Change order: what to include and how to bill it

A change order is a written agreement between the owner and the contractor, and sometimes the architect, that changes a signed construction contract. It adds or removes work, raises or lowers the contract price, and moves the completion date when it needs to. Once signed, it becomes part of the contract. Without one, extra work is a verbal favor you hope to get paid for.

Change orders are where many contractors lose money they've already earned: the homeowner asks for an upgrade on a Tuesday, the crew does it on Wednesday, and the price comes up for the first time on the final invoice. This guide covers what a change order is, the fields your change order form needs, how a change rewrites the contract price and the payment schedule, and how to collect for it by card or ACH.

What is a change order?

It's the document that records a change to the work after the contract is signed, with its price and time effect agreed in writing. AIA Contract Documents describes its G701-2017 Change Order form as the way to put agreed changes in the work into effect, adjusting the contract sum and the contract time, with signature lines for the owner, the contractor and the architect (AIA Contract Documents).

Homeowner jobs use the same idea with less paperwork, and some states set minimum contents. California's Contractors State License Board tells consumers that a change to the contract price or the scope of work has to be made with a written change order signed by the customer and the contractor before the change (CSLB).

What is a construction change order versus a directive or field order?

A change order is the agreed version. When the parties haven't agreed yet, other documents fill the gap:

AIA's guide to change orders points to the construction change directive as the alternative when the parties haven't agreed on the change and its adjustments (AIA Contract Documents). On a homeowner job without an architect, treat any oral instruction as a draft change order and get it signed before the crew starts.

What should a change order include? A change order template

A complete change order answers five questions: what changed, why, what it costs, how it moves the schedule, and how it gets paid. Use the fields below as your change order template; copy them into your own form or your estimating software.

1. Project name, address and the original contract date.
2. Change order number, numbered in sequence for the job.
3. Date issued and who requested the change (owner, contractor, architect, inspector).
4. Description of the change in plain words, with drawing or specification references.
5. Reason for the change: owner request, unforeseen condition, code requirement, design error.
6. Price breakdown: labor, materials, equipment, subcontractors, and overhead and profit.
7. Amount added to or subtracted from the contract.
8. Original contract sum, net change from earlier change orders, sum before this change, and the new contract sum.
9. Days added to or removed from the schedule, and the new completion date.
10. Effect on the payment schedule: a new line, a changed milestone amount, or a credit.
11. Payment terms for this change: any deposit, when it's billed, and accepted payment methods.
12. Signatures, printed names and dates for each party.

Fields 8 and 9 mirror what AIA's G701 tracks: the original contract sum, the net change from previously authorized change orders, the sum before the change, the increase or decrease, the new sum, and the change in contract time with the new date of substantial completion (AIA Contract Documents).

Field 10 is a legal requirement in some places. California's Business and Professions Code section 7159 says a change order isn't enforceable against the buyer on a home improvement contract unless, before the work starts, it identifies in writing the scope of work, the amount added or subtracted, and the effect on progress payments or the completion date (Cal. B&P Code 7159). Even where no law requires it, a change order form without field 10 leaves the payment question open, and open questions turn into disputes.

How does a change order change the contract price?

Each signed change order adds to or subtracts from the running contract sum, and the next one starts from the new total. Keep a log so the math never drifts.

A made-up kitchen remodel in Austin shows the running total. The original contract is $48,000. Change order 1 upgrades the cabinets for $3,600 ($3,000 in special-order materials and $600 in labor). Change order 2 deletes a pendant light the owner decided against, a credit of $800.

Credits belong on change orders too. A deleted item that never gets a written credit is the homeowner's first complaint at the final walkthrough, and it's a fair one.

How does a change order affect the payment schedule?

It changes when money comes in, not just how much. Every change order should say where its amount lands in the schedule: as a new line, folded into an existing milestone, or as a credit against a later payment.

The same Austin kitchen, before and after the two change orders (figures made up):

The schedule still adds up to the contract sum, and every dollar of each change order has a home. On jobs billed through a schedule of values and pay applications, each signed change order becomes its own line; our guide to progress billing shows how that line moves through each pay app, so we won't repeat it here.

Watch state limits on collecting ahead of the work. California's licensing board reminds contractors that payments after the down payment can't exceed the value of the work performed or the materials delivered (CSLB). A contractor in California should check how that rule applies before asking for money on a change order whose materials haven't arrived.

Should you bill a change order before or after the work?

Bill materials when you commit to them, and bill labor when it's done. That simple rule covers most jobs.

What you shouldn't do is save every change for the final invoice. Federal contracts show why: under the FAR Changes clause at 52.243-4, a contractor must assert its right to an adjustment within 30 days of receiving a written change order, and a proposal asserted after final payment isn't allowed (FAR 52.243-4). Private contracts often have their own notice clauses. Read yours, and treat its deadline as real.

How do you collect a change-order deposit by card or ACH?

Send the signed change order with a payment link, or take the card on site when the owner signs. Which one depends on where you are and how large the deposit is.

Card-present payments cost less. Visa's interchange schedule effective April 18, 2026 prices a Visa Signature consumer credit card at 1.65% plus $0.10 when it's tapped or inserted, and 2.05% plus $0.10 when it's keyed into a web page (Visa). On the $3,000 cabinet deposit in our example, that's $49.60 in person against $61.60 by payment link, before any processor markup. If the homeowner is standing in the kitchen when they sign, tap the card then.

For large change orders, ACH usually makes more sense. Clearo's ACH payment processing lets owners pay from a bank account, priced by quote, and Clearo says ACH payments usually fund the next business day. Our virtual terminal sends invoices and payment links, and our mobile payments cover tap to pay and card readers on site.

The signed change order is also your dispute evidence. Mastercard's chargeback guide lets some disputes over services be filed within 120 calendar days of when the services ended, up to 540 days in all (Mastercard). A card payment for a change order with no signature behind it is easy for a homeowner to dispute months later. Our guide to credit card processing for contractors covers deposits, readers and fees in more detail.

Change orders on federal and public jobs

Public contracts are stricter about notice. Beyond the 30-day assertion window above, FAR 52.243-4 treats an oral or other informal order as a change only if the contractor gives written notice stating the date, circumstances and source of the order and that it regards the order as a change. Costs incurred more than 20 days before that notice generally can't be recovered, except for defective specifications (FAR 52.243-4).

State and local agencies set their own rules, so read the changes clause in the contract itself. On a public job, the change order process belongs in your project startup checklist, not in the final week.

Change orders, lien waivers and the final payment

An unpaid change order is money a careless lien waiver can give away. When you sign a progress waiver, list any signed but unpaid change orders as exceptions until they're paid. Our lien waiver guide explains the exceptions line and the difference between conditional and unconditional waivers.

Common change order mistakes

• Starting extra work on a handshake and pricing it later.
• Leaving the payment terms off the change order, so nobody knows when it's due.
• Forgetting written credits for deleted work.
• Losing track of the running contract sum across several change orders.
• Billing every change on the final invoice, when the owner's patience and budget are thinnest.
• Missing a contract's notice deadline for claiming a change.
• Taking a card payment for a change with no signed document behind it.

Your next step

If change orders and deposits make up a growing share of what you collect, a recent statement shows what those payments cost by card and by method. Send one for a free statement review, or contact us to set up payment links, on-site card readers and ACH for your jobs. Our page on home services payment processing covers how we work with contractors and trades.