How Should an Owner Review a Change Order?

Start with the contract documents, not the price. A change order is owed only for work that differs from what the contract required. Ask the architect, or whoever wrote the drawings, whether the work was shown or specified. Then read the cause the contractor gives: an owner request, a design error or omission, a concealed condition, or an RFI answer that changed the design.

Check two more things before pricing. Is the work covered by an allowance already in the contract? Then it is an allowance adjustment, not new money. And did the contractor give notice on time? Federal contracts, for example, allow no adjustment for costs incurred more than 20 days before written notice of a constructive change (FAR 52.243-4); private contracts set their own periods.

The best check is your own number. The U.S. General Services Administration's cost policy (P120) has its estimator prepare an independent estimate before a change request goes to the contractor, at the same level of detail as the contractor's proposal, and review the proposal's costs for accuracy, reasonableness and allowability. Most private owners will not go that far on every change, but the method scales: have your architect, cost consultant or owner's representative price the large ones.

• Labor: hours that fit the scope, at rates backed by payroll records, not a round percentage.
• Materials: supplier quotes or invoices, with tax and delivery where they apply.
• Subcontractor work: each sub's own quote, with its breakdown.
• Credits: when work is swapped, the net is the new work minus the deleted work. P120 has its estimator compute the net cost or credit the same way, and counts decreases and increases at their full value when deciding whether a change needs an independent estimate.

Your contract's changes article usually states the markups: overhead and profit on the contractor's own work, a lower rate on subcontracted work, and sometimes insurance and bond at cost. Check each percentage against the contract, and check what it is applied to. The two common errors are a self-performed rate applied to a subcontractor's quote, and markup added on top of a sub's quote that already contains the sub's own markup at a rate the contract does not allow.

If your contract is silent on markups, the rate is negotiated, and a published public rate is a reasonable reference. To see how a markup changes the total, try the change order pricing calculator; the contractor's side of the same math is in how to price a change order.

Days cost you money too: extended general conditions, later occupancy, and, if the days are left open, a delay claim later. Ask for the schedule fragment: the activities the change touches, whether they are on the critical path, and the new dates. P120 asks for schedule-related and impact costs to be shown as a separate part of each estimate; ask the contractor to do the same, so you can see what you are paying for time.

If a change has no effect on the critical path, it should carry no days. If it does, approving the days in the same change order as the money settles the question for that change.

The job is fictional: "Harbor Point Library Renovation". The owner asks for 18 reading-room light fixtures to be a different model. The GC's change order carries the electrical sub's quote of $14,600.00, a 15% GC markup, 2% for insurance and bond, and 6 days. The fictional contract allows 5% on subcontracted work and insurance and bond at 2%.

Every figure is rounded to the cent where shown: $14,600.00 − $3,816.00 = $10,784.00; 5% of that is $539.20; and $17,125.80 − $11,549.66 = $5,576.14.

Keep a running total of approved and pending change orders against the contingency you set aside. Once a change is executed it raises the contract sum, and the contractor bills it on the next pay application, where retainage is usually held on it too.

In Conflo the owner sees a change order once the GC sends it for approval: the scope, the reason and the RFI it came from, the schedule days, each line at the owner's price, and the decision due date. The GC's cost codes, cost lines and markup are not shown to the owner, and neither is the cost backup; the Files section is shared with everyone on the change order.

A Contract impact panel shows the original contract, the change orders already approved, this one, what the contract becomes if it is approved and the percent change against the original, and the other change orders still pending. The owner approves in one step, which executes the change order, or rejects it with a reason the GC sees. Limits today: there is no place for the owner's own estimate of the change, and no field for a requested credit; put those in the rejection reason or a file.

An owner's review is four questions in order: is it a change, is the cost right, are the markups the contract's, and are the days real. Ask for the credit when work is swapped, and price the big ones yourself before the contractor's number arrives.

Send back what you cannot check with the reason in writing, and approve the money and the days together.

See how change orders work in Conflo

1. P120, Public Buildings Service Cost and Schedule Management Policy Requirements (GSA Order PBS 1000.6B, November 7, 2022) — U.S. General Services Administration, via the Whole Building Design Guide. Read October 16, 2026.
2. FAR 52.243-4, Changes — Acquisition.gov, U.S. General Services Administration. Read October 16, 2026.