Construction change order

Most projects see three kinds of changes flowing through them:

1. Owner-initiated changes. The homeowner upgrades the kitchen island, swaps appliances, asks for hardwood instead of LVP. These are scope additions priced and approved before work starts.

2. Field-initiated changes. Demo reveals existing conditions that require rework — old knob-and-tube wiring, hidden rot, undisclosed plumbing. The contractor proposes a change order to cover the extra scope.

3. Design changes. Architect or engineer issues revised drawings — a wall moves, a beam is added, an inspection requires an upgrade. The contractor prices the impact.

There is also the Construction Change Directive (CCD) — a written authorization to proceed with a change before final price is agreed. Used when schedule can't wait for negotiation. The CCD is later converted to a formal change order once the price is locked in.

AIA G701 is the industry-standard change order document. It captures: the change order number, project information, description of the change, attached drawings or scope description, cost impact (with optional breakdown), schedule impact, and signatures from the contractor, architect (if applicable), and owner.

Once executed, the G701 amends the contract. The original contract sum becomes the contract sum + the sum of all approved change orders, and the schedule extends by any approved time impact.

For sub-level change orders, contractors often use their own format. The same elements apply: description, price impact, schedule impact, signatures.

The pattern is consistent: a sub performs extra work without a signed CO, the work happens, an invoice arrives with the extra on it, the GC or builder pays it because the work was done, and there's no authorization to bill the owner. The cost gets stuck on the GC's P&L.

A single missed change order of $5,000–$8,000 wipes out the margin on most residential trade scopes. Across 15–25 trades on a typical build, even a 5% miss rate amounts to tens of thousands of dollars in unbilled work per year. This is one of the most common — and most preventable — sources of cost leakage in residential construction.

Rule 1: Require written COs before extra work begins. The hardest discipline to enforce. Field PMs know it's the right rule but face schedule pressure to keep moving. The only way to enforce it is to make it impossible to invoice without a CO on file — which is exactly what Kiron's Ella does.

Rule 2: Match every invoice line to the original quote or an approved CO. If a line on an invoice doesn't reference work in the original quote, it needs a CO behind it. Manual review misses this constantly. Ella does it automatically.

Rule 3: Track cumulative CO impact in real time. Five small COs across the project can quietly push the contract from $1.4M to $1.55M before anyone notices. A real-time running total prevents the surprise.

Ella reads every change order that lands in your project inbox — AIA G701, custom forms, or plain email. She extracts CO number, description, price impact, schedule impact, and signature status. She tracks running totals per project. When a sub invoice references work outside the original quote, she checks for an approved CO on file. If one doesn't exist, the invoice is held until the CO is signed.

The result: missed COs become rare, and the most preventable source of margin loss on residential builds gets cut to near zero. See the full feature breakdown at change order verification.