Construction Change Orders: Why the Work Is Not the Problem, the Paperwork Is
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You are on site, the owner points at something that is not in the drawings, and the crew is ready to do it. Whether that work is ever paid for will depend less on the quality of the work than on what is recorded before it starts: a description of the change, an agreed price and schedule effect, and a signature from someone with authority to bind the owner. On Florida public work the written record is close to the whole case. On private work it decides whether payment is a billing or a dispute.
Three Links in One Chain
A change order modifies a signed contract: it changes scope, price, schedule, or some combination. Treating it as a form misses why change orders fail. It is an authorization chain with three links, and when a change goes unpaid, these are the first places to look:
- The change is described. What is added, removed, or substituted, in enough detail that a third party could tell whether it was done.
- The price and the schedule effect are agreed. Both, stated even when the schedule effect is zero, because a change order that is silent on time leaves the contractor exposed on delay.
- The person who signs can bind the owner. The contract names who may approve changes. A superintendent, a tenant, a family member, or an engineer on site may say “go ahead” without having that authority.
Read the contract’s change clause before the first change comes up, because it sets the notice deadline, the form, and who signs.
| Link | What goes wrong | What the file needs |
|---|---|---|
| Described | Work done from a conversation | Written scope, sketch or marked drawing, photos |
| Priced and timed | Direct cost billed, markup and time left out | Itemized price, markup, schedule effect |
| Authorized | Approval from someone the contract does not empower | Signature of the person named in the contract |
Florida Public Work: Two Rules That Point the Same Way
Sovereign immunity and written change orders. In County of Brevard v. Miorelli Engineering, Inc., 703 So. 2d 1049 (Fla. 1997), the Florida Supreme Court held that sovereign immunity barred a contractor from recovering for extra work it treated as wholly outside the terms of the contract when there was no written change order, and it declined to let waiver or estoppel override the contract’s written requirement. A 1999 Florida Senate bill analysis summarizes the decision and quotes the court’s distinction: “Binding the sovereign to the implied covenants of an express contract is quite different from requiring a sovereign to pay for work not contemplated by that contract.” The rule is narrower than “no change order, no payment”: claims under the implied covenants of the written contract were treated differently from claims for work outside it. For the bookkeeper, the practical rule is still plain. Extra work for a Florida public owner without a signed change order is a receivable you may not be able to collect.
The 35-day clock for local governments. Section 218.755, Florida Statutes, applies to contracts for construction services entered into on or after July 1, 2025. When a local governmental entity receives a contractor’s price quote for a change order that the entity requested or issued, and the quote conforms to the statutory and contractual requirements, the entity must approve or deny it in writing within 35 days after receipt. A denial must specify the deficiencies and the actions needed to fix them. If the entity does not send a compliant notice, “the change order and price quote are deemed approved,” and the entity must pay the quoted amount upon completion of the change order. The contract cannot alter those duties.
The scope of that statute matters as much as the clock. It covers a local governmental entity and a change order that entity requested or issued. It does not, by its terms, reach a state agency contract, a federal contract, a private project, or a change the contractor proposes on its own initiative.
| Project | Unsigned or oral change | Florida rule to know |
|---|---|---|
| Local government contract entered on or after July 1, 2025 | Weak position for work outside the contract | Section 218.755: 35-day written response on a conforming quote for an entity-requested change, or deemed approval |
| State agency contract, or local contract entered before July 1, 2025 | Weak position for work outside the contract | Miorelli; the contract's own change and claims clauses |
| Private contract | Depends on the contract and the facts | The contract's change clause; whether an oral change binds despite a written-modification clause is a question for counsel |
Pricing the Change Like the Original Bid
A change order is also where margin leaks after the paperwork is right. The added work gets priced at its direct cost because the change feels small or the job is moving fast. Price it with the same structure as the bid: burdened labor, materials, equipment time, and the overhead and profit markup the contract allows.
For example, assume a change needs $2,000 of burdened labor, $1,000 of materials, and $500 of equipment time, for $3,500 of direct cost. Billed at $3,500, the change pays for itself and nothing else: not the supervision, the rescheduling, or the office time it consumed. With a 15% markup on cost, the price is $3,500 × 1.15 = $4,025. The $525 is the same markup the original bid carried on every other dollar of cost, applied to the new work. Markup and margin are different measures of it: 15% of cost is a gross margin of 525 ÷ 4,025 = 13.0% of the selling price, so a bid that targets a 15% margin needs a higher markup than 15%. Two errors run the other way and invite a fight: charging again for work already in the original scope, and charging general conditions that the change did not affect.
State the schedule effect in the same document. A change that adds days but says nothing about time can leave the contractor answering for a delay the change itself caused.
How a Change Order Moves Through the Books
A signed change order starts a tracking job. Keep each change as its own budget line or cost code, separate from the original contract, for two reasons. The original contract stays visible, so you can compare where the job landed with what was bid. And changes become visible as a group, which shows which kinds of jobs or clients generate scope growth the bids never priced.
The change order also has to reach two other reports, and on an AIA-format job a third: the billing, where an approved change becomes its own line on the schedule of values. In job costing, the costs of the changed work post to the change’s own line, so they can be compared with the change’s own price. On the work-in-progress schedule, the test is different from the billing test. Under ASC 606-10-25-10 in ASU 2014-09, a contract modification can be approved “in writing, by oral agreement, or implied by customary business practices,” and under 25-11 a change in scope approved before its price is agreed is estimated as variable consideration, subject to the standard’s constraint. So a change can belong in the WIP contract value before the change order form is signed, and it updates the estimated cost in the same entry; a change the parties have not approved stays off. Keep the two decisions separate: the signed change order governs what you bill and when you start work, and the accounting standard governs what the financial statements recognize. The flow also runs backward: a cost code running past budget because field conditions changed can be the first sign that a change order should be requested, while there is still leverage to agree on price.
The Field Habit That Makes the Office Rules Work
Every rule above is written in the office, and change orders break in the field, in the gap between the moment a change is needed and the moment it is authorized. The fix is a habit, not a better form: out-of-scope work does not start until it is authorized in writing by the person the contract names. Electronic approvals help, because an owner can approve a priced change from a phone in minutes, which removes the reason to proceed first and paper it later.
The same habit has to run downhill. A general contractor who lets a subcontractor perform out-of-scope work without a written change can end up owing the sub for work the general contractor cannot bill upstream, because the chain broke at the general contractor’s level. The rule the general contractor enforces with the owner applies to every tier below it.
The Decision Rule
No out-of-scope work starts until three things are on paper: the change described, the price and schedule effect agreed, and the signature of someone the contract empowers to approve it. On a Florida local government job, add one more step: submit the price quote in the form the contract and section 218.755 require, and calendar the 35th day. Everything else, from the markup to the WIP entry, depends on those records existing before the tools come out.
This guide explains construction change orders and the Florida public-work rules above as general information, not legal or accounting advice. Your contract controls the procedure, and disputes turn on facts, so talk to a Florida construction attorney before relying on these rules in a dispute.