Client documents
Change orders
Recording extra work so the contract value moves with a paper trail behind it.
In short
A change order is how the contract value moves on the record. Approving one adjusts the budget and shows up as a change on the client's documents.
Work changes. A change order is how the contract value changes with it, in a way the client can see and you can point back to six months later.
The lifecycle
A change order starts proposed, carrying a number, a title, an amount and which categories it affects. From there it is approved, rejected, or voided.
Approving is the step that moves money. The category adjustments are applied to the budget, and the job's contract value goes up by the change order's amount. Until then it is a record of a conversation and changes no figures.
Where it shows
An approved change order appears in three places, which is the whole reason to raise one:
- The contract value on the job, with a breakdown of the original amount plus each change.
- The adjustment column on project costing, so Original stays as
signed and the change is visible beside it.
- The project statement you hand the client. See
Change order or a direct adjustment
You can also adjust a project costing line directly, which moves the budget with no change order behind it. The two are for different situations and it is worth being deliberate:
| Use | When |
|---|---|
| A change order | The scope changed and the client is paying for it. It is client-visible and numbered. |
| A direct adjustment | You are correcting your own estimate, or moving budget between categories. Nothing is being billed. |
Note
A direct adjustment deliberately leaves no client-facing record, because there is nothing to tell the client. If a client should know about it, it wanted to be a change order.
Numbering
Change orders are numbered per job, in order, so "CO 3 on the Henderson job" means one thing. Rejected and voided numbers are not reused, since the gap is itself part of the record.
Practical advice
Raise a change order when the scope changes, not when you invoice. The value of the record is that it is dated near the conversation it came from, while everyone still remembers what was agreed and why.