Understanding Change Orders: What Owners Should Know Before Construction Starts

Change Orders Are Normal. Surprises Are Not.

Scope changes happen on virtually every commercial construction project. An owner requests an addition, unforeseen conditions are encountered, a design conflict requires a field resolution—these are real project events and they generate legitimate change orders.

The problem is not that change orders exist. The problem is how they are managed. A well-run change order process is transparent, timely, and documented before work proceeds. A poorly run process results in change orders that are presented at closeout for work that was never formally authorized.

The Anatomy of a Change Order

A proper change order document should include:

• —Scope description: A written description of the work being added, deleted, or modified—specific enough that both parties understand what is covered.
• —Pricing breakdown: Labor, material, equipment, and subcontractor costs—with overhead and fee clearly identified. Not a single lump sum.
• —Schedule impact: The number of calendar days added or deleted from the project schedule, with justification.
• —Authorization signature: Owner signature authorizing the change before work proceeds. Not after.
• —Running contract total: The updated GMP or lump sum after this change order is incorporated.

Red Flags in Change Order Management

• —Change orders presented at closeout for work that was completed weeks or months earlier
• —Verbal authorizations that are later claimed as approved change orders
• —Single-line pricing with no breakdown of labor, material, and fee
• —Schedule impacts claimed after the fact that were not identified at the time of the change
• —Bundled change orders that combine unrelated scope items making individual pricing impossible to evaluate

Establishing the Protocol Before Construction Starts

The change order protocol should be defined in the contract and reviewed during the pre-construction meeting at project start. Every stakeholder—owner, owner's representative, project manager, site superintendent—should understand the authorization process and confirm that no work proceeds without a signed change order.

This is not a formality. It is the mechanism by which the owner retains control over project cost and scope throughout construction.

Iron Sparrow Construction is based in North Carolina and takes on commercial and residential construction projects across the United States. Contact our team to discuss your project.