Signed change orders

Definition

Extra work agreed in writing after a job is priced, where a contractor's real margin is won or lost.

Why It Matters

A backlog number means very little without knowing how changes are handled, because the original bid is a guess and the changes are where a disciplined shop recovers cost. Look for signatures rather than verbal agreements, and look for a pattern: a shop with almost none is either bidding generously or absorbing scope, and a shop with a great many on every job may be underbidding to win. Ask to see the last ten completed jobs at bid and at final.