Not every change order is a problem — scope changes happen on every project. The question is whether the change was truly outside the original contract scope, whether the pricing is reasonable, and whether the schedule impact claimed is legitimate.
The Three Questions
Every change order should be evaluated against three fundamental questions:
1. Was this work outside the original scope? This requires a careful reading of the contract documents — plans, specifications, and the agreement itself. GCs sometimes submit change orders for work that was clearly included in the original scope but was underestimated in their bid. That is a GC cost problem, not an owner change.
2. Is the pricing reasonable? Change order pricing should reflect actual costs — not list prices inflated with excessive markup. Labor rates, material costs, and subcontractor quotes should be verifiable. The GC's markup on change order work is often significantly higher than their markup on base contract work.
3. Is the schedule impact valid? Many change orders include a time extension request. The question is whether the changed work is actually on the critical path. If the change order work can be performed concurrently with other scheduled activities, a time extension is not warranted.
Pattern Behavior
One change order is a change order. Five change orders in the same cost category is a pattern. When a GC consistently submits change orders in areas like site conditions, coordination, or owner-furnished items, it often indicates a bid strategy — price low to win, then recover margin through changes.
An experienced change order analyst recognizes these patterns because they have seen them across multiple projects and GC relationships.
The Value of Independent Review
Owners and lenders who accept change orders at face value are leaving money on the table. An independent review of a $50,000 change order package that results in a $15,000 reduction has already paid for itself many times over.
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