Key Takeaways
- Evaluate necessity, ROI, schedule impact, cumulative effect, deferability.
- Seven-step process: no work before signed CO.
- Thresholds at 5%, 10%, 15% trigger escalating reviews.
- Track changes as dollars and percentage of contract.
Decision frameworks for evaluating and controlling change orders.
Change Evaluation Matrix
Evaluate: Necessary for safety/code? Increases value > cost? Affects critical path? Cumulative approaching 10%? Can be deferred?
Seven-Step Change Control
Request → Impact Analysis → Evaluation → Negotiation → Decision → Signed CO → Budget/Schedule Update. No work before step 6.
Cumulative Thresholds
At 5%: review remaining scope for potential changes. At 10%: full project feasibility review. At 15%: evaluate if minimum returns achievable.
Case Study: Evaluating Three COs
Week 6 of $85K renovation, three COs totaling $7,200.
- 1CO1 $2,400 subfloor rot: necessary, approve.
- 2CO2 $3,200 quartz upgrade: positive ROI but 1-week delay. Defer.
- 3CO3 $1,600 recessed lights: not necessary, no schedule impact. Negotiate to $1,200, approve.
- 4Cumulative: $3,600 (4.2%). Below 5% threshold.
Structured evaluation approves necessary items, defers delays, negotiates discretionary work.
Key Takeaways
- ✓Evaluate necessity, ROI, schedule impact, cumulative effect, deferability.
- ✓Seven-step process: no work before signed CO.
- ✓Thresholds at 5%, 10%, 15% trigger escalating reviews.
- ✓Track changes as dollars and percentage of contract.
Sources
- AIA Document G701 — Change Order(2025-01-15)
- NAHB Change Management Best Practices(2025-01-15)
Common Mistakes to Avoid
Approving investor-requested upgrades without analyzing the ROI impact
Consequence: Spending $5,000 on an upgrade that adds only $2,000 in value, reducing overall project profitability
Correction: Run every investor-requested change through the ROI filter: will this change add more value than it costs?
Test Your Knowledge
1.What framework helps decide whether to approve a change order?
2.What percentage of change order costs typically come from hidden conditions vs. investor-requested changes?