WHY CHANGE ORDERS
ALWAYS LOSE MONEY.

The GC says "just get it done, we'll deal with the paperwork later." The PM complies because the relationship matters. The work gets done. Two weeks later the PM submits a change order. The GC says the price is too high. They negotiate. The PM settles for 70% of cost because the work is already done and there's no leverage left. The right sequence: price first, start work second. Without a price agreement, "get it done" is authorization to work for free.

The PM prices the change order: $8,000 labor, $3,200 material, $11,200 total. The overhead allocation at 13% is $1,456. The profit margin at 22% gross is $3,542. The real change order value is $16,198 — not $11,200. Most subcontractors price change orders the way they priced T&M work in 2014: direct cost plus a round number markup that doesn't reflect actual overhead structure.

The PM completes change order work in March. Submits the billing in May. By May, the GC's contingency is allocated, the project has moved forward, and the superintendent who directed the work has been reassigned. The claim gets disputed. The sub collects 60%. The leverage window for a change order closes approximately 30 days after completion. After that, the clock is running against you.

The PM doesn't set up a change order cost code. The crew's labor goes to the base contract labor code. The extra material goes to the base contract material code. The change order gets billed and paid. But the job cost report shows $12,000 over on labor and $3,000 over on material — because the change order revenue didn't get matched to its cost. The job looks like it lost money. It didn't. The coding structure made it invisible.