Change order
A change order is a written modification to the original contract scope or price — added work, a selection upgrade, or a condition discovered on site.
Change orders should adjust both the contract price and the job's budget, with overhead and profit markup applied. Unbilled or undocumented changes (scope creep) are a top cause of margin erosion, especially on remodels with allowances and selections.
Related terms
- Allowance — An allowance is a placeholder dollar amount in an estimate for a selection the client hasn't finalized — like tile, fixtures, or appliances.
- Schedule of values (SOV) — A schedule of values breaks the contract price into line items so progress billing can be tied to the portion of each item that's complete.
- Markup — Markup is profit measured against your cost — the percentage you add on top of cost to get your price.