Construction Change Orders Explained: Managing Costs and Timelines in 2026
“We found something behind the wall,” they say. Or perhaps, “The lighting plan doesn’t fit with the air conditioning ducts.”
In an instant, the budget goes up. The timeline gets longer.
In the construction industry, Change Orders (COs) have a bad reputation. Many clients view them with suspicion. They worry that contractors use them to squeeze extra profit out of a project. While “predatory” change orders do exist—and we will show you how to spot them—the truth is usually less malicious.
In commercial construction, change is inevitable. A building is a prototype. It is a one-of-a-kind creation assembled by hand. Perfection is impossible, but great management is essential.
As we move into 2026, supply chains are still tight. Buildings are becoming more technical. Understanding how Change Orders work is the only way to protect your bottom line.
This guide will explain the three root causes of change orders. You will learn the difference between a “valid” cost and an unfair one. Most importantly, you will see how Aetheling Construction helps you manage risk before we even start building.
What Is a Change Order?
To manage the process, you first need to understand the definition.
In simple terms, a Change Order is a legal update to your original contract. It is not just an invoice. It is a formal agreement that changes one of three things:
- The Scope of Work (What we are building).
- The Price (What it costs).
- The Schedule (How long it takes).
Once you and the Contractor sign it, it becomes a binding legal document. It acknowledges that the new work was not in the original plan. Therefore, it requires extra money and extra time to finish.
The Myth of “Zero Change Orders”
Some contractors might promise you a “Guaranteed Maximum Price” or claim they never issue change orders. You should be very careful with these promises.
If a contractor pays for legitimate extra work out of their own pocket, they lose money. To make up for that loss, they might cut corners elsewhere. They might use cheaper materials. They might rush the labor. They might not pay their subcontractors on time.
A transparent Change Order process is actually a good thing. It is a sign of an honest, healthy project where everyone is on the same page.
The Three Main Causes of Change Orders
In our experience working across Olympia, Lacey, and Tumwater, 95% of change orders come from three specific sources. If you understand the source, you can decide if the cost is fair.
1. Unforeseen Conditions (The “Hidden” Cost)
This is the most common cause in Tenant Improvement (TI) projects. This happens often when we renovate older buildings in downtown Olympia.
The Scenario We are renovating a historic office space. The blueprints assume the old wall framing is strong. However, when we tear down the drywall, we find a problem. The wood studs are rotted. A roof leak from ten years ago caused damage that no one knew about.
The Reality No one could have seen this coming. The architect couldn’t see it. The landlord didn’t know. The contractor couldn’t see through the wall.
The Verdict This is a valid Change Order. The rot must be fixed for safety. We cannot legally or ethically cover it up. It is an “unforeseen condition” that we must address immediately.
2. Design Discrepancies (Errors & Omissions)
Architects and engineers are skilled professionals. However, they are human. Sometimes, the drawings on paper do not match the reality of the building.
The Scenario The mechanical plan shows a large air duct running through the ceiling. However, the structural plan shows a steel beam in that exact same spot. In the industry, we call this a “clash.”
The Reality We have to move the ductwork. This might require custom parts or more sheet metal. It takes extra labor to figure out the new path.
The Verdict This is usually a valid Change Order for the contractor. We have to do extra work that was not in the bid. However, this is sometimes a point of negotiation between the owner and the design team regarding who pays for the mistake.
3. Owner-Driven Changes (Scope Creep)
This category is the one you can control. It is also usually the most expensive.
The Scenario You visit the job site during framing. You stand in the new Executive Office. It feels a little small. You ask the superintendent, “Can we move this wall two feet to the left?”
The Reality It sounds like a simple request. But moving that wall starts a chain reaction:
- We have to move the electrical outlets that are already installed.
- We have to redesign the carpet layout.
- We have to move a sprinkler head (which requires the fire marshal to approve it again).
- We have to update the final blueprints.
The “Predatory” Change Order: Be Careful of the Low Bidder
We have written before about the dangers of accepting the lowest bid. This is where that choice can hurt your business.
Some unethical contractors use a strategy called “Bid Low, Change High.”
They submit a very low bid to win your project. To get that low number, they leave out necessary items. They might exclude permit fees, final cleaning, or difficult electrical work. Once you sign the contract and work begins, they hit you with Change Orders for the things they “forgot.”
How to Spot Unfair Billing
- The “Code Upgrade” Excuse: A contractor might say, “I didn’t know I had to upgrade the electrical panel to meet the code.” If they say this, they are either lying or incompetent. A professional contractor in Thurston County knows the local codes.
- The “Clarification” Bill: Sometimes they charge extra for work that was clearly on the drawings. They might claim their estimator “missed it.” That is their internal mistake. You should not have to pay for their lack of attention to detail.
