Here's something I've seen happen more times than I can count: a contractor finishes a job, the client is happy, the work is solid, and the job still loses money. You dig into the numbers and find $18,000 in changes that were never documented or never billed.
Work that was done. Work that was real. Work that came out of someone's pocket.
Change orders are not paperwork. They're revenue. Every undocumented change is money transferred directly from your bank account to your client's.
Why Contractors Don't Bill Change Orders
It's almost never laziness. It's usually one of these four reasons:
Fear of conflict
Telling a client something will cost more feels confrontational, especially mid-project when the relationship matters.
Assumes it'll balance out
"It's just a small thing, I'll make it up on the next phase." Except you never do.
They forget
Changes get requested verbally on the job site. The crew does the work. A month later nobody remembers.
No system
There's no process for capturing, pricing, and presenting changes, so it just doesn't happen.
The Real Cost of Unbilled Changes
On a typical residential remodel, changes represent 5-15% of the original contract value. On commercial projects, it can be higher.
If you're doing $2M in revenue and 8% goes out in undocumented changes, that's $160,000 per year in work you did and didn't get paid for. That number doesn't show up on any report. It just quietly drains your profitability.
Build a Change Order Process That Gets Used
The best process is one your field team will actually follow. That means fast, simple, and available where the work happens.
Define What a Change Order Is, For Everyone
Every person on the job site needs to understand: anything outside the original scope is a change. Client requests, unforeseen conditions, errors in design documents, and anything added verbally.
Put it in writing on your contracts: all changes to scope must be documented before work begins. This sets expectations before anyone gets surprised.
Capture Changes in Real Time
Verbal requests on the job site are where most changes get lost. When a client says "while you're at it, can you move that outlet?", that's a change order. Document it immediately, even informally, so you don't forget.
- ✓Description of the change requested
- ✓Who requested it (client, architect, engineer)
- ✓Date and time of request
- ✓Estimated hours and materials
- ✓Any verbal approvals received
Price It Before You Do It
The biggest mistake: doing the work first and trying to price it after. Price the change, present it to the client, get approval, then do the work.
When a client approves a change in writing before the work starts, there's no awkward conversation after the fact. The amount is already agreed to. This is not bureaucracy, it's how you get paid.
Use a Formal Change Order Document
A professional change order includes:
- ✓Reference to the original contract
- ✓Clear description of the scope change
- ✓Dollar amount broken into labor and materials
- ✓Revised project timeline (if applicable)
- ✓Signature lines for both parties
Professional presentation matters. A change order that looks like a proper document gets treated like one. A note scrawled in a text message gets negotiated away.
Track Them All in One Place
Every change order, submitted, approved, rejected, pending, should be visible in one place. Know the current value of open changes before any client conversation. Going into a billing call without that number is a reliable way to forget something.
How to Have the Conversation
Most contractors dread the change order conversation because they think it'll upset the client. In reality, clients who respect you expect it. You're running a business.
How to Frame It
"Hey, I wanted to get you the pricing on that change before we move forward. Here's what it's going to add to the project."
Present it as a professional service, here's the work, here's the cost, here's your approval form. That's it.
Clients who push back on every documented change expected you to absorb those costs. That's a conversation to have now, about scope and contract terms, not after the job is done.