Change Orders Survival Guide: Beat Budget Creep & Keep Your Remodel on Track

Change orders are one of the biggest frustrations that homeowners have with home remodeling and construction projects. These modifications of the initial plan can stem from design tweaks, project scope changes, or unforeseen issues that pop up once work is underway. While some change orders are unavoidable, others result from vague planning or miscommunication early in the process.

I've seen a statistic floating around claiming that it's normal for change orders to increase remodeling project costs by 10% to 25%. In my opinion, neither homeowners nor remodelers should take those numbers as a given. In fact, in my experience, most change orders can be avoided with better upfront design and planning, which is something that is a priority in the design-build approach to home renovations.

In this post, I'll explain how change orders work and how they impact the project cost and timeline. I'll discuss why the traditional model of hiring a general contractor so often gives rise to change orders and how a different approach, such as design-build, can limit change orders for your remodeling project.

What Are Change Orders and How Do They Affect the Original Contract?

A change order is a formal amendment to the original contract that outlines alterations to the scope of work, materials, or timeline of a construction project. These changes can result from design modifications, unexpected site conditions, or homeowner requests that arise after work has begun. While some changes are unavoidable, others stem from unclear or partial planning at the outset.

Typically, change orders come with an additional cost that is added to the project budget. Each change order can also affect the project schedule, potentially causing delays. In some cases, frequent or poorly documented change orders can even lead to legal issues between homeowners and contractors.

Are Change Orders a Sign of Bad Project Management?

Let me be clear: in themselves, change orders are not a sign of bad project management. Some change orders stem from unforeseen circumstances, like hidden damage or customer requests to alter the scope of the project.

That said, in many cases, change orders are a reflection of insufficient planning before beginning the construction process. When the design phase is rushed, the project documents are vague, or the specifics aren't fully discussed, it’s much more likely that issues will arise that prompt revisions to the scope and the original contract price.

On top of that, poor change management can definitely make things worse. A disorganized project manager may fail to clearly communicate updates, properly document changes, or transparently explain cost impacts. In these cases, the change order process can feel chaotic and leave the project owner uncertain about what’s happening and why.

Ultimately, as I'll explain in the next section, the root of these problems is often found in the nature of the traditional project bidding process that fails to resolve key details upfront.

Why Are Change Orders So Common in Traditional Contracting?

Various factors make change orders so common in the traditional model of bids and construction contracts.

When I say the traditional model, what I mean is the typical approach of having three general contractors come to your home, do a walkthrough, and then give you bids based on their interpretation of the scope of work (which is often just plugged into some project management software to calculate the price). You're then expected to pick one of those three bids, sign a contract, and get the ball rolling.

Here's the problem: these bids are like a rough draft. The project information isn't complete, and the contractors haven't taken the time to fully explore the ins and outs of what you're looking for.

For instance, maybe they've set an allowance of $2,000 for a generic bathroom vanity, but that's because they didn't talk with you at the outset and find out that you were looking for a double vanity with luxury finishes. So what happens when you tell them about the vanity you really want? A change order. It's lather-rinse-repeat with multiple elements of the project, and that's how you get a price that is 10-25% higher than you originally thought you'd pay.

A similar thing happens with the work of subcontractors, who are the construction contractors who often do big chunks of the work. In the initial bid, the scope of the subcontractor's hours may be very limited because they have almost no details about your home or the work to be done. As a result, when the subcontractor gets on site, they often encounter issues that require expanding the narrow scope of work found in the original bid. Voilà, another change order.

How Can Change Orders Be Avoided?

The best way to avoid unexpected change orders is to invest time upfront to make sure the project's work plan, materials, and scope are clearly defined. With the design-build approach, we get these details ironed out upfront, so all the parties involved are on the same page. We make sure that we have a detailed description of the work and overall project clarity before signing a contract.

A key feature of the design-build process is that one firm handles the entire project from beginning to end. They prioritize early collaboration to understand your vision, which enables better definition of both the overall project scope and many of the small details. Once everything is approved and signed off on, you sign a lump-sum contract that includes everything involved in the project (design, materials, construction).

Can Design-Build Contracts Have Change Orders?

While the design-build model can avoid many change orders, there are still three main ways that construction change orders or cost adjustments can arise.

First, change orders can happen at the client's request. This is the most common type of change order we encounter as a design-build firm. As the construction work unfolds, homeowners may propose changes to the original scope, usually adding on additional work. This type of change order can be big or small, but it comes at the customer's request, meaning there's no surprise increase to the total contract sum.

Second, sometimes a change order is necessary because of an unusual and unexpected demand from an inspector. This doesn't happen often and normally isn't too costly, but there's no alternative to a change order if the inspector requires project changes.

Third, as in any construction project, unforeseen site conditions or safety issues may demand a change order. For example, if we find hidden mold or dangerous electrical wiring. Design-build firms do everything possible to nip these problems in the bud with a thorough walkthrough and project preparation, but some issues aren't visible until the work actually starts.

Change Order Advice for Homeowners

As I already mentioned, working with a firm that invests the time with you upfront to carefully design the project is the most effective way to limit the project's risk of surprise change orders. But regardless of the remodeler or contractor you work with, there are a few other tips that can help avoid headaches related to change orders.

For any specific contract, make sure you carefully read all of the contract terms. You want to fully understand the change order process outlined in the agreement, including if there are any stipulations for changes in materials costs. Any change request should be submitted in writing and documented (often using a formal change order form). Never rely solely on a verbal agreement, even if you have a positive relationship with your contractor. Undocumented changes can lead to confusion, disputes, or extra costs later on.

It’s also important to know your contractual obligations and ensure that all relevant parties involved (including any contracting officer) are aware of the changes. Confirm how proposed changes will affect construction schedules and whether they alter the original agreement in any way. Clear communication and proper documentation protect everyone and keep your project on track.

Planning Your Design-Build Home Remodel

Hogan Design & Construction has been serving clients in the greater Chicago area for more than 25 years. In that time, we've built a project team that knows the ins and outs of custom home remodeling. Our design-build process is effective at drawing out the key project specifications, creating a detailed project plan, and then making the remodel a reality through high-quality craftsmanship. We also have experienced project managers who monitor progress at every stage and facilitate clear communication and adherence to the project timeline.

If you're thinking about a home remodel, we would welcome the opportunity to meet and talk about what we can achieve together. You can see examples of our work in our portfolio, and we invite you to contact us today to schedule a consultation.