Quick Answer
A construction change order is a written amendment to your contract, typically carrying a 15% to 25% markup over the direct cost of the changed work.
Once a contract is signed, prices are locked, materials are ordered, and crews are scheduled — so any change disrupts that plan and costs more than if it had been part of the original scope. This is true whether the change is something you requested or an unforeseen condition discovered during construction.
The single biggest factor in how many change orders a project generates is how finalized the design and selections were before the contract was signed.
Typical Change Order Markup
Markup varies by project type and what the change order covers.
| Project Type | Typical Markup | Notes |
|---|---|---|
| Residential new construction | 15% – 25% | Combined overhead and profit markup on direct cost of the changed work. |
| Commercial projects | 10% – 20% | Often specified directly in the original contract (AIA A201 framework is common). |
| Administrative/processing fee | $50 – $250 flat, or 5% – 10% | Covers the time to stop work, re-plan, reorder materials, and document the change — separate from markup. |
| Unforeseen condition changes | 15% – 20% | Issues found once work begins (rock in excavation, rot behind drywall) typically carry the same markup as owner-requested changes. |
Before You Sign
Confirm the change order markup is in your contract upfront
Once you sign with one builder, you lose competitive bidding leverage on any changes that come up later.
What Commonly Triggers a Change Order
These six categories cover the vast majority of change orders on residential projects.
Adding recessed lighting, moving a wall, upgrading a finish, or changing a fixture after the original scope was priced. The most common and most controllable type of change order.
Rock or poor soil found during excavation, water damage discovered behind existing drywall, or structural issues not visible until demolition begins.
Work that fails inspection and requires a method or material change to meet code — sometimes billed as a change order if it goes beyond the original scope.
If a specified product becomes unavailable or its price changes significantly between contract signing and ordering, the difference is often handled as a change order.
If actual selections (cabinets, countertops, fixtures) exceed the dollar allowance set in the original contract, the difference is billed as a change order once you make your final selection.
Weather delays, material lead times, or sequencing issues that require additional mobilization, equipment rental, or labor outside the original plan.
Late Selections Are the Most Common — and Most Avoidable — Cause
The classic change order story: a builder quotes a low contract price full of allowances, then selections made after signing come in over budget, resulting in expensive change orders that erode the original "good deal." This pattern is so common in the industry that experienced builders specifically warn homeowners about it.
Finalizing cabinets, countertops, flooring, and fixtures before you sign — not after — is the single most effective way to avoid this trap.
Reviewing a bid with allowances?
Make sure allowance amounts realistically reflect your actual selections.
Understand Allowances →Want a buffer for the unexpected?
See how much contingency to budget on top of your construction estimate.
Plan Contingency →How to Protect Your Budget From Change Order Surprises
You cannot eliminate change orders entirely — unforeseen conditions and evolving preferences are part of construction. But you can control how much they cost you and how transparently they are handled.
Confirm the change order markup percentage in your original contract, not after a change is already needed. This should match the markup used in your initial bid.
Never approve a change order verbally. Insist on a signed change order document — cost, scope, and schedule impact — before the contractor proceeds with the changed work.
The biggest source of change order cost is unfinalized selections. Lock in cabinets, countertops, fixtures, and finishes before signing your contract whenever possible.
Get clarity upfront on how allowance overages will be calculated and billed, so there are no surprises when your actual selection costs more than the placeholder allowance.
If a change order is based on a hidden condition (rot, rock, structural issue), ask for photos and a written explanation before approving the additional cost.
Recommended Tools and Reports
Contractor Bid Analyzer
Review your bid for change order markup terms, allowances, and exclusions before signing.
Analyze Bid →Cost Report
Get a full project cost estimate so you can finalize selections before your contract is signed.
Get Cost Report →Permit Report
Understand code requirements that could trigger correction-related change orders.
Check Permits →House Plans
Browse fully detailed plans to reduce design ambiguity that leads to change orders.
Browse Plans →Related Guides
Frequently Asked Questions
What is a construction change order?
A construction change order is a formal, written amendment to your construction contract that documents a change in scope, cost, or schedule after the original contract was signed. It typically requires approval from both the homeowner and contractor before the changed work proceeds.
How much markup do contractors charge on change orders?
Markup on residential change orders typically ranges from 15% to 25% combined overhead and profit on the direct cost of the changed work, plus sometimes a separate administrative fee of $50-$250 or 5%-10% to cover the time of replanning and reordering.
Can a contractor charge whatever they want for a change order?
Once you sign a contract with one builder, you typically give up the ability to get competitive bids on changes — which is why confirming the markup percentage in your original contract matters. Some contracts cap markup or require a half-and-half cost split on disputed change orders.
How do I avoid expensive change orders?
Finalize as many selections as possible before signing your contract, get the change order markup percentage in writing upfront, never approve changes verbally, and ask for documentation when a change order is based on an unforeseen condition.
What percentage of a project typically comes from change orders?
Industry data suggests change orders can account for roughly 8% to 11% of total project cost on average, though this varies significantly based on how finalized the design and selections were before construction started.
Is a change order the same as an allowance overage?
They are related but not identical. An allowance overage occurs when your actual selection (like a countertop) costs more than the dollar amount budgeted in the contract. It is commonly billed through the change order process, but the underlying cause — exceeding a pre-set budget line — is specific to allowances.
Before You Sign
Confirm Change Order Terms Before They Become a Surprise
Review markup percentages, allowance terms, and exclusions in your contractor bid before committing.