Change order

Definition

A signed mid-job amendment adding scope and price to an existing contract.

Why It Matters

In project trades the change-order discipline is the margin: scope grows on nearly every job, and whether that growth gets priced and signed or absorbed decides the year. Unsigned change orders are free work while the job runs and dispute fuel when it ends, so in diligence compare change-order revenue to the receivables fights, and ask who on the crew is allowed to promise work. A seller who says the customers would never sign paperwork is describing the margin they leaked.

In numbers: A $180,000 paving job that grows 15% in scope carries $27,000 of change orders, and whether that lands as revenue or as an argument depends entirely on when it was signed.