Change Order Calculator

Frequently Asked Questions

How do you calculate a construction change order?

Start with the direct costs the change actually adds: labor, materials, equipment, and any subcontractor work. Apply your overhead percentage and then your profit percentage to the work your own crews perform. Apply a separate, usually lower, markup to subcontractor work. Add the two together and that is the change order price. Expressed as a formula: change order total = (own direct costs × (1 + overhead) × (1 + profit)) + (subcontractor cost × (1 + sub markup)).

What is a typical markup on a change order?

The common industry range is 10% to 15% combined overhead and profit on the contractor's own work, with many institutional and public contracts capping it at 10%. Markup on subcontractor work is usually lower — often 5%, sometimes up to 10% — on the reasoning that the sub has already marked up its own labor and materials. The single most important rule: check your contract first. If it specifies allowable markup on changes, that number governs regardless of what is typical.

Should change orders use the same markup as the original bid?

As a default, yes — if the job was priced at a given markup, changes to that job should carry the same markup. Cutting your markup on changes to seem accommodating is one of the more reliable ways to finish a profitable job at break-even. There is an argument for a higher markup on changes, because out-of-sequence work is genuinely less efficient than planned work, but many contracts prohibit that. What you cannot do is absorb the overhead on added scope and expect the original margin to survive.

What percentage of a contract is a normal amount of change orders?

Cumulative change orders under about 5% of the original contract value are routine. Between 5% and 10% is common and usually manageable. Once cumulative changes pass 10%, many owner contracts require formal written approval, and above 20% you can run into re-bid clauses, bonding review, or a cardinal change argument. Tracking the cumulative percentage as you go — not just the value of each individual change — is what keeps you ahead of that conversation.

Can you charge for delay or disruption in a change order?

Often yes, but it has to be documented and it is the most frequently forfeited cost on any change. Added scope rarely arrives at a convenient moment: crews get pulled off planned work, resequencing costs productivity, and a two-day change can push a milestone by a week. Many contracts allow recovery of these impacts, but only with contemporaneous records — daily logs, manpower counts, and schedule updates made at the time, not reconstructed later. This calculator prices direct cost and markup; delay and disruption should be priced separately and supported by documentation.

Why do contractors lose money on change orders?

Three reasons dominate. First, work performed on a verbal go-ahead that never becomes a signed change order — the cost is real and the recovery is not. Second, markup discounted to keep the relationship comfortable, which quietly moves the whole job's margin down. Third, unpriced disruption: the direct labor hours get captured but the productivity loss on the surrounding work never does. All three are documentation problems more than pricing problems, which is why the fix is a process that captures the change at the moment it happens.

What is the difference between a change order and a change directive?

A change order is a negotiated, signed agreement on both scope and price before the work proceeds. A construction change directive — sometimes called a field order or a unilateral change — is the owner instructing you to proceed while price and time remain unsettled. Directives keep the job moving but shift risk onto the contractor, so if you are working under one, your cost records are the entire basis of your eventual recovery. Track those costs separately from base contract costs from day one.

How should change orders be documented?

At a minimum: a written description of the added or deleted scope, the reason for the change and who requested it, an itemized cost breakdown by labor, material, equipment and subcontractor, the markup applied, any schedule impact in calendar days, and signatures from both parties before work starts. Attach photographs and the relevant drawing or RFI reference. The test to apply is whether someone who was never on the job could read the file in a year and understand what changed, why, and what it cost.