What this guide covers
A change order is a written, signed change to a job's work, price or schedule. This guide covers running them on paving and concrete work: when you need one, how to price it, how to get it signed before the extra work starts, and how to make sure it ends up on the invoice. It's for owners and estimators, and for the foreman who has to make the call at 7 a.m. with a milling machine idling.
Where the money goes
Paving and concrete are outdoor work on somebody else's property, much of it below the surface. The estimate is built from what you could see. The job is built on what's actually there. The gap between the two is the change order, and how you handle that gap decides whether the job made money.
It usually goes the same way. The crew finds something. The foreman calls the property manager, who says "just take care of it." The crew takes care of it. Two weeks later the invoice has an extra $6,400 on it, and the property manager doesn't remember agreeing to $6,400. Now you're negotiating from behind, with a customer who already has the work.
A signed change order before the extra work starts turns that negotiation into a signature. That's the whole idea. The rest of this guide is about making it easy enough that it actually happens.
What triggers a change order
On paving and concrete, the triggers are predictable. If you've been doing this a while, you've seen all of these.
Base failure. The mill drops through soft base, or the excavator finds pumping subgrade under the old slab. The fix is an undercut: dig out the bad material, bring in stone, compact it, then pave or pour. Nobody could see it from the surface, and it isn't in the contract.
Overruns on unit-price items. The proposal carried 200 square feet of base repair as an allowance. The site has 900. The extra 700 is a change order at the proposal's unit price.
Owner additions. "While you're here, can you do the drive-through lane too?" Yes, on a change order.
Utilities and structures. A manhole that needs a riser ring, a valve box four inches below the new grade, a conduit right where the curb goes. Each is a small item with a real cost.
Drainage and grade. The lot was designed to drain to a catch basin that now sits higher than the pavement around it. Fixing that isn't paving. It's a change.
Weather. Rain shuts down the pour, the crew leaves, and coming back costs a day of moving the equipment back in and setting up again. Whether that's billable depends on the contract. If the contract says it is, it's a change order.
Spec changes. The owner's engineer bumps the surface course from 1½ inches to 2. That's a third more surface tons, and tons are money.
Site conditions the customer was responsible for. Cars still in the lot, a dumpster that was supposed to be moved, a locked gate. Standby time and a return trip are change orders if the proposal says they are.
Head off the ones you can
The best change order is the one you priced before it happened. Three things on the proposal do most of that work.
Unit prices for the predictable unknowns. Base repair per square foot or per ton of stone. Undercut per cubic yard. Extra mix per ton. Manhole adjustments each. Put them on the proposal as unit prices, with an allowance quantity if you like, and the change order becomes arithmetic instead of a new proposal.
Written exclusions. Say what's not included: unsuitable subgrade, hazardous material, utility work, permits, testing, moving cars. If an excluded item comes up, the conversation starts from "this is extra" instead of "is this extra?"
A time-and-materials clause. For work you can't unit-price in advance, the proposal should state the T&M rates: labor per hour by role, equipment per hour, and materials at cost plus a stated markup. A T&M authorization signed on site, with the rates already agreed, is the fastest change order there is. Expect the customer to want a not-to-exceed amount on it.
Pricing a change order
Change orders have a reputation as the place contractors pad. Don't. Price it the way you'd price the same work on a fresh proposal, and be able to show the math.
Quantities. Measure the extra work: square feet of undercut, tons of stone, tons of mix, feet of curb. If the customer's rep is on site, measure it with them.
Unit prices from the contract, if there are any. If the proposal has a unit price, use it. Walking away from your own unit price is how you lose the customer's trust for the rest of the job.
Cost plus markup if there aren't. Labor and equipment at your rates, materials at invoice plus the markup in your T&M clause. Show the lines.
What the change really costs. Extra work usually means delay. If the undercut takes a day, the paving crew that was coming tomorrow now comes the day after, and there may be standby or a return trip. Include it, and say why.
Overhead and profit. Change orders carry overhead and profit like any other work, at the markup your contract sets or the one you'd use on a proposal. What you shouldn't do is use a change order to win back margin you gave away on the original price.
Credits. Some changes take work out. If the owner drops the striping, or the base was better than expected and the allowance went unused, that's a deductive change order. Issuing it promptly is how you keep the customer believing the additive ones.
