Change Orders and Constructive Changes

What Is a Change Order?

A change order is a written agreement between the owner, contractor, and architect that modifies the original construction contract. It adjusts the contract sum, the contract time, or both. Under the AIA A201 General Conditions of the Contract for Construction, no change to the work is valid unless it is properly authorized in writing. Performing extra work without a signed change order is one of the most common ways contractors lose money on a project.

Change orders arise from many sources: design errors or omissions, owner-requested additions, unforeseen site conditions, code changes issued after contract execution, or work that overlaps between subcontractors. The paper trail that captures how a change was discovered and priced is called the change order request package.

The AIA G701 Form

The AIA G701 Change Order form is the standard document used to record the final agreement on a change. It identifies the project and parties, states the description of the change, shows the adjustment to the contract sum, shows the adjustment to the contract time in calendar days, and carries signature lines for the architect, owner, and contractor. A G701 that is missing any of these elements is incomplete and may not be enforceable.

Before the G701 is signed, the contractor typically submits a Change Order Request (COR) or Proposed Change Order (PCO) package to the architect for review. That package is what this lesson focuses on building.

Components of a Complete Change Order Request Package

1. RFI or Directive Origin. Every change starts somewhere. Document the triggering event: the Request for Information number, the architect's supplemental instruction, or the owner's written directive. This creates an unbroken paper trail from discovery to payment.

2. Written Scope Description. Describe clearly what work is being added, deleted, or changed. Avoid vague language. Identify the drawing or specification section that applies, state what the original scope was, and state exactly how it differs from the changed scope.

3. Detailed Cost Breakdown. The cost breakdown organizes all costs into standard line items:

• Direct labor — hours by trade classification multiplied by fully burdened wage rate (base wage plus taxes, insurance, and fringe benefits).
• Material — quantity times unit cost, supported by supplier quotes where possible.
• Equipment — hours times ownership or rental rate.
• Subcontractor costs — attach the sub's own backup; prime contractor then applies its markup to that subtotal.
• Overhead and profit — a percentage markup applied to the subtotals above. The allowable markup percentage is often specified in the contract. AIA A201 does not set a specific percentage; the parties negotiate it. A common industry range is 10–15% overhead and 5–10% profit, but always check the contract.

4. Time-Impact Analysis (TIA). If the change adds duration to the project, the contractor must demonstrate how many compensable delay days result. A TIA compares the baseline schedule to a modified schedule that includes the new activity. The analyst inserts the changed work as a new activity, links it to predecessor and successor activities, and recalculates the critical path. The difference in project completion date is the number of compensable delay days. Document this on a TIA worksheet and attach a marked-up bar chart or CPM fragment.

Constructive Changes

A constructive change occurs when the owner or its representatives direct the contractor to perform work differently—without issuing a formal written change order—and that direction results in extra cost or time. Common examples include an architect insisting on a higher-quality finish than the specifications require, or an owner restricting site access in a way not contemplated by the contract schedule.

Constructive changes are legally treated as if a formal change order had been issued, but the contractor must take prompt action to preserve its rights. Under AIA A201, the contractor must provide written notice of a claim within the time period specified in the contract. Missing that notice deadline can waive the right to additional compensation. Always read the notice provisions in the contract before work begins.

Safety Considerations in Change Order Work

Changed work often introduces new hazards that were not addressed in the original site safety plan. Before any new scope of work begins:

• Update the Job Hazard Analysis (JHA) to reflect new tasks, tools, and materials.
• Verify lockout/tagout (LOTO) procedures if the change involves electrical, mechanical, or hydraulic energy sources. Follow OSHA 29 CFR 1910.147 for general industry or 29 CFR 1926 Subpart K for construction electrical work.
• Confirm PPE requirements for new materials (for example, a chemical grout versus standard concrete requires different respiratory and skin protection).
• Brief all affected workers before the changed work starts. A toolbox talk specific to the new scope is good practice and may be required by your site safety plan.

Documenting safety precautions taken during changed work also protects the contractor if a dispute arises later about whether the work was performed professionally.

Submitting and Tracking the Package

Organize the package in this order: (1) cover letter referencing the PCO number, (2) G701 draft, (3) scope narrative, (4) cost backup worksheets, (5) TIA worksheet and schedule fragment, (6) supporting quotes or invoices. Number every page. Keep a log of all PCOs by number, date submitted, date responded, and status. Unresolved PCOs accumulate quickly and can affect cash flow and the final payment application on the G702/G703.