How to Review a Construction Change Order Before You Approve It
Change orders are a normal part of construction, especially on renovations and complex capital projects. Existing conditions are uncovered, owner priorities evolve, design information is clarified, and field coordination may reveal work that was not anticipated.
The presence of a change order does not necessarily mean the project is being poorly managed. The quality of the review process determines whether the owner understands the reason, cost, schedule impact, and available options before approving it.
A good change-order review should answer several basic questions.
Why is the change required?
The first step is to identify the cause. A change may result from:
An owner-requested scope revision
A concealed or unforeseen condition
A design clarification or coordination issue
A code or authority requirement
A material substitution
A contractor or subcontractor omission
A schedule or sequencing decision
The reason matters because it helps determine whether the work is genuinely outside the original contract and who may be responsible for the resulting cost.
The description should be specific. Phrases such as "additional work" or "field condition" are not enough on their own. The owner should be able to connect the proposal to drawings, specifications, requests for information, meeting decisions, photographs, or other project records.
Was the work included in the original contract?
Before reviewing the price, confirm whether the work is truly a change.
Relevant documents may include:
The signed agreement
Drawings and specifications
Proposal clarifications
Allowances and alternates
Addenda and bid instructions
Contractor exclusions
Approved submittals
Prior correspondence
Construction documents do not always describe every detail perfectly. The review should still consider the contractor's original scope, normal trade practice, and the contractual requirements that apply.
If responsibility is unclear, the owner may need input from the architect, engineer, construction manager, or legal counsel depending on the issue.
Is the scope of the change clear?
A change-order proposal should define exactly what will be added, removed, or revised. It should also identify work that is not included.
Owners should ask:
Which locations and systems are affected?
Does the change include demolition, temporary work, protection, and restoration?
Are design, engineering, permitting, testing, or inspection costs included?
Does it affect other trades?
Are there credits for work no longer required?
Will the change create future maintenance or operational implications?
An incomplete scope can lead to a second change order for work that should have been considered the first time.
Does the cost have adequate backup?
The level of detail should be proportionate to the size and complexity of the change. A meaningful proposal may include:
Labor hours and rates
Material quantities and unit costs
Equipment costs
Subcontractor proposals
Delivery, tax, and freight
General conditions or supervision
Contractor and subcontractor markups
Insurance or bond costs where applicable
Credits and previously carried allowances
The owner should be able to follow how the total was calculated. Large lump-sum amounts without supporting detail are difficult to evaluate.
Review does not need to become an argument over every small item. It should establish that the price is understandable, internally consistent, and aligned with the scope.
Are markups consistent with the contract?
Many contracts define allowable markups for overhead, profit, insurance, bonds, or work performed by subcontractors. Those provisions should be checked before approval.
Owners should also look for layered markups. A subcontractor may apply its fee, followed by a contractor markup. That may be permitted, but it should be transparent and consistent with the agreement.
Credits deserve the same attention. If original work is removed, the owner should receive an appropriate credit based on the contract structure and the actual status of procurement or installation.
What is the schedule impact?
Cost and time should be reviewed together. A change may affect procurement, sequencing, inspections, access, or work already completed.
Ask the contractor to explain:
Whether the completion date will change
Which activities are affected
Whether new materials have long lead times
Whether work must be resequenced or remobilized
Whether acceleration could reduce the delay
What owner decision date is required
Statements such as "schedule impact to be determined" may be unavoidable in an early notice, but the issue should remain open and be resolved before the full impact is forgotten.
Are there reasonable alternatives?
The proposed solution may not be the only option. Before approval, consider whether the project team has evaluated:
A different material or system
A revised detail
Deferring nonessential scope
Using remaining allowance or contingency
Combining the work with another planned activity
A solution with less schedule impact
Alternatives should not compromise safety, code compliance, quality, or the owner's objectives. But a short options review can prevent an expensive proposal from becoming the default simply because it was presented first.
Has the change been authorized properly?
Changed work should follow the approval requirements established in the contract. Informal direction in a meeting, email, or field conversation can create confusion about authorization and cost.
A disciplined process identifies:
Who can request a proposal
Who reviews it
Who has authority to approve it
Whether work can proceed before final pricing
How emergency or time-sensitive changes are documented
How the budget and forecast will be updated
No owner wants the schedule delayed unnecessarily. At the same time, repeated verbal approvals can weaken cost control and make the final account difficult to reconcile.
Review the cumulative impact
Each individual change may appear manageable. The cumulative effect can be significant.
Owners should maintain a current log showing submitted, pending, approved, rejected, and potential changes. The cost report should reflect not only approved changes but also a reasonable forecast of unresolved exposure.
This gives the owner a better understanding of projected final cost and remaining contingency before additional decisions are made.
An owner's representative can help review scope, supporting documentation, contract requirements, pricing, schedule effects, and alternatives while maintaining a clear record of the owner's decisions.
Kestrel Advisory & Consulting provides senior-level owner representation, cost and schedule oversight, and construction management support for commercial, residential, and capital projects across Fairfield County, the NYC metro area, and major U.S. markets.
Facing significant change-order exposure on a commercial or residential project? Contact Kestrel for independent owner-side review and construction oversight.