Here's a worked example. The proposal has base repair at $9.50 a square foot with a 200 square foot allowance. The crew finds 900 square feet of soft base. The change order is 700 × $9.50 = $6,650, plus one day of paving crew standby at the T&M rates in the contract. It adds one working day. The customer has seen the $9.50 before, so the only new numbers are the quantity and the day.
Getting the signature
This is the part that matters most, and it's the hardest part in the field. The customer's rep is on the phone, the crew is standing around, and the foreman doesn't have the authority or the paperwork to do it right.
Fix that ahead of time.
Decide who can approve, on both sides. Name the customer's signer on the proposal. Your foreman should know whether they can authorize a change order up to a set amount, or whether it always goes through the office.
Make it fast to write. A change order that takes an hour to write up won't get written. It should take five minutes: the change, the quantity, the price, what it does to the schedule, and a place to sign.
Send it to their phone. A change order emailed to the customer's rep, signable on their phone, gets signed while the crew is still on site. One that needs a printer and a scanner gets signed next week, or never.
Don't start the extra work without it. This is the rule, and it's the one everyone breaks. Keep the exceptions narrow: safety, or a situation where stopping costs more than the change. Even then, get a text or email that says "go ahead," and send the formal change order the same day.
Photograph the condition. Take timestamped photos of the soft base, the pumping subgrade, the conduit in the curb line. If the change order is ever disputed, the photos settle it.
Versions and the paper trail
A change order can change, too. The customer wants a smaller quantity, or a different fix. Keep every version. The one they signed is the one that counts, and the earlier ones show how you got there. Number change orders in order on each job (change order 1, change order 2) so the invoice, the schedule and the conversation all mean the same thing.
The change order should also say what it does to the schedule. "Adds one working day" is enough. A job that ends up late with no paper explaining why started with change orders that added cost and said nothing about time.
Getting it on the invoice
A signed change order that never gets billed is a donation. It happens more than anyone admits, especially on jobs with several change orders and a final invoice put together from memory.
On lump-sum jobs, each change order is a line on the final invoice with its number and the signed amount. On progress-billed jobs, it gets added to the schedule of values and billed as the work is done.
Reconcile at closeout. Every change order on the job should be signed and either billed or credited. If the signed total doesn't match the change order lines on your invoices, find the gap.
The customer side
Customers hate change orders. Mostly, they hate surprises. A change order presented as "here's what we found, here's a photo, here's the unit price from your proposal, here's the quantity, here's the total, and here's what it does to the schedule" is a fact. A change order that first shows up on the final invoice is an accusation.
Explain the unit prices when you present the proposal, before the job starts. "This is what base repair costs if we find bad base. We've allowed 200 square feet, and we only bill what we find." The customer who heard that in the sales meeting signs the change order in a minute. The one who didn't argues for a week.
A short checklist for the foreman
- Stop. Don't do the extra work yet.
- Photograph the condition.
- Measure the quantity.
- Write the change order from the unit prices or T&M rates on the proposal.
- Send it to the named signer.
- Get the signature, or at least a written go-ahead.
- Then do the work.
- Log what was actually done, so the office can reconcile it.
Where Pavr fits
Pavr is job management software for paving, sealcoating, striping and concrete contractors. In Pavr you write a change order on the job, draw what changed on its own layer of the site map, and send it. The customer gets it by email and signs on their phone, on the same page as their proposal, with a code from their email instead of a password. The original lot shows dimmed and the extra work lit. They sign the exact version they saw, and you keep the record of when they signed. If something should change before they sign, you change it and send it again. Change orders are numbered in order on each job.
Until it's signed, the part of the job it affects waits, and only the customer's signature puts it on the job. Once it's signed, it's on the invoice, so closeout doesn't depend on anybody's memory.
The lines are priced from today's plant prices and rates at the margin the customer signed on the proposal, so the change order reads like the proposal did. For work you can't price up front, a T&M authorization carries a not-to-exceed amount. It bills weekly, you get a warning at 80 percent and again at the cap, and the invoice stops there until you record the increase the customer approved. Crew photos are pinned to the map where the soft base was, which is where the picture is when the customer asks.
If you're shopping, make every demo run a real change order all the way to an invoice.