What is a Change Order in a Home Service Business?

What is a change order?

A change order is a formal document between a home service provider and a client that modifies the original scope, cost, or timeline of a project. 

Its purpose is to clearly outline any changes to a job so you can get a client’s approval before moving forward. For example, if the cost of materials changes or a deadline needs to be extended. 

Construction change orders are often used in building and renovation project management, but they can also be used in other industries, such as: 

• Landscaping: if a customer decides to add a water feature to an existing project.
• HVAC: when additional ductwork is required on top of the original quote. 
• Plumbing: if the cost of replacement parts increases for a repair job.
• Cleaning: when a client adds extra services to the original contract, like window cleaning.
• Painting: if the client decides to skip the accent wall they initially asked for.  
• Electrical: when a basic light fixture installation reveals faulty wires that need to be replaced. 

Types of change orders and when to use them

There are two main types of change orders: additive and deductive. These affect the cost of a job. 

There are also non-monetary change orders, which are less common and address updates that impact the project without increasing or decreasing its cost. 

Additive change orders

Additive change orders are used to increase the scope, timeline, or materials for an original contract, adding to its cost. 

For example, you can use an additive change order to: 

• Add a new service, product, or feature at the client’s request
• Upgrade materials or finishes from what was originally planned
• Extend the project deadline due to labor or material delays
• Cover additional work caused by unexpected issues like water damage
• Bring in a specialist for a specific task, like an electrician

Deductive change orders

Deductive change orders are used to decrease the cost of a project due to changes in scope, timeline, or materials. 

For example, you can use a deductive change order to: 

• Remove services, products, or tasks at the client’s request
• Substitute cheaper materials, like flooring, paint, or fixtures
• Shorten the project deadline based on reduced labor requirements
• Cancel work that is no longer required, like mold remediation after an inspection shows it’s not necessary
• Adjust labor hours for tasks that took less time than anticipated
• Reduce the amount of materials or supplies required to complete a job

Non-monetary change orders

Non-monetary change orders document adjustments to a project that don’t affect its cost. 

For example, you can use non-monetary change orders when: 

• The deadline changes due to weather or material delays
• A client requests an adjustment to the original schedule
• You substitute materials for the same price (like the paint color)
• Small changes are made to the scope that don’t impact pricing, like if the client requests specific cleaning products or provides their own

Unlike leaving a simple note on a client’s file, non-monetary change orders require approval. This creates a paper trail you can refer back to on longer projects, or for changes the client requests against your advice. If any issues arise down the road, you can use the approved change order to confirm you did what the client requested. 

What should be included in a change order?

An effective change order should include: 

1. The project name or number
2. The date
3. Client details, like their name, address, and contact information
4. A reference to the original quote or contract
5. A detailed description of the change
6. Itemized cost adjustments, including taxes
7. Any changes to the timeline
8. A place for the client to sign

What’s the process for change orders?

The change order process usually looks like this: 

1. The project owner or project manager identifies the change. For example: A client requests additional work, or the materials you initially ordered are no longer in stock. 
2. You discuss the proposed change with the client. You let them know what the change is, how much it will cost, and what their options are. 
3. Prepare the change order. Fill out a change order template, including all the required information. 
4. Get approval. Review the change order with the client and have them sign their approval before work begins.
5. Complete the job. Finish up the work, including anything left from the original scope and the change order. 
6. Keep a record of the work. File a copy of your change order with the rest of the client’s documents in case you need to refer back to it later. 

For example, a client asks a general contractor to make a change to the original plan that affects the prime contract, like upgrading from laminate flooring to ceramic tile. The contractor would explain the additional costs, prepare a construction change order with the new details, and get the client’s signed approval before moving forward. 

How to create a change order

You can either make change orders manually or use a template for faster, more consistent results. 

Manual change orders

If you opt to make a change order manually, use Microsoft Word or Google Docs to add all the required fields, and be sure to include a place for the client’s signature. 

Save a copy of your document to use for future change orders to make the process more efficient next time. 

Change order templates

Using a template is the easiest and fastest way to make a change order. They keep your change orders consistent across clients and projects, prevent you from forgetting important information, and reduce spelling and calculation errors. 

For example, using Jobber’s change order template, you can:

• Provide a detailed description of scope changes
• Include an itemized list of materials, supplies, services, or labor costs
• Note any timeline impacts caused by the scope changes
• Add notes or special instructions, like a reference to the original quote or contract
• Save the change order as a PDF that’s ready to send to your client for approval

Best practices for change orders

Changes in cost, timeline, or scope aren’t always what clients want to hear. To keep your clients’ expectations in check and protect your business (and sanity), follow these tips for managing change orders. 

1. Communicate changes early

Change orders come about in one of two ways:

1. either the client asks for something to be changed, or 
2. you come across an issue that impacts the original scope, timeline, or budget. 

Keeping an open line of communication with the client throughout the course of the work prevents surprises from catching either of you off guard. 

For example, as soon as a client mentions they’re considering changing materials, remind them that it may come with an additional cost. Or, if you suspect that the job may be complicated and require additional work like repairs or labor, warn them upfront. 

That way, they won’t be as shocked when a proposed change results in a cost increase. And they’ll be less likely to argue when they receive their final invoice.

2. Be upfront about costs and timelines

When you encounter a situation requiring a change order, be as accurate and clear as possible about additional costs and deadline extensions. Don’t ballpark—use real numbers based on exact material prices, labor costs, and your schedule. 

You don’t want to have to create multiple change orders for the same work. Getting it right the first time will keep the client from getting frustrated and maintain your professionalism. 

3. Keep records

You should attach a copy to your client’s file whenever you create a change order. It ensures all documentation related to a job or project is up to date and accurate, and can act as a reference point down the road. 

It’s also helpful if the client disputes the additional costs or refuses to make a payment.

4. Get a signature

Getting a signature offers you an opportunity to review the change order with the client in detail and make sure they are aligned before you move forward. 

5. Standardize your process

Following a standard operating procedure for change orders keeps the process consistent across clients and jobs. It prevents mistakes and miscommunications and ensures your employees know what to do when a job changes. 

Otherwise, you risk losing money on jobs if they forget to make a change order or do it incorrectly. For example, if they don’t document the price change or get a client’s approval. Then you’ll be left paying for the extra work out of pocket. 

6. Use software 

When you’re relying on paper records or even emails, it’s easy to forget details or lose track of change orders altogether. With work order software like Jobber, updates are saved and organized within the job details—so you stay clear, consistent, and covered. 

That way, you won’t have to scramble when unexpected costs and issues arise during a project. Instead, you can focus on getting the job done in a way that keeps all parties happy and turns a profit.