy cracking and spalling due to age.

In the process of redoing the pad, you need to compact the base and sub-grade. This will mitigate cracking in the concrete, by preventing the soil from shifting and creating voids. Voids mean sections of the base will give and your pad will lose some structural support.

As you begin to remove parts of the pad and dig up the base material your team discovers that there’s coral in the sub-grade. Well this was not expected because the boring samples that were provided in the RFP show soil. On top of that, the project specifications call for soil to be used for compaction.

Your team did not account for removal of the existing sub-grade and to bring in new soil. The estimate only included using the existing material. So, now what?

Well, as mentioned before, you’ll need to submit the RFI. Wait for the response, and based on the response that will give you the information you need on how to proceed.

With this example, let’s say the engineer and owner decided they still wanted to use soil. Now it’s the teams responsibility to develop a change order proposal.

You’ve already hired a subcontractor to perform the removal and compaction work. They’re going to ask for a change too.

When you receive their price enter that in the top section of the change order template. You can choose to include a brief description of the work they’re being hired for as well. Last is the markup, this value will typically be about 15% for a subcontractor.

Subcontractor Costs

Next is the labor hours for your field crew. In this example, since we hired a subcontractor to do the work we will not have any costs here.

For this example, I wanted to save the owner some costs. So, I decided we would provide the material and the sub just needs to perform the work. This job needed 150 cubic yards (CY) of soil to complete, enter that value along with the cost per CY.

You can choose to add markup to your material cost here as well, any where from 5-15% should be okay.

Material Costs

The last couple sections includes equipment and office/superintendent costs. With equipment you can workout an agreement to rent the equipment yourself to reduce costs to the owner.

Don’t forget about your management costs as well. These can add up and cause your job to go negative if forgotten.

Equipment & Management Costs

Finally, we arrive at the final cost for the change. This is where you can add your overhead and profits, these variables can be modified as you see fit. The values that I included in this example are typical.

Total Costs

How to submit a change order?

Now that you’ve completed the change order document, it’s time to submit to the customer. It’s okay to print the template in PDF format. Send this file via email and request that you get written approval or a signature to execute the contract.

What to do after submitting a change order?

Once the change order has been sent out, give them 14-21 calendar days to review and respond. Make sure you know your company policy for execution of a change order. Since this is a legal binding document, providing an electronic signature is not sufficient.

You should expect a wet signature and that they send you something in the mail.

If the schedule requires that you get onsite right away, make sure that written approval comes your way. That way if you can’t wait to get the change finalized just yet you have something to fall back on. A written approval could be an email to get the work underway.

Conclusion

In project management, it’s vital to understand the ins and outs of a change order. They affect all jobs whether it be a small project with a minor change or even large construction projects. It’s your job as the project manager to identify the potential change order and obtain the additional costs.

Know that in the construction business, things are constantly changing which is why documentation is so important. They will cover your butt so you can recover the cost that your company is entitled to.

When you’re working though a change order, just remember to do so with a professional manner. When it comes to money it can always be a stressful topic and things can sometimes get heated.

Working in a construction company, there’s a level of customer service that will be required. Remember that you should keep the customer in mind when developing the change estimate.

Who knows, they might have some extra work for you in the future should they like your company. In construction it’s always a good idea to develop relationships with your customers for future jobs.

I hope I was able to provide you with the necessary information to perform a change order now.

Thank you for reading.

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