Change Order Review

The four pillars of change order review

An effective change order review covers four areas: markup verification, entitlement screening, documentation completeness, and cross-change analysis. Addressing all four gives owners a complete picture of whether a submission is fair and properly supported.

Markup verification

Most construction contracts cap the markup rates a contractor can apply to change order costs. Common caps include limits on labor burden, overhead, profit, subcontractor markup, bond, and insurance. Verifying whether the contractor's applied rates exceed these caps is often the fastest way to identify dollar savings.

Entitlement screening

Not every change order claim is entitled to payment. Entitlement depends on whether the work was excluded from the original contract scope, whether proper notice was given, and whether the contractor bears the risk under the contract's allocation of risk provisions.

Documentation review

Change orders should be supported by backup documentation proportional to their size and pricing method. Time and material change orders require contemporaneous time records. Lump sum changes require a detailed estimate with subcontractor quotes. Missing or inadequate documentation is a basis to defer approval.

Cross-change analysis

Individual change orders don't exist in isolation. Reviewing each submission against the full change register catches duplicate charges, repeated mobilization costs, and fragmentation patterns that are invisible when looking at one change at a time.