Change Orders in Construction: How Subs Get Paid for Extra Work

DEFINITION

change order

A written amendment to the original contract authorizing scope/cost/schedule changes.

DEFINITION

constructive change

An owner or GC directive that changes the scope without a formal change order — creates a claim situation if undocumented.

DEFINITION

claim

A formal demand for compensation for work outside the original contract scope, typically filed when change orders are denied.

DEFINITION

back-charge

A deduction from your payment for costs the GC claims you caused — often disputed, always in writing.

Why change orders are the top reason subs don’t get paid what they earned

Most specialty trade subs are good at their trade. They are not good at change order paperwork, and that gap costs real money.

The pattern is consistent: a GC’s superintendent asks your foreman to extend a conduit run, reroute a pipe around a last-minute beam, or add receptacles that weren’t in the drawings. The foreman says sure, the crew does the work, and nobody writes anything down. Three weeks later, the pay application comes back short. The GC says they never authorized extra work. Your foreman remembers the conversation differently than the superintendent does.

That’s not a bad GC problem. That’s a documentation problem.

Every scope deviation — no matter how small, no matter how good the relationship — needs a paper trail. Not because GCs are dishonest, but because the superintendent who directed your crew and the project manager reviewing invoices are often different people with different information.

Constructive changes and verbal approvals

A constructive change is what happens when a GC directs you to do something different without issuing a formal change order. “Move the panel six feet left” is a constructive change. “Add a circuit for the new equipment” is a constructive change. These happen constantly on active jobs.

The problem isn’t the work — it’s the missing paperwork. If a constructive change adds cost to your job and you don’t document it at the time, collecting payment for it later is an uphill fight. The GC’s position is that the direction was within your original scope. Your position is that it wasn’t. Without contemporaneous documentation, it becomes a he-said/she-said argument where the person holding the checkbook usually wins.

Verbal approvals carry the same risk. A superintendent’s handshake approval means something in the field and nothing in the dispute process.

The cost estimate before the change order starts

The best time to price a change order is before the work begins.

Put together a written estimate — labor hours by classification, material quantities and costs, overhead and markup. Submit it. Get it approved. Then do the work.

Estimating after the fact forces you to reconstruct costs from timesheets and receipts that may be incomplete, and it gives the GC room to second-guess every number. An approved estimate before work starts eliminates most of that friction.

Even a rough not-to-exceed number, submitted in writing and acknowledged by the GC, is better than no estimate at all. It establishes that extra work is happening, that it has a cost, and that both parties knew about it before work started.