How Do You Manage Change Orders?

Scope gets added in the field, the work gets done, and the change order to pay for it never gets written.

Price the change and get the client to approve it before the work proceeds, so the contract value and the budget both move together and nothing gets built unbilled.

What this workflow is

A change order is the document that records added or changed scope, its price, and the client's approval. Managing change orders is the discipline of catching a scope change when it happens, pricing it, getting it approved, and moving both the cost baseline and the contract value before the work is done.

Why it matters

Change orders are where finish-trade margin is won or lost. Field-driven scope creep is constant: an owner asks for an extra run of cabinets, a wall gets moved, a better tile gets chosen. If that work happens before the change is approved, the contractor either eats the cost or fights for it after the fact. The failure mode is doing the work and forgetting to bill it, which is pure margin gone.

How to do it

1. Identify the scope change

   The moment field or office sees added or changed scope, it is captured as a change event, before any work begins.
2. Price the change

   The added scope is priced: labor, materials, and markup. This is the number the client will approve.
3. Submit for client approval

   The priced change goes to the owner or architect for a decision. Until they approve, the scope is not billable.
4. Approve and move the baseline

   On approval, the change moves the cost budget and the contract value together, in lockstep, so neither drifts from the other.
5. Fan the change into the billing

   The approved change updates the schedule of values, so the added scope becomes billable on the next pay application.
6. Never bill unapproved scope

   Scope that has not been approved is never billed. The discipline protects both the client relationship and the contractor from disputes.

Common mistakes

How Scaftra runs it

Scaftra runs change orders as change events that move through draft, pending review, and approved. Approval is atomic: in one transaction it creates the change order, adds a change-order-origin budget line, and fans the impact into the active schedule of values, so the cost baseline and the contract value stay in lockstep and unapproved scope is never billable.

Key capabilities

• Change event lifecycle: Every change moves through draft, pending review, and approved, so the status of added scope is never ambiguous.
• Atomic approval: Approval creates the change order, the budget line, and the SOV impact in one transaction, all or nothing, so cost and contract value never drift apart.
• Contract value in lockstep with cost: An approved change moves the schedule of values, so the added scope becomes billable and the contract total stays accurate.
• Unapproved scope is never billable: Scope that has not cleared approval cannot appear on a pay application, which protects both the client relationship and the margin.

Benefits

• Added scope is approved before it is built, so the leverage stays with the contractor.
• The contract value and the budget always reconcile, with no side spreadsheet to drift.
• Approved changes flow straight onto the next pay application, so nothing earned goes unbilled.

Who runs this

• GCs with field-driven scope creep.Contractors whose owners constantly add scope mid-job and who need it priced and approved before it is built.
• Design-build firms.Teams whose design changes carry cost impact that has to move the contract, not just the drawings.

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