Your contractor calls on a Tuesday afternoon. “Good news and bad news,” he says. “We opened the wall behind the sink. The good news is I know why the floor felt soft. However, the bad news is it is going to cost about $1,800 to fix.”
Your stomach drops a little. After all, you did not plan for this. But you also cannot leave rotten wood under a brand-new kitchen. So what happens next? Somebody is going to say the words “change order.”
Most homeowners meet that phrase for the first time in the middle of a project, with a pen in one hand and a worried look on their face. Therefore, this guide explains it before that day comes: what a change order is, why it happens, what it does to your budget and schedule, and how to handle one calmly.
The quick answer
A change order is a written, signed agreement that changes your original remodeling contract. Specifically, it says what is changing, what it will cost (or save), and how much time it adds. It is not a bad thing. Without one, extra work is just a handshake, and handshakes are how budgets get lost. In addition, a good rule of thumb is to keep about 10 percent of your budget ready for change orders, and more for older homes.
What a change order is, in plain words
When you hire a contractor, you sign a contract. It says what work will be done, what it will cost, and when it will be finished. In short, a change order is a short, signed add-on that updates that contract when something changes.
Think of it as the receipt for a plot twist. For example, you decided to add something, or the house surprised you, and the change order records exactly what happened and what it costs.
| Part of a change order | What it should say | Why it matters |
|---|---|---|
| What is changing | A clear description of the added, removed, or swapped work | Stops “I thought that was included” arguments |
| Why | The reason, such as a hidden problem or your request | Shows who the change belongs to |
| Cost | The price to add or subtract, ideally broken into labor and materials | Lets you check the math |
| Time | How many days it adds or removes | Time is a hidden cost of every change |
| New contract total | The original price plus all changes so far | Keeps a running score |
| Payment terms | When the extra money is due | Avoids a surprise bill at the end |
| Signatures and date | Both you and the contractor, before work starts | Makes it official |
Why change orders happen
Here is the part that surprises people. In reality, contractors do not usually invent change orders to pad the bill. A trade magazine for builders, the Journal of Light Construction, notes that beyond hidden conditions, most changes start with the homeowner. For example, here are the usual causes.
| Cause | Example | Who it usually comes from |
|---|---|---|
| You change your mind | Upgrading the tile, adding outlets, moving a cabinet | Homeowner |
| Hidden conditions | Rot, old wiring, mold, or plumbing that is not up to code | The house |
| Rules and inspections | An inspector requires a fix that was not in the plan | The city or code |
| Materials | A product is discontinued, late, or much pricier | Suppliers |
| Unclear plans or allowances | A placeholder amount for tile or fixtures that you choose later | Planning gaps |
Notice the last row. An allowance is a placeholder budget for something you have not picked yet. If your tile choice costs more than the allowance, the difference shows up as a change order. That is why early decisions save so much money. Therefore, to see how allowances hide inside bids, read what to look for in a written bid.
Meanwhile, older houses make surprises more likely. If yours is showing its age, our guide to early warning signs in an old house can help you spot trouble before demolition day.
How a change order hits your budget and schedule
The trouble with change orders is that each one feels small. For instance, a new outlet here, a nicer faucet there. However, small things add up quietly. Here is a made-up example to show how.
| Item | Cost | Running total |
|---|---|---|
| Original contract | $30,000 | $30,000 |
| Change order 1: extra outlets in the kitchen | +$600 | $30,600 |
| Change order 2: upgrade the backsplash tile | +$1,400 | $32,000 |
| Change order 3: repair rotten subfloor | +$1,800 | $33,800 |
As you can see, three small “yeses” turned $30,000 into $33,800, which is almost 13 percent more. That is right in line with what builders say. The Journal of Light Construction suggests that 10 percent of the project budget is a good benchmark for change orders, and adds that they are sometimes higher but rarely lower. Additionally, some remodelers go further and recommend keeping 20 percent in reserve for extra work and surprises.
Why a “small” change costs more than you think
- Markup. Many remodelers charge a higher markup on change orders than on the original job, because each one takes extra paperwork, planning, and scheduling.
- Time. A change can push back other trades, and a longer job costs the contractor more to run. Therefore, good change orders include a time extension.
- Disruption. Stopping, re-measuring, and re-ordering is slower than doing it right the first time.
- Rework. Changing something after it is built means paying for the work twice.
Money and time are twins. Therefore, if you want to understand how one affects the other, see why remodel schedules slip.
Good change orders vs bad ones
| A good change order | A bad change order |
|---|---|
| Written and signed before the work starts | Verbal, or “we’ll sort it out later” |
| Describes the exact work | Vague, like “extra work in kitchen” |
| Shows the price clearly, with labor and materials | A single lump sum with no detail |
| States how many days it adds | Silent about the schedule |
| Shows the new total contract price | Arrives as a surprise at the end |
| Gives you a choice, including doing nothing when it is safe | Presents it as take it or leave it |
If a contractor does the extra work first and sends a bill afterward, push back politely. Specifically, ask for the change order in writing, with the price, before any more work happens. For hidden problems that threaten safety, like a gas leak or a rotten beam, work may need to move fast, but you can still get the numbers in writing the same day.
