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Change Orders

What is a Change Order?​

A change order is a formal document that modifies the original contract scope after it has been signed. It allows you to track additions, deletions, or modifications to a project while maintaining a clear audit trail of all scope changes.

Key characteristics:

  • Separate document: Change orders are distinct contracts linked to the parent project
  • Additive: They modify the original contract value (up or down)
  • Tracked: All changes are recorded in project history
  • Signed: Require customer approval like the original contract

When to Use Change Orders​

Create a change order whenever the project scope changes after the original contract is signed:

  • Customer requests: Additional work, upgrades, or features requested mid-project
  • Unforeseen conditions: Hidden damage, code requirements, or site conditions
  • Deletions/credits: Removing scope or providing credits for work not performed
  • Modifications: Changes to materials, finishes, or design after approval
  • Substitutions: Material changes that affect pricing

Important: Always create a change order before proceeding with changed work to ensure proper documentation and payment.

Creating a Change Order​

Step 1: Create the Change Estimate​

  1. Navigate to the project
  2. Go to the Estimates tab
  3. Click New Estimate (do not modify the original estimate)
  4. Name it clearly (e.g., "Change Order #1 - Kitchen Upgrade")
  5. Add line items for the changes:
    • Additions: Regular positive pricing
    • Credits/Deletions: Use negative amounts

Step 2: Generate the Change Order Contract​

  1. Go to the Contracts tab
  2. Click New Contract
  3. Select Change Order as the contract type
  4. Link to estimate: Choose your change estimate
  5. Configure display options:
    • Choose which sections to include
    • Add custom terms if needed
    • Configure payment schedule
  6. Add signees: Include all required parties
  7. Click Send for Signature

The change order will be numbered automatically (CO-001, CO-002, etc.).

Pricing Changes​

Additions​

Price additions as you would a regular estimate:

Kitchen Island Addition
  Materials: $2,500
  Labor: $1,800
  Total Addition: $4,300

Credits and Deletions​

Use negative amounts for removed scope:

Delete Standard Countertops
  Materials: -$1,200
  Labor: -$600
  Total Credit: -$1,800

Net Change Calculation​

Readybuild automatically calculates the net change:

Original Contract: $45,000
Change Order #1: +$4,300
Change Order #2: -$1,800
Current Contract Value: $47,500

What Happens When a Change Order is Signed​

Once all parties sign the change order:

  1. Estimate locked: The change estimate becomes read-only
  2. Project updated: The sold amount increases (or decreases) by the change order total
  3. Invoices generated: Additional invoices are created based on the payment schedule
  4. Totals recalculated: All project financial totals update to reflect the change
  5. History recorded: The change is permanently tracked in project history

The parent project now reflects the cumulative value of the original contract plus all signed change orders.

Managing Multiple Change Orders​

Tracking Changes​

Each change order is numbered sequentially, making it easy to track the evolution of project scope:

  • Change Order 1: +$4,300 (Kitchen island)
  • Change Order 2: -$1,800 (Countertop credit)
  • Change Order 3: +$2,100 (Additional electrical)

Viewing Totals​

The Contracts tab shows:

  • Original Contract Value: Initial signed amount
  • Total Change Orders: Sum of all signed changes
  • Current Contract Value: Original + changes
  • Individual CO amounts: Each change order's impact

This provides complete visibility into how the project scope has evolved.

Change Order Best Practices​

Timing​

  • Document immediately: Create change orders as soon as scope changes are agreed upon
  • Before work starts: Get signatures before proceeding with changed work
  • Don't wait: Process changes promptly to avoid disputes later

Documentation​

  • Clear descriptions: Be specific about what's changing and why
  • Include photos: Attach images of conditions or requested changes
  • Reference original: Note what section of original contract is being modified
  • Explain impact: Document schedule implications if applicable

Communication​

  • Set expectations: Explain how change orders affect price and timeline
  • Get approvals: Ensure all stakeholders sign before work begins
  • Update regularly: Keep customers informed of cumulative changes

Organization​

  • One change per order: Don't combine unrelated changes
  • Sequential numbering: Use the automatic numbering system
  • Consistent naming: Use clear, descriptive names for each change

Common Change Order Scenarios​

Customer Upgrades​

Scenario: Customer wants to upgrade flooring during construction.

Process:

  1. Create estimate with upgraded materials
  2. Show comparison to original allowance
  3. Create change order for the difference
  4. Get signature before ordering materials

Discovered Conditions​

Scenario: Hidden water damage found during demolition.

Process:

  1. Document with photos
  2. Create estimate for remediation work
  3. Explain necessity to customer
  4. Process change order for additional work

Design Changes​

Scenario: Customer changes mind on kitchen layout after approval.

Process:

  1. Create new estimate with revised layout
  2. Document impact on materials and labor
  3. Note any schedule implications
  4. Get signature on change order before proceeding

Material Substitutions​

Scenario: Specified product discontinued, upgrade required.

Process:

  1. Estimate price difference
  2. Create change order (may be credit or addition)
  3. Get approval for substitution
  4. Update project documentation