How Do You Price a Change Order?

Before pricing anything, read three parts of the contract: the changes article, the definition of cost (what counts as reimbursable), and any stated markup percentages. These decide what you can charge, how you must present it and how long you have.

Notice deadlines matter as much as the price. The federal changes clause, for example, allows no adjustment for costs incurred more than 20 days before the contractor gives written notice of a constructive change, except for an adjustment based on defective specifications, and requires the contractor to assert its right to an adjustment within 30 days of a written change order unless the government extends that period (FAR 52.243-4). Private contracts set their own periods. Missing one can cost the whole change.

Write down the cause too: an RFI answer, an owner request, a field condition or a design error. The cause decides who pays and is the first question an owner asks.

Direct cost is what the change costs you before any markup. Price it in four groups.

• Labor: hours by trade, times the burdened hourly rate. The burden is the cost on top of the base wage: payroll taxes, workers' compensation insurance, benefits and any union fringe. It varies by trade, state and company; use your own payroll figures, not a rule of thumb.
• Materials: quantity times unit cost, plus delivery and sales tax where it applies. Use the supplier quote or invoice.
• Equipment: rental invoices or your company's equipment rates, including delivery. Some public agencies publish rental rates contractors must use.
• Subcontractor quotes: each sub's priced quote for its part of the change. A sub's quote already includes the sub's own overhead and profit.

Keep each group separate. Owners and architects review them separately, and many contracts allow a different markup on each.

Markups cover the cost of running the business (overhead), the return on doing the work (profit), and the insurance and bond premiums that rise with the contract sum. There is no standard set of percentages. Contracts state them, cap them or leave them to negotiation.

Public specifications show how specific this gets. Caltrans' force-account rules, taught in its local-assistance payment module, add 35% to labor (after a labor surcharge), 15% to equipment, 15% to materials and 10% to subcontracted work. A private contract might instead allow 15% overhead and profit on self-performed work and 5% on subcontracted work. Neither is a norm for your job.

Two rules prevent most arguments:

1. Mark up each layer once. If the contract allows markup on a sub's quote, the sub's own markup is already inside it; do not add your full overhead-and-profit rate on top of theirs unless the contract says you may.
2. Apply insurance and bond where the contract says, usually as a percentage on the subtotal after overhead and profit, at your actual premium rates.

The job is fictional: "Cedar Row Office Fit-Out", built by a fictional GC. The owner asks for 12 additional floor boxes in an open-office area after the slab is poured. The GC self-performs coring and patching; a fictional electrical sub, "Halvorsen Electric", quotes the electrical work. The fictional contract allows 15% overhead and profit on the GC's own work, 5% on subcontracted work, then 1.0% insurance and 1.2% bond on the subtotal.

• Labor: two workers, 6 hours each, 12 hours. Base wage $48.50 an hour; the GC's labor burden on this crew is 38%. Burdened rate: $48.50 × 1.38 = $66.93. Labor: $66.93 × 12 = $803.16.
• Materials: grout and sleeves, $412.38, plus 8% sales tax (this example's local rate): $412.38 × 0.08 = $32.99. Materials: $445.37.
• Equipment: core drill, one day: $185.00.
• Subcontractor: Halvorsen Electric's quote, $9,860.00.

Each line is rounded to the cent at the line shown. The total markup is $12,265.60 − $11,293.53 = $972.07, about 8.6% of direct cost, because most of the cost is subcontracted work at the lower rate.

A change that touches the critical path needs days as well as dollars. State the days in the change order, and show why: the activities affected, the logic, and the new dates. In the example, the floor boxes must be installed and inspected before flooring starts, and flooring is on the critical path, so the GC asks for 2 working days.

Ask for time in the same document as the money. A change order signed with a price and no days usually ends the time question for that change, and a later delay claim for the same work starts from behind. If you cannot yet price the delay, say so in the change order and reserve the right in writing, as the contract allows.

Owners, architects and lenders review change orders the same way. Expect to provide:

• The reason and the document that caused it (the RFI, the owner's request, the bulletin).
• A scope description an outsider can follow.
• Each subcontractor's quote on its letterhead, with its own breakdown.
• Labor hours by trade and the rates, with the burden explained.
• Material quotes or invoices; equipment rates or rental invoices.
• The markup calculation, matching the contract's percentages.
• Days requested, with the schedule fragment.

Once executed, the change raises the contract sum that retainage is held on, and the sub bills it on its pay application.

• Markup on markup: full overhead and profit added on a sub's quote that already carries the sub's.
• Labor burden: a burden percentage with no payroll backing.
• Unit prices: the contract has unit prices for the work and the change was priced as a lump sum instead.
• Late notice: the change was priced after the contract's notice period ran out.
• Time left off: the change was signed with no days, and a delay claim followed.
• Scope already in the contract: the owner says the work was shown or specified; the RFI and the drawings settle it.

In Conflo a change order records its reason (RFI, owner request, field condition or design error) and can link to the RFI that caused it. You price it in lines, each with a cost code, a description and an amount, and set one markup percentage, from 0 to 50%, applied to the total cost; the owner price is cost plus markup, calculated to the cent. Days added or saved are recorded on every change order. Each one has a Files section everyone on it sees, and a Cost backup section for quotes, takeoffs and receipts that only the GC and that change order's sub see. It goes through GC review, then owner approval.

A subcontractor can quote a change order for its scope and sees its own cost, never the GC's markup or the owner price. Once executed, the change raises the contract sum on pay apps, and a sub's quoted cost is added to its commitment. Limits today: lines are amounts, without separate labor-hours, material or equipment fields, and there is one markup rate rather than separate rates for own work, sub work, insurance and bond.

A change order price that gets approved quickly is built in the same order every time: direct cost by group, the contract's markups applied once each, days with schedule logic, and backup a stranger could follow. The percentages differ from contract to contract; the method does not.

Read your changes article before the first change arrives, and price every change the same way.

See how change orders work in Conflo

1. FAR 52.243-4, Changes — Acquisition.gov, U.S. General Services Administration. Read October 16, 2026.
2. Local Assistance Module 8: Payment (January 2026), force account under Standard Specifications 9-1.04 — California Department of Transportation (Caltrans). Read October 16, 2026.