What is change orderin construction?

A change order is a signed agreement on scope, price, and time before the changed work is billed. A construction change directive (CCD) orders the contractor to proceed even though price or time is not yet agreed, with cost resolved later, often through tracked time and material. CCDs keep the job moving during a pricing dispute, but they shift more documentation burden onto the contractor.

The contract's changes clause controls it, so read that clause before pricing anything. On US commercial work it is typical to see allowed overhead and profit in the range of 5% to 15% on self-performed work, with a lower allowed percentage on subcontracted work, but these are negotiated contract terms, not market rules. Some contracts also cap the total combined markup when multiple tiers each add a percentage.

The contractor takes on real payment risk, because most contracts require written authorization before changed work is compensable. Recovery through the claims or disputes process is sometimes possible, but it is slow, uncertain, and expensive. Standard practice is to submit the change order request with backup, get a signature or at least a written directive, and document everything (daily reports, photos, time and material tickets) if work must proceed before execution.