Change Orders: Price Them, Write Them, Get Them Signed

“The customer added work. How do I charge for it?” Halfway through a job the homeowner walks out and asks for one more thing: stairs down to the yard, an extra outlet, the bedroom painted too while you are here. The work is rarely the problem. The trouble starts when the price is said out loud in the driveway, the work gets done, and the final invoice is the first time anyone sees the number in writing.

A change order fixes that. It is a short document that changes the contract: what is being added or removed, what it costs, how it moves the schedule and the payments, signed before the work starts. Some states make that the rule, not a good habit.

Why an unsigned change is hard to collect

California is the clearest example. Its home improvement law says “an extra work or change order is not enforceable against a buyer unless the change order sets forth all of the following”: the scope of work, the amount to be added or subtracted from the contract, and “the effect the order will make in the progress payments or the completion date” (Bus. & Prof. Code §7159.6(a)). The law also requires the contract “and any changes to the contract” to be “in writing and signed by the parties” before the work they cover begins (§7159(d)). The contract must include a change-order form that becomes part of it only when signed before that work starts (§7159(c)(5)), and it must carry a heading, “Note About Extra Work and Change Orders,” that tells the owner exactly that.

The same section protects you, too: “The buyer may not require a contractor to perform extra or change-order work without providing written authorization” (§7159.6(b)). And it leaves a door open: skipping the paperwork “does not preclude the recovery of compensation for work performed based upon legal or equitable remedies designed to prevent unjust enrichment” (§7159.6(c)). Read that as a lawsuit to prove what the work was worth, not as an invoice the customer pays.

New Jersey’s consumer affairs rule reaches the same place by another road: home improvement contracts over $500, “and all changes in the terms and conditions thereof shall be in writing” and signed by all parties (N.J.A.C. 13:45A-16.2(a)12). Other states have their own wording, and the contract rules behind it are covered in What a Home Improvement Contract Must Say. Even where no statute says it, a signed change order is the only clean record of what was agreed.

Price the change at your full rate

Change work tempts a discount: you are already there, the customer is friendly, and the number has to come out on the spot. Resist it. A change can cost you more per hour than the work you bid, not less: it interrupts the sequence, can need its own materials run and sometimes its own inspection. Price it the way you priced the job, then add what the change itself costs you.

• Labor at your real rate, built from the loaded hourly cost of your crew, not from what you pay them. Working out labor burden shows how.
• Materials at your normal markup, the same as on the original bid. If markup and margin still get mixed up in your office, read Markup vs. Margin first.
• The extra trip and setup: the supply run, a second delivery, a dumpster swap, a permit revision or an added inspection.
• The schedule: how many days the change adds, and what it pushes back. A crew held on this job for an extra day is a crew not starting the next one.
• Credits, honestly: when the owner drops something, the credit is the price of that item less what you have already spent on it and cannot get back, such as special-order material or a restocking fee.

A worked example

Say a deck builder is halfway through a signed deck job when the owner asks for a set of stairs down to the yard with a gate at the top. The builder’s numbers, as an example:

The change order states the new contract total, moves the completion date by one working day, and adds the $2,117.50 to the final payment rather than inventing a new due date. If the builder had quoted “about two grand” in the driveway, the paperwork is where the real number replaces it, before the first stringer is cut.

What goes on the page

One page is enough. California’s three required items, plus the basics around them, make a good skeleton for any state:

1. Which contract it changes: a change order number, the customer, the job address and the date of the original contract.
2. The scope: exactly what is added, removed or substituted, with materials named the way the original contract names them.
3. The money: the amount added or credited, the previous contract total and the new one.
4. The effect on payments and the finish date: which payment the amount joins, and the new completion date, even when the answer is “no change”.
5. Any notice your state requires on it. California, for one, requires that when the contract says subcontractors will be used, the same subcontractor disclaimer appears again on each change order (§7159(c)(7)(C)).
6. Signatures and dates for both sides, and a line that the work starts after signing.

Signing when the owner is at work

The owner may not be home when the change comes up. Electronic signatures can work. The federal E-SIGN Act says a signature, contract or other record “may not be denied legal effect, validity, or enforceability solely because it is in electronic form” (15 U.S.C. §7001(a)), and defines an electronic signature as “an electronic sound, symbol, or process, attached to or logically associated with a contract or other record and executed or adopted by a person with the intent to sign the record” (§7006(5)). At the state level, California’s version of the Uniform Electronic Transactions Act says that if a law requires a signature, “an electronic signature satisfies the law” (Civ. Code §1633.7(d)).

Three cautions keep an e-signed change order solid:

• Agree to sign electronically up front, the right way. California’s act applies “only to a transaction between parties each of which has agreed to conduct the transaction by electronic means” (§1633.5(b)). The same subdivision says that agreement may not be placed in a standard form contract that is not itself an electronic record, unless it is a separate and optional agreement whose primary purpose is to allow electronic dealings. So with a paper contract, a short separate consent the owner signs at the start is the safer route than a clause buried in the form. Check how your own state’s version reads.
• Mind the consumer-consent rule. Where a law requires information to be given to a consumer in writing, E-SIGN lets an electronic record count only if the consumer has affirmatively consented after the disclosures the act lists (§7001(c)).
• Sign the whole document, and be able to show who signed. A text that says “ok go ahead” does not carry the scope, the price and the schedule. California attributes an electronic signature to a person if it was the act of that person, which may be shown in any manner (§1633.9(a)), so use a method that records who signed, when, and which version.

When the customer will not sign

Then the change has not been agreed, and the safest course is not to do it. Finish the work you contracted for. If you uncover a hidden condition, such as rot under a floor you are tiling, stop that part, photograph it, write the change order for the repair and wait for the signature, unless your contract already says how hidden conditions are handled.

At the end, list every signed change order on the final invoice so the total ties back to paper the customer has already seen; getting paid faster covers the rest of the billing. If you send estimates from the office in our tools, a change can go out as its own estimate by email, so the customer sees the scope and the price in writing and accepts from the link. Accepting is not a signed contract, and the page says so: where your state wants a signed change order, get the signature as well.

General information, not legal or tax advice. Rules change and vary by state; check with the agency named above or a professional for your situation.