Managing Change Orders: Best Practices for Contractors and Owners

wooden judge gavel and yellow construction gloves

In the world of construction, change is inevitable. Whether it is due to unforeseen site conditions, design modifications, or client-driven adjustments, change orders are a routine part of most projects. However, if not managed properly, they can lead to delays, budget overruns, and disputes. For both contractors and owners, understanding how to handle change orders efficiently is key to keeping projects on track and relationships intact.

At Plumtree & Brunner, LLP, our California construction attorneys can help you properly draft and manage change order clauses in contracts. We help you pre-plan to avoid issues whenever possible, and are ready to represent your interests when others do not respect your rights.  

What Is a Change Order?

A change order is a formal amendment to the original construction contract. It outlines modifications to the project’s scope, cost, or timeline, and must be agreed upon by all parties before implementation. Common reasons for change orders include:

  • Design errors or omissions
  • Unforeseen site conditions
  • Owner-requested changes
  • Regulatory or code updates
  • Material or labor shortages

Why Change Order Management Matters

Poorly managed change orders can derail a project. They often lead to:

  • Budget overruns
  • Schedule delays
  • Legal disputes
  • Strained contractor-owner relationships

By implementing best practices, contractors and owners can minimize disruption and maintain transparency throughout the construction process.

Best Practices for Contractors

1. Establish a Clear Change Order Process

From the outset, define how change orders will be handled. Include procedures in the contract that specify:

  • How changes must be requested (in writing)
  • Who has authority to approve them
  • Required documentation and timelines

2. Document Everything

Thorough documentation is your best defense against disputes. Each change order should include:

  • A detailed description of the change
  • Cost and schedule impacts
  • Supporting documentation (drawings, photos, estimates)
  • Signatures from all parties

3. Communicate Early and Often

As soon as a potential change arises, notify the owner. Early communication builds trust and allows time for evaluation and negotiation before work proceeds.

4. Use Technology to Track Changes

Construction management software can streamline change order tracking, approvals, and documentation. Digital tools reduce errors and provide a centralized record of all modifications.

5. Train Your Team

Ensure that project managers, site supervisors, and administrative staff understand the change order process. Consistency across your team helps avoid unauthorized work and billing issues.

Best Practices for Owners

1. Be Realistic About Flexibility

Changes are sometimes necessary, but frequent or late-stage modifications can be costly. Before requesting a change, consider its impact on the budget and timeline.

2. Review Change Orders Promptly

Delays in reviewing or approving change orders can stall progress. Assign a point person to handle change order reviews and keep the process moving.

3. Request Detailed Justifications

Ask for clear explanations of why a change is needed and how it affects the project. This helps ensure transparency and prevents unnecessary costs.

4. Maintain a Contingency Budget

Set aside a contingency fund to cover unexpected changes. This helps avoid financial strain and keeps the project moving forward when surprises arise.

5. Keep Communication Open

man in black suit is typing on laptop

Maintain regular check-ins with the contractor to stay informed about project developments. Open communication reduces misunderstandings and fosters collaboration.

Avoiding Common Pitfalls

  • Verbal Agreements: Always get change orders in writing. Verbal agreements are difficult to enforce and often lead to disputes.
  • Proceeding Without Approval: Contractors should never begin work on a change without written authorization. Doing so risks nonpayment and liability.
  • Lack of Clarity: Vague descriptions can lead to confusion. Be specific about what’s changing and why.

Avoid Change Order Problems by Consulting a California Construction Attorney

Change orders are a natural part of construction, but they do not have to be a source of conflict. With clear procedures, thorough documentation, and open communication, contractors and owners can manage changes efficiently and keep projects on track.

Our team at Plumtree & Bruner, LLP can help you draft change order provisions that work for your project. Contact us today for a consultation.