A CHANGE ORDER YOU DID NOT BILL IS A GIFT TO THE GC.
Most change order losses start when work begins before any documentation exists. The average commercial project has 10 to 30 change orders, and each one needs a written potential change order before work starts, a price at full burdened cost plus overhead and margin, and a submission inside 48 hours. A 15 percent cap on cost pays a 13 percent margin, so even approved change orders lose money when they are priced from the wrong base.
On a $3M project with active scope changes, unbilled change orders commonly represent $80K to $200K of performed work that never reaches an invoice, and one change order audit surfaced $310K. An $11,200 change order is worth $16,198 once 13 percent overhead and 22 percent gross margin are priced in. The guides in this hub cover the paper, the price, the billing and the WIP entry for every change order.
WHAT IT MEANS.
A change order is a written agreement that adds to or alters a subcontract's scope, price or time, and it becomes a financial event only once it is priced, approved, recorded in the WIP schedule and billed on a pay application.
WHY IT BREAKS.
Work Starts Before the Paper Does
A verbal direction from a superintendent or a sketch on a napkin is not a change order. Every scope change gets a written potential change order before work starts, and when the GC directs you to proceed first, you proceed under written protest. Escalation follows at 30, 45 and 60 days.
The Markup Cap Shorts the Margin
A cap of 10 percent overhead and 5 percent profit on cost pays a 13.0 percent margin, because markup divides by cost and margin divides by price. The 12 to 15 percent of overhead that change work consumes is rarely priced into any of them.
Billing Lag Turns Cost Into a Loan
Approved work deploys cost three weeks before it collects, and a $40,000 change order can tie up $52,500. Disputed scope can go unpaid for 6 to 24 months. Submitting inside 48 hours and booking the change the day it signs keeps the WIP schedule honest.
EVERYTHING ON THIS SUBJECT.
Every guide below is a full page on one part of this subject. Start at the top if the whole thing is new; jump to the one that describes your week if it's not.
- Change Order Cash Flow ImpactThree problems: unapproved scope with no billing event, a 3 week lag on approved work, and disputed scope unpaid for 6 to 24 months.
- Change Order DocumentationA written PCO before work starts, a price agreed before the crew moves, and written protest when the GC says proceed anyway.
- Change Order Financial SystemThe average commercial project sees 10 to 30 change orders.
- Change Order Markup and OverheadA 15 percent cap pays a 13 percent margin, and the burdened cost of change work is above the estimate.
- Why Change Orders Lose MoneyOverhead at 13 percent adds $1,456 and 22 percent gross adds $3,542.
- Change Order AccountingOne CO audit surfaced $310K of performed, unbilled change work.
- Unapproved Change Order RiskDirected scope with no written approval gets disputed once the job is done, and the WIP holds cost with no revenue on it.
- Profit Fade and Change OrdersUnbilled COs are 40 to 60 percent of profit fade.
- Profit Fade ExplainedA job bid at 25 percent gross margin that finished at 11.
FLAT MONTHLY FEE. NO SURPRISES.
Three tiers, priced by your trailing twelve month revenue. Which one you're in depends on how much of the work you want off your desk. No hourly billing and no payroll.
| Last 12 months revenue | Monthly fee | One-time onboarding |
|---|---|---|
| Up to $1M | $1,900 to $2,900 | $1,000 |
| $1M to $3.5M | $2,600 to $3,900 | $1,500 |
| $3.5M to $6.5M | $3,800 to $5,700 | $3,000 |
| $6.5M to $9.5M | $5,100 to $7,100 | $4,500 |
| $9.5M to $12.5M | $6,100 to $8,500 | $6,000 |
| $12.5M to $15.5M | $7,400 to $11,000 | $7,500 |
| $15.5M to $18.5M | $9,400 to $13,500 | $9,000 |
| $18.5M+ | Quoted individually | Quoted individually |
The onboarding fee covers migrating your books back to the start of your last taxable year and getting you fully operational in 60 days. It's billed once, with your first invoice. It's the same for all three tiers. Your first month is prorated, and your monthly engagement starts on the first of the first full month.
Range reflects the three tiers below. Which one you're in depends on how much of the work you want off your desk. No payroll. No hidden line items. The onboarding fee is right here in the table.
You stop guessing.
You get the CFO work. Job costing built against the way you estimate, a 13 week cash forecast, monthly WIP, and a meeting every month that ends in decisions and never in a report.
Your bookkeeper still does the books.
You stop touching the books.
Everything in Core, and we do the bookkeeping and the controllership as well. Your office stops answering coding questions and stops fixing a reconciliation that will not balance on the last day of the month.
We do the books. No payroll.
Every job shows its margin while it is still open.
Everything in Executive, plus the job costing and WIP platform set up, loaded with your cost codes, and managed for you every month. You never have to learn it.
We do the books, the job costing, and the software. No payroll.
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