Why Do Change Orders Cost So Much?
Clients are often shocked by the price of a change. A common question we hear is, “Why does moving an outlet cost $500? The part is only $5!”
You are not paying for the part. You are paying for the Disruption of Flow.
Commercial construction relies on a strict schedule. Electricians are scheduled for Monday. Drywallers are scheduled for Wednesday. If you add a change on Tuesday, it causes a ripple effect.
- Administrative Time: The Project Manager has to estimate the cost, write the paperwork, and get your approval.
- Trip Charges: The electrician has already left for another job. We have to pay them to drive back to your site.
- Rush Fees: If the change needs new materials, we might have to pay for overnight shipping to keep the project on time.
- Overhead & Profit: Just like the main contract, change orders include a standard markup. This covers insurance, liability, and management.
Strategies to Protect Your Budget
You cannot stop every surprise. However, you can minimize the financial pain. Here are three strategies Aetheling Construction recommends for 2026.
1. The 10-15% Contingency Fund
This is the golden rule of construction budgeting. Never fund a project to the exact dollar amount of the bid.
If the construction bid is $200,000, you should get a loan for $230,000. View this extra money as “already spent.”
If you don’t use it, it is a bonus at the end of the project. If you do use it, you won’t have to scramble for cash or take out high-interest loans in the middle of the build.
2. Pre-Construction Destructive Testing
Don’t guess what is behind the walls. Look.
Before we finalize the budget, pay Aetheling Construction a small consulting fee. We will perform “exploratory demolition.” We cut small holes in the drywall to check the plumbing, wiring, and studs.
If we find rot or bad wiring, we find it before we bid. This means the repair cost is in the base price, not added later as a surprise.
3. The “Design Freeze”
Indecision is expensive.
Once you sign the contract, you should enact a “Design Freeze.” Stop looking at Pinterest. Stop visiting other offices for inspiration. Commit to the plan you signed.
Only change the plan for safety issues or critical flaws. If you want to change something just for looks, wait for “Phase 2” after the main build is done.
The Aetheling Process: No Surprises
Trust is lost when a contractor hands a client a stack of surprise bills at the end of a job. At Aetheling Construction, we do things differently. Our process is built on total transparency.
- No Work Without a Signature We do not do extra work until you approve the cost. We will send you a “Proposed Change Order” (PCO). It will list the exact labor and material costs. You decide if it is worth it. If you say no, we don’t do it.
- Digital Proof We use cloud-based software to manage our projects. If we find rot behind a wall, we take a photo. We upload it to the client portal and tag you immediately. You see exactly what we see. You never have to just take our word for it.
- Options, Not Just Bills When a problem comes up, we don’t just send a bill. We send you solutions.
- Option A: The “Gold Standard” fix (Most expensive, lasts the longest).
- Option B: The “Value” fix (Meets code, costs less).
- Option C: The “Do Nothing” option (We explain the risks).
Conclusion: Expect the Unexpected
A renovation project is a living, breathing thing. Surprises will happen. The measure of a successful project isn’t whether problems arose. It is how they were solved.
You can navigate Change Orders without hurting your business. Carry a healthy contingency fund. Hire a contractor who bids honestly rather than cheaply. Resist the urge to change the design halfway through.
At Aetheling Construction, we believe that the best surprise is no surprise. Let’s build your budget with reality in mind.
Are you planning a commercial renovation in Olympia or Lacey? Contact Aetheling Construction today for a consultation. Let us help you build a realistic, transparent budget.
Frequently Asked Questions (FAQ)
- What is the typical markup on a construction change order? In commercial construction, the standard markup for Overhead and Profit (O&P) is usually between 10% and 15%. This fee covers the office time to process the change. It also covers the management required to fit the new work into the schedule without causing delays.
- Can I reject a change order from my contractor? Yes, you can reject a change order. However, the result depends on the type of change. If the change is “discretionary” (like moving a wall for looks), rejecting it just means the work won’t happen. If the change is for safety or code compliance (like fixing rot), rejecting it might force the contractor to stop work. We cannot legally continue if the site is unsafe.
- How does a change order affect the project timeline? Change orders almost always affect the schedule. Even a small change, like swapping a light fixture, can cause delays. The new materials might take weeks to arrive. The electrician might be booked on another job. When you approve a change order, always ask your contractor how many days it will add to the finish date.
- What is the difference between a Change Order and a Construction Directive? A Change Order is an agreement signed by both you and the contractor. You agree on the price before work starts. A Construction Change Directive (CCD) is different. It is an instruction from the owner to do the work immediately, even if the price isn’t settled yet. This is used only when time is critical. The price is negotiated later based on actual costs.