What the law says
Rules differ by state, but many states require home improvement changes to be in writing. For example, California is a clear case. Under its home improvement contract law, a change order only becomes part of the contract if it is written and signed by both sides before the extra work starts. In addition, it must describe the work, the cost added or subtracted, and the effect on the payment schedule.
However, do not assume your state is the same. Check your state’s contractor licensing board or consumer protection office, and put the change order process in your contract. Our guide to when the city has to sign off also covers what to expect from inspectors, since a failed inspection is one common source of change orders.
How to handle one, step by step
- First, pause. Unless it is a safety issue, wait 24 hours before you decide. The “while we’re at it” urge often fades overnight.
- Next, ask why. Is this fixing a problem, or adding something you want? Both are fine. They just belong in different mental boxes.
- Then, ask for options. Is there a cheaper material, a smaller fix, or a way to do it later?
- Also, get it in writing. You want the description, the price, the schedule impact, and the new total.
- Meanwhile, compare it to your quote. Does the price match the unit costs or allowances in your contract?
- Then, sort it: must, should, or dream. If you need a method, our guide to building a safety cushion into your plan shows how.
- Finally, sign before the work starts, pay as the contract says, and keep your copy.
- After that, update your budget sheet right away, so you always know where you stand.
Bathrooms are a common place for surprises, since plumbing, tile, and waterproofing hide so many problems. Therefore, if you are planning one, check bathroom price drivers before you set your cushion.
How to avoid the avoidable ones
You cannot avoid every change order. After all, rot is rot. But many of them are optional, and a few smart habits cut them sharply.
- First, pick everything before demolition. Tile, faucets, lights, cabinets, and appliances. A decision made late costs more than a decision made early.
- Second, make the scope very specific. The more detailed the contract, the fewer arguments about what was “included.”
- Third, ask the surprise question. Say to each contractor, “What could surprise us on this job, and what would it cost?” Good ones will have honest answers.
- Also, ask about unit prices for hidden problems. Some contractors will agree in advance on a price for things like extra subfloor or rotted framing, so you are not negotiating under pressure.
- Moreover, plan the layout early. Moving a sink or a wall is a common change order. See how moving a kitchen sink changes the job before you finalize the plan.
- Finally, plan the order of work. Late changes often come from doing things in the wrong sequence. Read which jobs have to happen first.
A sample change order you can adapt
This is a simple outline, not legal advice. Therefore, ask your contractor for their form, and check that it covers each of these parts.
| Field | Example |
|---|---|
| Project and address | Kitchen remodel, 123 Maple Street |
| Change order number and date | No. 3, dated May 12 |
| Description of change | Remove rotten subfloor near sink and install new plywood subfloor, about 24 square feet |
| Reason | Hidden water damage found after demolition |
| Cost | Labor $900, materials $500, markup $400, total $1,800 |
| Time effect | Adds 2 working days |
| New contract total | $33,800 (see the earlier example) |
| Payment due | On signing, as the contract states |
| Signatures | Homeowner and contractor, both dated before work begins |
Frequently asked questions
What is a change order in construction?
In short, it is a written document that changes the scope, price, or schedule of an existing construction contract. Both the owner and the contractor sign it, and it becomes part of the contract.
Who pays for a change order?
Usually the homeowner pays when the change is requested by the homeowner or caused by hidden conditions in the house. However, if the contractor makes a mistake, the contract normally puts that cost on the contractor. Therefore, check your contract to see who pays for what.
Can a change order lower the price?
Yes. If you remove work or choose a cheaper material, the change order can be a credit that reduces your total. However, it should still be written and signed.
Is an email or text message enough?
It is better than nothing, but a signed change order is the safest form. For example, some states, such as California, specifically require a written change order signed by both parties before the work begins. Therefore, check your state’s rule.
How much should I budget for change orders?
Generally, a common benchmark is about 10 percent of the project cost, and many remodelers suggest 15 to 20 percent for older homes or projects that open walls and floors. In fact, costs are sometimes higher than 10 percent, but rarely lower.
What if I think the change order price is too high?
First, ask for a breakdown of labor, materials, and markup, and compare it with the prices in your contract. Then, you can ask for a cheaper option, get a second opinion, or decline the change if it is not needed for safety or code.
Final thoughts
A change order is not a sign that something went wrong. In fact, it is a sign that someone is keeping score. The projects that end badly are usually the ones with no score at all, where extra work happens by handshake and everyone remembers the numbers differently.
So when your contractor says, “Good news and bad news,” take a breath. Therefore, ask for the details, ask for the price, ask for the time, and ask for it in writing. Then decide with a clear head. That one habit can protect your budget more than any discount ever will.
Keep planning your project
More practical, plain-English guides on costs, permits, design, and hiring from the RemodelPulse team.
