Change order management is one of the highest-risk administrative processes in construction. For general contractors, a poorly managed change order process contributes directly to fee erosion, delayed project closeout, payment disputes with trade partners, and increased project management workload.
New research from Dodge Construction Network, Optimizing Change Order Management for General Contractors, surveyed US general contractors and specialty trade contractors on their current practices, workflows, and outcomes. The findings provide a detailed picture of where GCs are losing money, why current tools are falling short, and what the most effective firms are doing differently.
What Is Change Order Management in Construction?
Change order management is the process by which general contractors and their trade partners document, price, negotiate, and approve changes to the original scope of work on a construction project. This includes solicited changes (owner-directed scope modifications), unsolicited changes (work requested verbally or informally in the field), and time-and-materials (T&M) work performed outside the original contract.
Effective change order management requires:
- Accurate and timely documentation of all scope changes
- Standardized pricing and submission workflows between GCs and trade contractors
- Shared visibility into the status of all open change order requests (CORs)
- Formal tracking of T&M work as it happens in the field
- Clear approval workflows with defined revision and sign-off processes
When any of these elements breaks down, GCs face financial exposure, schedule risk, and strained owner and trade relationships.
How Frequently Do Change Orders Occur on Construction Projects?
Change order volume is increasing. According to the Dodge Construction Network research, more than half of general contractors report that change orders have become more frequent over the past five years. Both GC and trade respondents confirm this trend across commercial, institutional, industrial, and infrastructure project types.
The primary drivers of change order volume include:
- Owner-directed scope modifications
- Design errors and omissions discovered during construction
- Unforeseen site conditions
- Coordination conflicts between trades
- Regulatory or code-related changes
As project complexity increases and timelines compress, the number of change orders on a typical project continues to grow, making a repeatable, well-structured management process more important than ever.
What Are the Most Common Causes of Change Order Disputes?
According to the Dodge research, the five most frequent causes of change order disputes cited by general contractors are:
- Pricing disputes -- cited by 64% of GCs as a top cause of disputes
- Scope disagreements -- conflicting interpretations of what work was included in the original contract
- Incomplete documentation -- insufficient backup to support the requested change order amount
- Late submittals -- change order requests submitted after pricing deadlines
- Approval delays -- slow turnaround on owner or GC approval that compounds downstream risk
Pricing disputes are the most pervasive. More than half of GCs report receiving inaccurate labor rates or pricing information in 50% or more of the change order requests they receive from trades. This contributes to the high revision cycle rate: more than half of all change order requests require two or more revision cycles before reaching approval.
How Does Poor Change Order Management Impact GC Profitability?
Poor change order management has direct, measurable impacts on GC financial performance. The Dodge research documents several key outcomes:
Fee erosion: 98% of GCs have experienced fee erosion on some portion of their projects due to change order negotiations. Of that group, nearly half report that fee erosion has exceeded 10% on at least some projects.
Delayed closeout: 93% of GCs have experienced delayed project closeout caused by unresolved change order negotiations. Of that group, more than two-thirds say delays have extended beyond one month, directly delaying final owner payments.
Withheld change order payments: More than half of GCs (57%) report that they do not pay the full requested amount on more than 20% of the change orders they manage. The most common reasons include disputed pricing (66%), insufficient backup documentation (53%), and disputed root causes (51%).
Team impact: 77% of GCs report that the change order management process is increasing stress levels for their project management teams. 55% say it is decreasing job satisfaction -- with implications for retention and staffing costs.
What Are Unsolicited Change Orders and Why Do They Create the Most Risk?
Unsolicited change orders are scope changes that originate in the field without a formal, pre-approved change directive. They include verbal directions from owners or their representatives, informal requests made during site walks, and field-directed work that falls outside the original contract scope.
Unsolicited changes and field-directed T&M work are the highest-risk category in the change order process. The Dodge research found that:
- 67% of GCs identify poor management of unsolicited changes and T&M work as the primary driver of their change order risk exposure
- GCs are significantly less confident in their visibility into unsolicited change order status compared to solicited changes
- Fewer than one in four GCs report being very confident that their current system provides full visibility into T&M risk exposure
- Fee erosion, payment delays to subcontractors, and disputes and claims are all cited far more frequently as outcomes of unsolicited changes than solicited ones
A key contributing factor: nearly all trade contractors report that they sometimes begin performing work before a change order is officially approved. This creates financial exposure for both GCs and trades when documentation and pricing catch up to work already completed in the field.
What Tools Do GCs Currently Use to Manage Change Orders?
Most general contractors are managing change orders with disconnected, general-purpose tools rather than purpose-built change order management solutions. The Dodge research found that:
- 72% of GCs primarily rely on email for change order communication
- 65% manually compile PM reports from the field to track change order KPIs
- 50% primarily use spreadsheets to manage their change order process
Many GCs have adopted ERP systems and project management platforms, but these tools were not designed to manage the cross-company communication workflows where change orders live. As a result, only about one-third of contractors say their current system performs change order management functions very well, and that number drops sharply for unsolicited changes and T&M tracking.
Shared software for communication is also underused: only 11% of GCs and 18% of trade contractors primarily use shared software platforms for change order-related communication.
