What is a change order? Is it any deviation from written specs and drawings or is it only additional work? Regardless of what a company's policy is, there has to be a definition that the whole team understands and agrees on. At my company, change orders include all deviations from the original scope of work, plus all clarifications of job specs. Apart from assuring that clients pay for extra work, this comprehensive definition protects the company from the conflicts that often arise from undocumented verbal agreements. With so many decisions being made during a job and so many chances for decisions to conflict with one another in unanticipated ways, documentation is the only way to manage this information and avoid being wrongly blamed. Clearly defining what constitutes a change order is essential to setting up a system that prevents you from doing unpaid work. One way to better understand how change orders affect a contracting business is to track them as a percentage of sales. Historically, they have represented 10% of the total sales volume in my company. That percentage breaks down into the categories in the chart in Figure 1.

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