Wealth Opportunities in Commercial Real Estate: Management, Financing, and Marketing of Investment Properties

Change Orders

During the course of construction of most large construction projects, it will either be discovered that an item has not been covered in the contractor's budget or that a correction must be made due to myriad reasons.

The key steps in a change order include (1) verifying that the change order was approved and (2) reviewing the contractor's budget to make sure that the change order was not already included in the budget or, if it was, at what amount. (In other words, if the budget has a $7,500 allowance for hardware and the contractor submits a $9,000 change order for hardware, is the change order in addition to the allowance, or does the allowance cover the first $7,500 of the bill with the change order actually covering only $1,500?)