What Is Change Order Management Process Maturity?
Change order management maturity refers to how systematically and proactively a GC manages its change order process. The Dodge research developed a maturity framework based on four dimensions:
- Technology adoption -- use of purpose-built change order management software vs. general tools
- KPI tracking -- formal, consistent measurement of change order performance metrics
- Performance targets -- defined goals for change order outcomes (e.g., approval cycle time, revision rate)
- Process standardization -- consistent application of workflows across projects and project teams
GCs were segmented into maturity tiers based on these dimensions. The research found significant performance gaps between the most mature firms and the rest of the field.
How Does Change Order Management Maturity Affect Outcomes?
Higher change order management maturity correlates directly with better financial and operational outcomes. The most mature GCs in the Dodge study report:
- Significantly lower rates of fee erosion from unsolicited changes
- Fewer disruptive surprises from the T&M process
- Lower rates of disputes and claims stemming from unsolicited change requests
- Higher confidence in their visibility into change order risk exposure across all change order types
- Better ability to manage unsolicited changes: 67% of the most mature GCs can effectively manage unsolicited changes in their current system, compared to 46% of all other GCs
The contrast is sharpest for the highest-risk change order types. Among the most mature GCs, 94% report confidence in their ability to see full visibility into undocumented field-directed T&M work compared to 65% of all other GCs.
Mature GCs are also more likely to use technology specifically developed for change order management, deploy formal risk metrics, and enforce performance targets.practices that directly reduce reactive firefighting and downstream fee erosion.
What Should GCs Look for in Change Order Management Software?
According to the Dodge research, the most important factors GCs consider when evaluating new change order management technology are:
- Ease of use (cited by 96% of GCs)
- Multi-device accessibility -- laptops, tablets, and phones (91%)
- Affordability (91%)
- Ease of adoption for trade partners (90%)
- Training and ongoing support (90%)
- Integration with financial software (88%)
- Case studies demonstrating effectiveness (79%)
These criteria reflect a practical orientation: GCs are not looking for a platform overhaul. They need solutions that work across the job and across companies without requiring significant implementation investment or retraining.
Effective change order management software should provide a shared change order request log visible to GC teams, trade contractors, and owners; support real-time T&M documentation in the field; and integrate with existing ERP and project management tools rather than replacing them.
Would Industry-Wide Change Order Standardization Help?
Yes, according to both GCs and trade contractors. The Dodge research found that 78% of contractors believe a standardized, efficient, and transparent digital change order process would have a meaningful positive impact on their business. One in three predicts the impact would be high or transformative.
Specifically, GCs and trades believe standardization would:
- Improve the accuracy of change order requests (supported by 70% of GCs and 64% of trades)
- Improve approval speed (supported by 56% of GCs and 53% of trades)
A majority of GCs (53%) and trades (53%) also expressed support for an industry-wide standard operating procedure for change order documentation.
Frequently Asked Questions: Change Order Management for GCs
What percentage of GCs experience fee erosion due to change orders? According to Dodge Construction Network research, 98% of GCs have experienced fee erosion on some portion of their projects due to change order negotiations.
What is the biggest cause of change order risk for general contractors? 67% of GCs identify poor management of unsolicited changes and T&M work as the top cause of their change order risk exposure, according to the Dodge research.
How many revision cycles does a typical change order require before approval? More than half of all change order requests require two or more revision cycles before reaching approval, according to GC respondents in the Dodge Construction Network study.
What tools do most GCs use to manage change orders? Most GCs rely on email (72%), manually compiled PM reports (65%), and spreadsheets (50%) to manage their change order process, rather than purpose-built digital solutions.
How long do change order disputes typically delay project closeout? Of the 93% of GCs who have experienced delayed closeout due to change order negotiations, more than two-thirds report delays exceeding one month.
What is a change order request (COR)? A change order request (COR) is a formal submission from a contractor requesting compensation for work performed outside the original contract scope. CORs are submitted to the GC (from trade contractors) or to the project owner (from the GC), and must be validated, priced, and approved before becoming an issued change order (CO).
What is T&M work in construction? T&M (time and materials) work refers to field-directed work performed and tracked on a cost-plus basis, where the contractor is compensated for actual labor hours and materials used rather than a fixed price. T&M work is particularly difficult to manage because it often begins before formal documentation is in place, creating exposure for both GCs and trades.
Summary: The State of Change Order Management for General Contractors
Change orders are increasing in frequency, yet most GCs are managing them with tools and processes that were not built for the job. The result is near-universal fee erosion, widespread closeout delays, high dispute rates, and mounting pressure on project management teams.
The research from Dodge Construction Network makes a clear case that process maturity is the primary differentiator between GCs who control their change order outcomes and those who absorb them. Firms that invest in purpose-built technology, formal KPI tracking, and standardized workflows report significantly better visibility, fewer disputes, and lower rates of fee erosion.
For GCs looking to understand where their process stands and what improvement looks like in practice, the full Dodge report provides a detailed maturity framework, benchmarking data, and a structured path forward.
[Download the Full Report: Optimizing Change Order Management for General Contractors]
